This past year was a bumpy, erratic year, to say the least, in the financial markets. Mutual funds, hedge funds, pension funds, etc., all struggled. So you know when the pros all have a tough time, it was really rough.
I believe 2012 will be filled with its own set of bumps but I believe it won’t be quite as bumpy of a ride as 2011.
In 2012, I’m looking for a turn upward in commodities. I think that will be one of the big surprises of 2012.
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I believe many commodities from copper to sugar to corn to wheat to beef, etc. will start to have a nice rebound in 2012.
Right along with that, I believe that we’ll see a great rebound in the commodity-currencies as a result. These are currencies like the Australian dollar, Canadian dollar, New Zealand dollar and Mexican peso.
In fact, if we can see both stocks and commodities rally both at the same time, I believe it will case a very huge move in the Mexican peso. Since it’s an exotic currency, it tends to move like “a commodity-currency on steroids.”
I also expect the Federal Reserve to keep interest rates low all throughout 2012 and possibly well into 2013. It will be a slow-growth year at best still. The global economy is still licking its wounds and I think that still could continue for a couple of more years at least.
Unemployment will remain stubbornly high and so will the debt levels of most of the major nations. You see, these nations are used to “growing their way out” of their debt problems and if that’s even a possibility, it won’t be one for a couple of more years at least.
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At some point, politicians will need to do some serious cutting of debt even before decent growth returns.
Europe, the United States and Japan especially have not been willing to look their debts squarely in the eyeballs and take action. It’s not fun dealing with debt, no more than it is in doing the same in our own personal family finances but nonetheless it must be done.
I think that Americans have been so used to living off of money they didn’t really have (through racking up more credit card debt and through home equity loans) that there will need to be a huge deleveraging period which we are presently in…but will take some more years to complete.
We’ll have to bring our personal debt levels down and ratchet up our savings levels once again. Until this happens, we won’t likely see another long bull run like we saw from 1982 to 2000.
Stock investors will need to get used to a lower level of returns than in the past. I believe that the major averages will return 9 percent to 11 percent, at best, which is a historical norm for the averages anyway.
Commodities and commodity currencies will remain the place to be. You can bet that the industrialized nations will try to inflate their way out of problems as they’ve tried to do in the past.
This will drive up the cost of goods for the masses and water down their purchasing power. The rise of inflation will be an even greater divider between the rich and the poor.
However, those that know how to play the game will know to be invested in the things that actually benefit from the rise of inflation, such as commodities and commodity-currencies.
It will be the ones that are invested in these areas that will prosper the most and see their assets rise in value while most of the world sees theirs plummet and their purchasing power go down the tubes as a result.
2012 and beyond will be a very crucial time in the history of the world for the middle class. Much of the middle class will actually join the poor in the coming years as a result of high inflation which drives up the cost of goods and erodes their purchasing power.
The good news though is that those in the middle class that are invested in commodities and commodity currencies will stand a great chance to move to the upper-middle class or even join the rich.
So it’s not all a bad thing…for those who are positioned properly.
Therefore, make sure you are positioning your portfolio to where you can defend your assets against “the great inflation” that’s to come.
Governments like the U.S. never change their habits no matter who is in office. You can bet that they’ll continue to print money and try to inflate their way out of their problems. This always appears to be the least painful route…yet, eventually as more and more people are made poor because of it, it will cause more rioting and unrest even here in the U.S. in the years to come.
So make sure your wealth is protected in this regard as well. No doubt we are entering some of the toughest roads in history…but it doesn’t mean that it isn’t an opportunistic time, because it is!
There will be some of the greatest opportunities known to man that comes about in the upcoming years. The masses won’t see them coming as they did in the last bull market in stocks.
They won’t be well-versed in what will prosper…but my readers will be!
Have a Happy New Year!
About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Money Matrix Insider. Discover more by Clicking Here Now.
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