US Report Part 1: 2012 - The Year Ahead | Summary and Q&A

TL;DR

Experts recommend taking a global perspective when investing and not relying too much on short-term predictions or economic growth rates.

Key Insights

• 🍉 Short-term predictions by market experts should be approached with caution.
• ☠️ The correlation between economic growth rates and stock market returns is not always strong.
• ❓ Relying on indicators like the January indicator or a presidential election year to predict market performance is not reliable.
• 😨 Investors should not avoid equities altogether based on fears of economic shocks, as history has shown such concerns might not impact market returns significantly.

Transcript

hello and welcome to us report a four part series from Barnett Ravenscroft wealth management we'll be looking at the state of the world's largest economy and asking how should investors be positioning their portfolios in preparation for the year ahead 2011 was a turbulent year for world stock markets there were fears over the lack of growth in the ... Read More

Questions & Answers

Q: Should investors pay attention to short-term predictions made by market experts?

Different experts have different opinions, and the stocks that are favored by everybody would have already gone up in price. It is advisable to pick your expert carefully and not rely too heavily on short-term predictions.

Q: Is there a strong correlation between economic growth rates and stock market returns?

There is a common belief in this correlation, but it is tenuous at best. Markets often perform well even in the face of mediocre or poor economic numbers.

Q: Can the January indicator be relied upon to predict market performance for the entire year?

Although there is a theory that stock market gains in January indicate a positive year ahead, it is not a practical or useful rule. Last year's positive January indicator did not translate to a successful year.

Q: Are investors right to avoid equities due to concerns about economic shocks or the collapse of the Euro?

Experts advise against avoiding equities altogether. While there are concerns, history has shown that worrying about these possibilities has not always translated into poor market returns.

Summary & Key Takeaways

• 2011 was a turbulent year for world stock markets, but there have been more encouraging signs since the turn of the year.

• Short-term predictions by market experts should be taken with caution, as different experts favor different stocks and their value may have already increased.

• Economic growth does not always guarantee higher market returns, and markets can perform well even in the face of mediocre or poor economic numbers.