My outlook for 2012 is more abstract than numerical. Perception of the events of 2012 will be the motivation for market volatility with the emphasis being greatest just prior to the event. Let’s start with the event that will probably garner the most newsprint, the 2012 U.S. election. A presidential election year brings out more voters than off election years sometimes even the dead or the non-existent, vote. This year will bring a large turnout but the perception and focus will be on Congressional races. The coined phrase of Bernanke, “Too big to fail” will actually be spun on Congress. ‘Too big to function’ will be a truism of ineffectual government. I foresee a large turnover in the ‘old seniority’. The stock market does not like uncertainty, so October could present trepidation for investors.
The early part of 2012 will once again have news from the European economy that will send shock waves across the ocean to the United States. Our Federal Reserve, the Federal Reserve of transparency, will be the opaque dark transporter of funds of secrecy to bail out the chaos with buckets of our money fresh from the printing press. Bernanke’s fingerprints will be all over the cash.
Let’s view a lighter side of opportunity for 2012, trading. The index markets of equities, debt instruments, currencies and oil have become the computer programmer’s haven of manipulation. The interesting aspect of these programs is the infantile application of the ‘triggers’ of the programs. It is akin to an inexperienced poker player strategist having all the aces but all the other players know where the aces are also. Each day the tape magnifies the hand of the programmer as the programmer makes no attempt to mask their hand. They do not need to mask as they have all the aces. Have you every wished you could go to a horse race and know all the winners in advance? Those who can see will be able to forecast. Trade what is, not what should be, in 2012.
The year 2012 will be the birthing of the transformation of awareness. No longer will the public believe our government or any government without authentication and verification. ‘Big’ will be hated, still prevalent, but a grassroots movement against ‘Big’ will be a ripple, and then becomes a wave, that becomes a tsunami in coming years. The distrust of the Federal Reserve will increase until it will become ‘politically correct’ to bash their policies. Ben Bernanke will go down as the Richard Nixon of this era.
Small investors will make small fortunes. Large loses will be made by gargantuan ‘BIG’ funds. Stay small. Banish ‘BIG’ from your thought! Trade and prosper in 2012!