AFTER A REWARDING but volatile year for stock investors, our expected gains for the equity markets for 2011 are not much different from what we expected for 2010. What’s different for 2011 is that market risk will be more to the upside than was the case in 2010. Indeed, US stocks in 2011 will record a third straight year of double-digit percentage returns, the first time this has occurred in more than a decade. By the close of 2011, the Standard & Poor’s 500 Index will be at 1,350-plus, a target that implies that the market will appreciate at least in line with corporate earnings. It is with this backdrop that we venture forward with our predictions for 2011:
1. US growth accelerates as US real GDP reaches a new all time high
2. The US economy creates two to three million jobs in 2011 as unemployment falls to 9%
3. US stocks experience a third year of double-digit percentage returns for the first time in over a decade as earnings reach a new all time high
4. Stocks outperform bonds and cash
5. The US stock market outperforms the MSCI World Index
6. The US, Germany and Brazil outperform Japan, Spain and China
7. Commodities and emerging market currencies outperform a basket of the US dollar, euro and yen
8. Strong balance sheets and free cash flow lead to significant increases in dividends, share buybacks, mergers and acquisitions and business reinvestment
9. Investor flows move from bond funds to equity funds
10. The 2012 US presidential campaign sees a plethora of Republican candidates while President Barack Obama continues to move to the centre
1. US growth accelerates as US real GDP reaches a new all time high
2. The US economy creates two to three million jobs in 2011 as unemployment falls to 9%
3. US stocks experience a third year of double-digit percentage returns for the first time in over a decade as earnings reach a new all time high
4. Stocks outperform bonds and cash
5. The US stock market outperforms the MSCI World Index
6. The US, Germany and Brazil outperform Japan, Spain and China
7. Commodities and emerging market currencies outperform a basket of the US dollar, euro and yen
8. Strong balance sheets and free cash flow lead to significant increases in dividends, share buybacks, mergers and acquisitions and business reinvestment
9. Investor flows move from bond funds to equity funds
10. The 2012 US presidential campaign sees a plethora of Republican candidates while President Barack Obama continues to move to the centre
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