We’re not even a month in, but it looks like the global economy, Europe and earnings may be the big attention getters in 2012. The equity markets have been off to what could be called a mild rally during the first half of January, but they’re still reacting to eurozone worries like a baby with a jack-in-the-box; they know something big is coming, but they’re not sure when, and when it does, they jump. It’s a fair enough reaction. Last year’s rough and tumble volatility wasn’t exactly a cake walk.
That wild ride doesn’t appear to be over, as hopeful outlooks for smooth sailing were noticeably absent from the early slate of 2012 market predictions. But if you can’t wrap yourself up in a warm blanket of false promises, at least you can pull up a chair to the grown-up’s table and take a practical survey of the landscape. Doing just that, Franklin Growth Opportunities Fund Portfolio Manager Grant Bowers suggests heading into 2012 with realistic expectations:
For many investors, the new year doesn’t appear all that new. Home prices remain anemic, job growth feels inadequate and the market is about as turbulent as ever. But there’s a flip side to every coin and there’s often potential opportunity hidden in what looks like just plain old trouble.
Ed Perks, lead manager of the flagship Franklin Income Fund, senior VP and director of Core/Hybrid Portfolio Management for the Franklin Equity Group and regular contributor to these pages, ruminates on what he sees as a continuing theme of disconnection between perception and reality and how it will shape the investment landscape in the year ahead:
Hindsight may be 20/20, but perfect foresight sure would be nicer to have. The future is unknowable, of course, but that doesn’t mean we have to go blindly tripping into it. Somewhere between the randomness of throwing a dart at a board and the fictional “vision” of E.S.P. lays the gray area of the educated guess. What use is 20/20 hindsight, after all, if we can’t use it to learn some lessons?
Fortunately for us we have access to industry experts Ed Jamieson, Peter Langerman, and Gary Motyl, three men with about 75 years of investment experience between them. You’ve already read as they opined on the future of Europe and the potential market impact of the U.S. presidential election, and in this post you’ll hear from them one more time as they analyze trends, possibilities and probabilities and postulate on what may be in store for the markets in 2012.
Forget the Kentucky Derby with its mint juleps and heartstring-tugging back stories. If you’re looking for a truly dramatic horserace, look no further than this year’s run-up to the U.S. presidential election as we count down to November.
For Americans it means choosing a leader to guide the country for the next four years. But what does it all mean to investors? Once you get past the mudslinging and the emotional policy pleas, how can you expect all of this political theater to impact the markets?
As soon as we hang our 2012 calendars we are, like clockwork, inundated with a plethora of economic prognostications. Eager forecasters make predictions ranging from 5,000 point market rallies to, literally, the end of the world. Forecasting, however, is a dicey pursuit. As 2011 proved, any number of unforeseen market-rocking variables can occur.
In keeping with our heritage, Beyond Bulls & Bears is taking a contrarian approach to forecasting, steering clear of sensationalism and relying instead on the opinions of three of our industry veterans who place emphasis on rolled-up sleeves research and long-term outcomes. Each shares his insights on three key factors that have been affecting global markets as 2011 drew to a close and as the new year swings into action.
In an environment plagued by grinding volatility and the nagging sensation of treading water, the stocks of dividend-paying companies have become more broadly appealing. Particularly when you’re talking about yields that have recently surpassed those of long-term Treasury bonds.
As lead manager of Franklin Rising Dividends Fund, Don Taylor certainly qualifies as an experienced voice on the subject of not just dividends, but rising dividends and the role dividend-paying investments can play in a portfolio. It’s an oft-repeated refrain here on Beyond Bulls and Bears, but—as the broader market continues in stops and starts like a stubborn mule—meticulous, company-by-company examination of fundamentals rather than sweeping generalizations based on macro movements is what Don and team turn to in their quest for stocks primed to pay with the potential to increase their dividends over the long haul. To meet the Franklin Rising Dividends criteria, here’s what Taylor looks for: