1. Best beginning of the year since 1987 on stock exchanges worldwide
According to Bloomberg the best beginning of the year for stocks around the world since 1987
isdoing too little to restore Americansconfidence inequities. In January the S&P 500 reference
index was up 4.16%. During the same period it’s Canadian counterpart S&P TSX rose 4.16%. #
1 on the performance podium was the MSCI Emerging Markets index, the most important
barometer of stock exchanges of economiesthat are growing at a faster pace than the
developed nations. Countries such as China, Brazil, South Korea, Taiwan, etc.During the month
of January the latter appreciated9.64%. Since October 3rd 2011, MSCI EM Index increased
20,02% while the S & P TSX appreciated 10.67% and the S & P 500 19,38%. This uptrend in
stocks around the world started on 3 October 2011 at a time when the psychology of the public
as well as professionals had reached the apex of fear vis a vis the possibility of European led
contagion in Asia and North America. Although there was no tangible proof that contagion would
materialize American investors sold more than $469 billion worth of stock investment funds. As
time passed and the US. economic statistics did not validate this theory according to which
European financial weakness will slow down or worse yet-reverse the positive economic trend in
North America and Asia, stocks “climbed a wall of worries”. This phenomenon ocurred despite
negative financial media headlines and public fears of worst case scenario. As is usually the
case after a significant recovery Strategists of large well known financial firms like UBS Bank,
RBS (Royal bank of Scotland), SocieteGeneralechanged recommendations. They advise
customers "Wrong but not much Later" (Larry Hatheway, chief economist, UBS) on the demise
of Emerging market economies and stock markets. American firm profits, unemployment, orders
from North American plants are in full expansion. Even Germany announced an increase in
December of finished goods orders of 1.7% and the consumerconfidence came in at the highest
level in the last five months. These figures show that the economy in Europe and specifically
that of number 1-Germany the situation is not really so "black". Once more time the end of the
world prophets are proven wrong. Stocks like New York listed Direxion Emerging Marketsand
Direxion Small Cap Bull have registered price increases of 64% and 96% respectively. This
much “easy money”left on the table is the price paid by the half empty glass crowd. Their fear
led to excessive bonds bingingwhich kept interest rates at extreme low levels. This trend began
to reverse and investors began to sell bonds in favor of equities. What can we expect next in
2012? Now that the “herd” is becoming more bullish expect shallow corrections and sideways
consolidating type trends. After which in the next 2-4 weeks the most elastic of investments,
namely those related to the emerging markets and natural resources-base and precious metals
to climb on the highest step of the podium at the end of the year. The latter were the most
affected by panic selling in the second half of 2011. As a result the TSX Venture index was
hardest hit but it also the best performing Canadian index since Oct 3rd registering a 17,42%
increase through Jan 31st 2012. We can expect that shares quoted on this stock market(TSX
Venture) to continue rising and to record performances superior to all other sectors. Indivivdual
stocks like Kaminak Gold, Atac Resources, Ansell Capital,Mahdia Gold have chances to rise to
the highest level in the last 52 weeks. I wish you a good year and as well as most
profitableinvestments.