Despite what others might say, 2011 was a volatile year on par with 2009, not
2010. In fact, the similarities have been eerie. In 2011 we saw, among other
statistics, three days (just like 2009) when the Dow swung more than 5% from
high to low something that happened 28 times in 2008 but hadnt happened in the
five years prior. Weve seen 193 days when the Dow moved 100 or more points from
high to low, just like the 196 days in 2009. But at least there has been some
good news as of late. Last Fridays report on new home sales confirmed that the
housing industry is beginning to get some traction off of the bottom. Supply
continues to fall and, while prices remain soft, sales volume is picking up.
Incomes and spending continue to increase, but at a very, very low rate. At
least it appears that the declining savings rate has found a resting place and
hasnt continued to fall. Its now at about the average rate for the past decade,
at 3.5% of incomes. Orders for durable goods were led in November by the
volatile aircraft segment on big orders for Boeing (NYSE: BA ). So, while these
numbers are good, they have to be taken with that grain of salt that reminds us,
month to month, things can look quite different but the trend remains a good
one. Italy is grabbing the debt bull by the horns, passing legislation raising
the retirement age to 66 for men and 62 for women, reinstating a property tax on
first homes how quaint and coming up with more initiatives to reduce tax
evasion. Theyve had a couple of decent bond sales last week, but anxiety remains
at a high level in the euro zone. Stay tuned, as this will be the defining issue
of the new year unless a war breaks out or some other unknowable event grabs
center stage. With that said, I still expect more volatility in the coming
months, so please be cautious. I wish you a safe, sound and prosperous
investment future and a warm, safe and happy new year.
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