Market Recap for December
Well they got it done! Have you ever seen so much drama, discourse and pure incompetence in all your life? Of course, I am speaking of the President and Congress’ dance over the past 60 days that finally ended with a last minute, but late, deal that “saved us” from the so called “fiscal cliff.”
As a active investors, I can tell you this whole discourse created havoc over the past two months that made it tough to profit. Day after day markets moved up or down based on the news that was mysteriously leaked out from behind closed doors. Both sides worked the financial and non-financial press to paint a picture that they were doing everything they could, but the “other guys” were blocking further progress.
No matter how you slice it, this drama cost us market returns in what has historically been one of the best trading months of the year. And oh by the way, we did have a positive month, but it took an extraordinary day on the last trading day of the year to make it happen.
Here is how the indexes finished the month: The S&P ended up .71%, the NASDAQ Composite returned .31% and the EAFE Index finished up 3.25% (the clear winner for the month).
Overall our strategies worked pretty well! The only portfolio to feel substantial drag was our Global Opportunities portfolio as we were light on country exposure and negatively impacted by the trade in gold and commodities.
We look forward to 2013 as we believe this will be the “Year of the Trend Follower.”
Market Forecast for January and 2013
If you have not seen our 2013 Stock Market Forecast Video, here is a link. Both Wayne and I believe that this fight over revenue increases and spending cuts is far from over! In fact, we think markets will manage to sidestep higher through continued debate on the former and the Congressional debate on increasing the U.S. debt limit, but when May/June comes, we could see traditionally tough market months turn even tougher.
This is why we believe 2013 will be the “Year of the Trend Follower.” Trend following is how we manage our active investment strategies and this strategy has struggled the past few years.
The good news is that trend following strategies like InTrust’s are generally not positively correlated to the overall stock markets. In English this means that they do well (after a brief adjustment period when markets do poorly.
My suggestion is that you take a look at a video we did called How to Get Rid of Your Investment Worries Once and For All and see how trend following really compliments traditional strategies, like buy and hold. By the way, we do have buy and hold strategies too (but with a twist that protects your capital).