The major US indices are off to a positive start in 2012, after a mixed 2011: The closely-watched Dow Jones Industrial Average ended 5.5 percent higher; Standard & Poor’s 500 Stock Index flat; the Nasdaqdown 3.2 percent.
Hugh Johnson, chairman of Johnson Illington Advisors, expects the stock market to stay “trendless and volatile with a slight upward tilt” in 2012.
“If we do go up, it’s probably not going to be by much,” he says.
With the European Union’s sovereign debt woes and geopolitical risk in the Middle East and Asia, stocks might manage a gain of 5 percent for the year plus an additional 2 percent in dividends for a total return of 7 percent, he says. “I give that estimate with my fingers crossed.”
For that kind of market, investors should choose “a somewhat boring portfolio,” he adds. “You need to own things that work well in a bull market and things that work well in a bear market – or at least go down less.”
He advises overweighting in bull-market sectors such as consumer cyclical and industrial stocks as well as bear-market sectors such as consumer staples and healthcare.Page 2 of 5 | Prev Page | Next Page