Why 2012 could be Spectacular

The new year typically brings about opportunity and reinvention. The 2011 books are closed. It's a fresh start and time to make some hay in 2012.

Many leading U.S. economic indicators are hinting that 2012 should be a big up year.

Among non-banks in the S&P 500, cash is at an all-time high. Over $2 trillion waiting to go to work. With interest rates so low, companies are incentivised invest it in growth opportunities.

For the first time in history, announced stock buybacks in the coming year exceed $1 Trillion. That means the supply of stock will go down, and demand will go up, which would lead to rising stock prices. This is great news for shareholders of all companies buying back stock. I hope health care is a significant part of this trend.

Corporate profits are at an all-time high. Sounds hard to believe. Companies have become leaner and more efficient out of necessity. Could this be a harbinger for growth and prosperity?
View Chart

An up market trend should reactivate investors to get their money into deals ahead of the curve. This could be excellent news for smaller pharma, biotech, and medical device companies.

Unemployment is receding, if only slightly. I'll take a positive trend over a negative trend. More folks in the workforce is good for everyone.

Finally, consumer spending is at an all-time high. Hard to believe, but the numbers are there. View Chart

Am I seeing the glass half full? Maybe. Certainly, there are still problems with the economy. Unemployment is too high. The national debt is skyrocketing. The U.S. import/export ratio is terrible. Near-zero interest rates are not healthy or sustainable, but it's better than double digit interest on loans.

Have a spectacular 2012.

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