2012 end-of-year recap

Needless to say, we survived Doomsday on December 21, 2012. 

This past summer, I warned readers that Canadian stock markets would likely underperform. This came to pass as the Canadian stock market squeezed out a paltry few percent return for the year. Pullbacks in commodity prices (including energy) were cited as chief reasons for the sluggish performance in 2012. Generally, investments in Canadian resources tended to do poorly in 2012. However, if you had some U.S. and some European exposure, you may have done quite a bit better as both of those markets did surprisingly well. Many of the larger international funds have surprisingly good returns despite the constant stream of bad news headlines throughout the year.

Interest rates continued to drop throughout 2012 and there were many headlines about Canadians that were way over their heads in debt - too many lines of credit and too much invested in real estate (mortgage debt).

The latter part of the year saw Canadian real estate cooling somewhat as prices either leveled out or dropped in some parts of the country.

Europe dominated most of the headlines continually throughout the year as news desks everywhere whipped investors into a frenzy about Europe's imminent breakup, Greek contagion and Spanish financial woes. Wrong.  European stock markets soared in the last six months of 2012 even though they are in the midst of a mild recession. 

The year ended on a high note as U.S. stock markets closed in on five year highs. European stock markets continued their upward flight and Japan’s long dormant stock markets were rocketing upward as well.

What lessons have we learned from 2012?

1. Diversify

2. Ignore the news headlines

3. The glass is half full after all