DOMESTIC EQUITIES FINISHED 2010 strong, with solid holiday shopping reports, and at least some tax resolution in Congress. By the numbers, for the two weeks ended Friday, December 31, 2010, the Dow Jones Industrial Average closed at 11,577, up 86 points, or 0.8%. The Standard & Poor’s 500 closed at 1257, up 14 points, or 1.1%, and the NASDAQ Composite closed at 2652, up 9 points, or 0.3%.
Health care legislation, interesting election results, wars, floods, blizzards, Russian spies posing as financial advisors – all this and more made the headlines in 2010. Around the world, sovereign bankruptcies in Greece and Ireland were averted, whiners in France and other plantation states rioted because they are actually expected to work to get paid, and the European Union began to show its cracks.
A variety of asset classes responded to this worry and concern by having a very solid year. In 2010, the Dow was up 11%, the S&P 500 was up 13%, the NASDAQ was up 17%, European stocks were up 9%, Netflix was up 228%, and H-P was off 18%. Responding to either demand from growing economies, or the suffocating sovereign debt levels around the world, hard assets had a good year. Gold was up 29%, silver was up 82%, copper was up 32%, oil was up 15%, and palladium was up 94%. Bombay’s Sensex finished the year up 15.4%, closing at 20,509. Hong Kong, Shang Hai, and other Asian markets also finished well.
The president has signed into law a repeal of “Don’t Ask, Don’t Tell”, allowing gays to serve openly in the military. It will be interesting to see what impact this has on our military and even more, to track unintended consequences.
According to a recent survey, Washington D.C garnered the spot as the best city for business, beating Omaha, Boston, and Des Moines, among others. Never hurts to have a seemingly endless supply of other people’s money to help fund your growth. This strategy consistently falls into the best practices category of the finest Ponzi con artists.
Toronto-Dominion Bank, owner of TD Ameritrade and other financial enterprises, has announced the purchase of Chrysler Financial from Cerberus. This is a plus for Chrysler Financial, in our opinion, as Canadian bankers don’t seem to be nearly as afflicted with the virus that seems to live and feed on Wall Street.
On the economic front, jobless claims dropped to 388,000 last week. Consumer confidence declined in December, according to the Conference Board, from 54.3 to 52.5. Oil prices are likely to continue to head north. Saudia Arabia has said it is prepared to support $100 per barrel oil, as they find greater demand in emerging markets. Prepared to support? No kidding.
So, what happens next in the world economy? Are we in for Happy Days again, or is this simply the euphoria before some type of worldwide meltdown? Well, my crystal ball is in for repairs, and the shop won’t return my calls.
There is always opportunity, and sovereign debt and its causes must be addressed. How will that shake out? There are too many scenarios to comment on, and everyone has an opinion. Those companies that appear to be best positioned for the future, regardless of economic circumstances, seem to be those that are multi-national, meaning they have revenue and operations around the world, have a low debt load, and offer products deemed to meet basic needs. Often, these companies are mature in the developed markets, and are growing rapidly in the developing economies of the world. They also have paid a consistent dividend.
Intermarine of Brazil, and BMW Group’s DesignworksUSA have teamed up to create Intermarine 55, a 57 foot yacht that will go on sale in July. It will sleep six comfortably, features windows all around, a sink, barbeque area, and cooler on the stern, another sink, barbeque area, and refrigerator on the flybridge, and plenty of meal prep space in the galley. Fridge, stove, and microwave come standard. You can customize fabrics and woods. Base price is $2.2 million.
Quote of the week:
“Don’t ask what the world needs. Ask what makes you come alive, and go do that, because what the world needs is people who have come alive.”
Howard Thurman
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