Lange Financial Services Brief Market Update. January 2, 2012.

[ 0 ] January 3, 2012 |

Lange Financial Services January 2, 2012 3:00pm

To the surprise of many investors, the DOW closed 5.6% in 2011 aided by substantial strength in McDonalds and IBM as well as other defensive stocks in this popular price weighted index.The S&P 500 was down a negligible .04% for the year. This performance belies investment results achieved generally by most investors hedge funds, mutual funds, etc.

Most investors experienced sub par returns with performances of many well below the popular indexes. Numerous well regarded stocks are still down substantially from earlier peaks reflecting negative expectations in the global outlook, especially as it related to the year long Euro zone crisis and the consequences of failure.

Billions of dollars have fled equity mutual funds as a result of poor market results and expectations last year and in recent years. Substantial redemptions have negatively impacted hedge funds.

Investors remain extremely concerned about the market outlook, and understandably so as a result of:

1. Poor investment performance and cloudy outlook generally.

2. Continued widespread concerns over the EURO crisis.

3. Apprehension over the domestic and worldwide economy given projections of slower growth.

4. The failure of our political leadership to create significant jobs and greater economic growth.

However, despite the prevailing and well known concerns, we have maintained a positive investment view since early October, and in prior months. While some of the aforementioned concerns may become worse, we also believe that most of the negative factors have been largely discounted. More important is the expectation that many companies will achieve significant growth in the year ahead and longer.

Our long standing investment policy has been to accumulate growing companies during periods of weakness. We are optimistic about 2012 given the fact that many stocks are inexpensive by almost all statistical measurements. Please see our updated ” Favored Stocks” list for ideas.


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