In 2012 equity markets advanced, declined and advanced again in most parts of the world to finish with an overall gain of +10% as measured by the Dow Jones Global Total Stock Market Index (DJW). The equity markets in Europe, Asia, North and South America all finished mixed with the United States Dow Jones Industrial Average (INDU)up +7%.
The fiscal cliff showdown between Congress and the president ended as expected in compromise. This compromise set a positive tone in the market to start 2013 off on a high note.
In my opinion, valuations on equity markets still favor stocks over bonds and we recommend investors that have a long term investment horizon continue to overweight stocks versus bonds.
Our Covestor investment portfolios finished in the plus column for the year 2012, though that’s no guarantee of performance this year. Looking forward we continue to believe the housing market will recover, given that inventories are low and household formation continues to build.
Our investment approach is to buy companies that we believe have consistent earning power, high return-on-equity while employing little or no long-term debt and to purchase at reasonable prices.
We have a system that filters thousands of stocks on a weekly basis using the Sparrow 75-point checklist that screens the highest quality companies, which are then reviewed and considered for purchase in your portfolio.
The investments discussed are held in client accounts as of January 25. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.