Goodbye 2012, Hello 2013
Events of 2012 remind us of a popular definition of “insanity”.
That is, repeating the same things and expecting different outcomes.
Three noteworthy financial events made the podium in 2012:
1. Euro Zone
Euro Zone woes just keep getting punted further down the road.
Even their rescue funds have been recently downgraded by Moody’s.
Overcoming political delay tactics become more painful every day.
A definite possibility is sovereign lenders taking a haircut on bonds owned.
Yes, more money has been borrowed than will be repaid.
2. US Fiscal Cliff
By now, everyone has opinions on the US fiscal cliff.
It frequently occupied the headlines in every media.
It will ramp up to a frenzy as 2012 winds down.
Nobody should be surprised if the cliff gets punted into 2013.
It’s simple, yet hard: collect more revenue and lower the spending – that’s it.
One key piece of recent news is that China has new leaders.
A revised economic playbookwill unfold for the next 10 years.
China has been slowing down since October 2011.
However, there are recent signs of a modest upturn.
The new team will have plenty on its plate.
Our crystal ball projects two themes to influence financial headlines during 2013:
1.) Earnings slowdown
Corporate earnings can slow down in the early part of 2013.
A modest pickup is anticipated in the second half.
Small, medium and large businesses will continue looking for two things.
A rise in revenues and continued minding of the expenses incurred.
Growth is the economic medicine businesses need to overcome adversity.
2.) Peek past cliffs and curves
Investors need to come to grips with the fact that they can’t influence the markets.
Like a well run business, every investor needs a clear and concise road map.
It’s vital to figure out what is important in each case.
Specifically, where the portfolio ought to be in 5 to 10 years.
Peek past the current cliffs and curves that stand in the way.