The markets have treated investors well so far in 2012. Entering Friday, the Dow has increased over three percent, and the S&P 500 is up nearly five percent. Even the foreign markets are up so far, despite being the worst performer in 2011.
So why has January been so positive thus far? There are continued signs of a strengthening economy here in the United States. While we’re certainly not back to running on all cylinders yet, economic indicators are trending in the right direction. Even the long-battered housing markets are showing signs of life. Along with these positive trends domestically, we haven’t seen significant negative news out of Europe so far this year. Much of the market volatility at the end of 2011 was driven by declining economic situations abroad. While this is still one of the primary reasons for concern in 2012, there has yet to be a significant issue or problem that has rattled investors.
It is obviously too early to draw any conclusions from January’s performance, but the consistent upward movement this month is certainly a welcome respite from the volatility of 2011, even if only temporary. There are still serious issues in the European zone that will be a concern going forward, and we certainly would like to see the positive economic news continue in the U.S. before drawing any long-term conclusions about our domestic situation.
January is also a great time to review your financial situation and plan for the New Year if you have yet to do so. As always, your Wealth Manager/Financial Advisor will be happy to assist.