We believe the stock market is poised to do just fine in 2012. We’ve studied previous markets where growth has moderated and the markets continue their upward gain. In the past, we’ve seen companies announce conservative guidance and then substantially out-perform. Now because of Sarbanes-Oxley, companies are pulling back. We believe we will still get a few surprises in consumer staples, industrials and maybe even materials.
Currently, profits are $107 for S&P companies, and the stocks are trading at 13.6 times earnings. We are predicting a target of 1485 for the S&P this year, and the Dow around 14,000. By no means do we think the market will have a straight ascent; however, we do not believe it will be as volatile as 2011. There are several main concerns that may affect both investor sentiment and market performance throughout the year, including Iran’s threat to cut off the Strait of Hormuz, Europe’s continuing debt crisis and our own presidential election. We believe it will be an interesting year, but perhaps not quite as interesting as 2011.
Despite the many surprises in 2011, only the tsunami that devastated parts of Japan had a real impact on the markets. It was more than psychological—the tsunami slowed manufacturing of electronics, cars and other manufacturing parts. Most everything else affected the sentiment, and we believe much of that sentiment is built into the current market prices.
While some members of our portfolio committee believe the unknowns this year may play a bigger role in influencing the market, the bottom line is that despite the possible affects of higher energy prices and the possible demise of the eurozone, we are sticking by our investment decisions. We are still invested for the long term, and we are still buying what we deem to be high quality companies that will survive any ups and downs the market might have. We are still buying McDonald’s Corporation (NYSE: MCD) and VF Corporation (NYSE: VFC).
Overall, we believe the market has the potential to be up 15% in 2012. We certainly believe we are due.
At Henssler Financial we believe you should Live Ready, which includes understanding how world events may affect the market. If you are unsure about how to develop your investment portfolio given the unknowns in the market, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or e-mail at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
