Enjoying the Calm, Mild Winter

Most of us have been enjoying the calm, mild winter weather (unless you are an avid snow lover), but I’m also referring to the markets. On that front, it’s been one of the best winters in years.In recent days, the Dow Industrials Index topped 13,000 for the first time since before the 2008 crash, and the NASDAQ topped 3,000 - the first time that’s happened since 2000. Overall, the markets have had their best yearly start since 1998.*

There is decent news on the U.S. economic front as well. The labor markets are improving and employment is slowly making headway in the right direction. Even real estate is showing tentative signs of improvement, as existing homes are beginning to change hands more frequently.

And let’s not forget the anecdotal portents. This is a Leap Year, and also a Presidential election year, and that bodes well for the markets. There have only been three down Leap years for the S&P 500 since 1928. Not only that, a National Football Conference team won the Super Bowl (go Giants!). The markets almost always go up then - no kidding.

The more you know me, the more you know I have little faith that any of these tidbits, by themselves or together, spell anything definitive for the markets in 2012. The bottom line remains we can’t predict the future at all, really. Yet perhaps the most comforting characteristic of recent markets for me is their relative calm. Recent trading has been measured, with limited anxiety and almost no panic evident. Volatility, for a change, has been muted. That is good news for investors, for nothing spooks the markets like being spooked.

Things could reverse themselves, of course. Part of the reason market trading has been muted is that traders are not all that confident about where the markets are headed from here, and although there is cautious optimism in the air traders are holding pat for now. And one of the few Leap Year exceptions was 2008, and we remember all too well how that turned out.

There will be continued focus on the financial mess in Europe, and rightfully so. In my view the crisis with our financial system is not simply a European event. It is a global fact, and one of the most crucial issues we must face, for the sake of prosperity, sustainability, and justice (and I know we agree these are integrally intertwined in our ever smaller, globalized world). The world is awash in too much debt, and that is because our money system is bound to this debt in destructive ways. Simply put, any time we create new money in our global financial system, we create an equal amount of new debt, and the interest accruing on all of that debt (for which new money is not created) is slowly choking our economies and the planet. (For those who want to read more about this, check out the American Monetary Institute http://www.monetary.org/).

But for now, I am enjoying the calm, and as spring approaches I am hopeful that calm will continue on into the summer and for the rest of 2012. Let’s stay the course with our investment strategies and relax. Enjoy the nice weather!

*Past performance is not indicative of future results.