Tuesday, January 03, 2012

2012 Predictions from General Investment Experts

I get Zack's daily "Profit from the Pros" email sent to me every day with a quick review on how the stock market did and commentary on what's next for the immediate day. Today I chose to read one of the linked articles as well entitled : "Treasuries, Stocks, Gold or Real Estate - Best Investment for 2012?"

1 of the analysts quoted picked real estate securities (home builders, REITS, etc.) as the top pick. Another made a comment, made by several other experts in recent national media, that the housing "bottom" could occur later this year.

I feel a little skeptical about this prediction. For one thing, there is still a lot of inventory sitting there. And another problem is that real wages (which means wages adjusted for inflation so you can compare one year to another) continue to drop. The fact is, when the majority of homeowners can't afford homes, then home prices drop.

Again, this is penalizing people who bought homes in the last 5-8 years, during the bubble, and have stayed current in their payments. They are going to continue paying much higher monthly payments, or sell at a price which won't recoup them enough for a down payment on a new home if they have to move. If they stay current, and wages continue to drop, then they will not have enough disposable income to a) enjoy life and b) keep the economy afloat with all their purchases.

Analysts are getting optimistic about 2012 because corporate earnings have rebounded a bit. I hope they are right. Naturally my livelihood depends on it, but I have to wonder if it wouldn't be a good idea to give all those hardworking people a little break?

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