Inflation expectations are rising, which doesn’t bode well for the economy. On the other hand, interest rates are extremely low, which is generally stimulative of the economy. The stock market had a good week, rising almost 2%. That doesn’t make up for the poor performance earlier this year, and it looks like the market will finish the year around -10%. Good thing for dividends.

Bonds continue to show better momentum than stocks, simply by virtue of being positive over the past year. Even gold has turned down, so I’ll continue to own a real estate index (XRE). Hopefully that will get me through the end of the year, since my accounts are being transferred from my prior employer to a self-directed account.

I’ll be back in the new year.

Market Outlook December 28, 2011

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