I’ve heard it said that “2012 is the new 2011.” The first week in the markets doesn’t seem to disagree. The week was relatively uneventful and volume was relatively light. It was a short week, since the market was closed on Monday. Even so, the market rose 2%. Unfortunately, that still doesn’t make up for prior negative performance. Stocks continue to struggle with negative momentum compared to bonds.
Real estate still has better momentum than other asset classes, so I continue to own XRE in my account. Looking at the stock market, it continues to appear undervalued. It appears, however, that patience will continue to serve investors sitting on the sidelines.
The economic outlook isn’t particularly rosy. The European crisis continues to depress expectations, especially for exporters. And although Canada was spared from the worst of the recent turmoil, there seems to be a lot of nervousness that our luck will run out. However, when people expect the worst and are looking for problems, they are unlikely to be surprised by bad news. In other words, any surprises are likely to be to the upside.