2011 was a very volatile and disappointing year for the US stock market. What’s notable is that most other world markets, with the exception of a few small ones, were down substantially more for the year. Entering 2011, expectations were high for a continuation of the economic recovery around the world despite deleveraging, residual debt and credit concerns. Although corporate earnings were quite strong in 2011, the investment landscape was driven by fear and anxiety. Fear that an over leveraged European bank may implode, and anxiety that a small or medium sized country in Europe may collapse and total mayhem would break out on the streets.

Looking into 2012, the positives and negatives seem to line up very close. The negatives include a systemic banking crisis in Europe, a true double-dip recession in the US, a hard landing in China, and a Middle East Crisis. The positives include Europe moving toward a resolution of its debt crisis, the US striking a budget deal or becoming fiscally responsible, and a housing/jobs recovery. My sense is that we will muddle through these issues with some resolved and unresolved. It’s very difficult to look out more than a few days in this type of market, although for the first few months of 2012 I am looking for more of the same; high volatility with equities muddling slightly higher.