Here's How Investments In 2011 Will Stack Up Against Investments In 2010

 “…everybody had a good year…everybody let their hair down everybody pulled their socks up…everybody put their foot down.” – John Lennon/Paul McCartney

If you’re a Beatle freak, you’ll remember what a glorious mess the Let It Be album was.

Aside from the odd, Phil Spector finished, final product is the even odder back story. The Beatles operating company, Apple Corps was hemorrhaging money mainly because the inmates (aka…the band) were running the asylum.

Long time producer George Martin quit the project, originally titled Get Back, in disgust of the group’s behaviour, infighting, lack of focus and discipline.

Drama not withstanding, the sessions did produce some memorable tunes and what would become their last live performance on top of the Apple Corps building on London’s Saville Row.

The track referenced in the title was, in typical Beatle fashion, more optimistically prophetic than originally intended. The group was in a bad place but managed to crawl out of the ditch, put the negativity behind them, and move forward to produce their next effort: Abbey Road, undeniably one of their finest as well as being their swansong. I’m not completely sure I have much of a feeling about 2011, but in retrospect, John’s bridge to Paul’s verse about the “good year” rang somewhat true for 2010.

If the wheels don’t totally fall off in the next few days, the Dow and the S&P will both turn in positive, respectable, low teens returns for the year to go on to build on 2009’s 30%+ returns. Investors, primarily institutional, “pulled their socks up… put their foot down” and bought equities again. Apparently, capitalism wasn’t quite dead despite persistent unemployment, a housing market that has yet to firm, and more fiscal idiocy courtesy of the Washington wizards. Oh yeah, financial mayhem in Euroland, too. All of that and double digits? I’ll take it any day.

So what kind of feeling have we got for next year? Good question. There’s a lot of bullish (no…that’s “BULLISH”) sentiment on the T.V. Individual investors are yanking money out of bond funds like it was a contest. And God forbid you criticise AAPL, or gold, or oil or other hard assets. Prepare to watch the comment posters crash the server. There’s a lot of that which makes me a little cautious.

On the other hand, there’re a couple of things that make one rub the old chin and say “hmmmmm…….” A few weeks ago, the great bond cataclysm was here. Treasuries were beaten to a bloody pulp and rates were set to skyrocket. Well, not exactly. The 10 year is yielding 3.35. At the beginning of the year: 3.84. Let’s round that up to 50 basis points. Sure, the great bond bull is probably a little wheezy and will get progressively wheezier. But is the great day of reckoning, nigh? Let’s tip toe out there and say “not quite yet”. Are bonds a buy? No. But the fact that they’re not quite ready to fall out of bed means rates stay tame and that will always help equities, right?

So what makes sense in 2011? Take a look at Goldman Sachs (GS). Love ’em or hate ’em, (the general public hates ’em although they probably don’t realise how much the firm has, most likely, saved our collective tuchas over the last few years) it’s a great franchise. If you bought at the beginning of 2010 you’ve made no money this year whatsoever. Same goes for the not quite as reviled Morgan Stanley (MS). You’ve run in place or given up a couple of dollars. At the end of the day, you still have a moderately priced, world class name. How about some tech? GOOG the merciless has had more downs than ups but, for the most part, has moved sideways. Are we wild about a $600 stock with a 24 P/E? Traditionally, no. However, GOOG does want to rule the world and they plan to get there whether it’s through your phone, your television, or your driverless car (WTF?)

At best, 2010 could be called a positive mixed bag. I’ve got a feeling 2011 may bear a striking resemblance. Get back, JoJo.

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