Monday, December 26, 2011

The Unexpected Shockeroos Of 2011

OK, not if you had read my BLOG and book! Aivars Lode
12/24/2011 @ 3:10PM |1,196 views

Robert Lenzner, Forbes Staff

I bet you didn’t know that in all the world’s financial markets– you’d have been better off staying in American multi-national companies that protected your capital– and even made you a tad of a positive return when dividends are added to market appreciation. This is Shockeroo Number One.
Shockeroo Number Two; You lost about 20% on your holdings in France and Italy, as well as China. Brazil and a whole host of other emerging markets. I bet you never expected that to happen, as all the Wall Street wise men were preaching the EMs as the way to make up for the stagnation in developed economies.
Shockeroo Number Three; Deflation, not inflation, ruled  government bond markets, driving down yields in 10 year and 20 year US Treasuries to levels not experienced since the 1950s. You missed a bull market in Treasuries, you know, those  securities the Chinese wish they didn’t own.
Shockeroo Number Four. Famous billionaire hedge fund managers like John Paulson just plain got the bullish on cheap bank stocks concept totally wrong. It’s embarassing to buy BankAmerica because you and the gang predict it’s a $25 stock. More like $5.00 and heading south. These positions were taken without the foggiest idea of what lay  out of vision on the bank balance sheets.  JP Morgan Chase is selling at 50% of book value. Citigroup is still a basket case. Goldman is off 44%.
Shockeroo Number Five. Gold prices don’t grow to the sky. The long expected gold bubble did not take place. Instead, after a lovely run-up from $1348 to $1920, came a cooling off correction of  $300 an ounce or 17%. Healthy. Soros and my number one gold guru both sold last summer at a tad under $1600 an ounce. Margin buyers above  $1700 got wiped.
Shockeroo Number Six. After laughing off Greece and the PIIGS, investors in European sovereigns and banks received a rude and brutal treatment by the endangered zone of a contagion. Europe does matter after all to the US, to China. And no “bazooka” of cheap financing changes a hugely worrisome hangover coming.
Shockeroo Number Seven.  The silly vapid notion of a “Santa Claus”  rally does not trump no energy plan, no growth agenda, no concrete opportunity for infrastructure,  a 2 month extension of  the payroll tax exclusion, only 9% confidence in the lawmakers.
Shockeroo Momentum is strong. I’m sure we can expect more upsetting moments in 2012. Goldman Sachs is calling fior only 1% growth in the first half,:PIMCO says zero growth. Welcome to the land of Shockeroos.

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