The year ahead

December 03, 2010

As we head into the waning days of 2010, our thoughts naturally turn to 2011 and beyond.

While many investment professionals are focusing on forecasts, we much prefer to look at the investible trends that will move markets, and more importantly, stocks, over the next year or two. These trends can be addressed by responding to specific questions posed by you, our clients.

Is the economy recoverIng?

While the simple answer is yes, it is certainly not what we are accustomed to. The US job recovery remains abysmal, and will probably stay that way for awhile. The loss of manufacturing jobs in the United States is nothing short of horrific.

Typically in a recovery, manufacturing jobs lead the way. So far, this has not been the case, but we see signs of this turning. We believe manufacturing growth is paramount, especially with government service jobs being cut as part of state and municipal fiscal retrenchment. We believe pro-growth policies will keep corporate tax rates low, which is ultimately good for dividend-paying stocks. A manufacturing recovery in the United States could be the “surprise” factor in 2011.