The Year In Review

While growing I listened a lot to the rock n’ roll band U2. Of all their albums, I’ve always liked The Joshua Tree the best. There’s a track on this record entitled “Running to Stand Still” and though I don’t think Bono had the S&P 500 in 2011 on his mind when he wrote the song, its title describes it perfectly.

It was a highly volatile year for the S&P 500. In April the index ran up 8% but by October it was down 12%. Yet with all of this volatility, the S&P 500 finished 2011 less than 1 point away from where it ended 2010. That’s the smallest annual change in history!

The Dow fared better – rising 5.5% for 2011. This is because the financial sector carries less weight in the blue chip index than in the S&P 500.

Other asset classes also saw wild swings. Gold was up 35% in September but only closed up 9.3% for the year. Silver was up 60% in April and the closed down 10.7% for 2011. Oil rallied up 24% at one point but finished the year up about 8%.

Treasuries managed to log their best gains since 2008. The Bank of America Merrill Lynch US Treasury Master Index returned about 10% this year.

The high volatility experienced in the markets during the year was caused by a variety of major global events, such as the unrest in the Middle East, Japan’s devastating earthquake and tsunami, bickering in Washington DC concerning the budget, and the European debt crisis.

So where are the markets heading in 2012?

We enter 2012 with the European sovereign debt crisis still looming, which could plunge the global economy into a recession. However, that hasn’t happened yet and there are positive signs that things are getting better, especially in the US: the unemployment rate is decreasing (albeit slowly), consumer confidence is rising, and American consumers are showing resilience.

Therefore, it’s not surprising that many investors and analysts have differing opinions. Goldman Sachs equity strategist, David Kostin, sees a 1.5% decline to 1250 due to a “Spillover from the European recession.” However, a consensus target of equity strategists for the S&P 500 is for it to rally 7% to 1350, or up 7%.

What do you think? Where are you predicting stocks, metals, oil and Treasuries are headed in 2012? Email me at thestockenthusiast.com

Here is a list of the top gainers and losers in the S&P 500 for 2011 –

Top 10 S&P 500 Gainers for 2011

COG (Cabot Oil & Gas) +103%

EP (El Paso) +92%

ISRG (Intuitive Surgical) +81%

MA (MasterCard) +69%

BIIB (Biogen Idec) +65%

HUM (Humana) +61%

CMG (Chipotle Mexican Grill) +60%

PRGO (Perrigo) +56%

OKE (ONEOK) +56%

ROST (Ross Stores) +54%

Top 10 S&P 500 Losers for 2011

FSLR (First Solar) -75%

ANR (Alpha Natural Resources) -67%

NFLX (NetFlix) -61%

BAC (Bank of America) -59%

X (United States Steel) -56%

SHLD (Sears Holdings) -55%

CSC (Computer Sciences) -52%

AIG (American International Group) -52%

GNW (Genworth Financial) -51%

HCBK (Hudson City Bancorp) -51%

— The Option Specialist

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