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2012 Market Outlook

2012 Market Outlook. Jon Erickson, CFA Senior Vice President, Research First Trust Advisors LP. U.S. Sector Returns – 2011.

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2012 Market Outlook

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  1. 2012 Market Outlook Jon Erickson, CFA Senior Vice President, Research First Trust Advisors LP

  2. U.S. Sector Returns – 2011 Returns represent the S&P 500 GICS Sectors for the period 12/31/10 through 12/31/11. Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  3. U.S. Sector Returns – YTD 2012 Returns represent the S&P 500 GICS Sectors for the period 12/31/11 through 5/10/12. Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  4. U.S. Style Returns – 2011 Returns for the period 12/31/10 through 12/31/11. Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  5. U.S. Style Returns – YTD 2012 Returns for the period 12/31/11 through 5/10/12. Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  6. Country Returns – 2011 Returns are represented by MSCI Country Indexes for the period 12/31/10 through 12/31/11. Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  7. Country Returns – YTD 2012 Returns are represented by MSCI Country Indexes for the period 12/31/11 through 5/10/12. Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  8. Europe’s Web of Debt France $75B Britain $15B Germany $45B Germany $190B Germany $184B Greece$236B $0.7B $0.8B France $511B $1.3B Britain $188B $6.9B $8.5B Italy $1.5 Trillion $0.1B Ireland $867B $46B $18B France $60B $5.4B Britain $77B $31B $30B $6.7B $0.8B $5.2B $16B Amount owed between countries as of December 31, 2010 in billions of dollars $47B $9.7B Spain $1.1 Trillion $22B Portugal $286B $86B Britain $24B $28B Germany $238B France $45B Britain $114B Germany $47B France $220B Source: New York Times

  9. Debt vs. GDP Source: IMF As of 12/31/2010

  10. Federal Receipts vs. Outlays 12-Month Moving Total Source: Treasury Department. Data from January 2000 through November 2011.

  11. Government Spending as a % of GDP vs. Dow ? Source: OMB, WSJ. Data from January 1965 through February 2012. Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  12. Home Building Must “Boom” to Normalize Housing Starts (Thousands, Annual Rate) Source: Census Bureau. Data from January 2004 through November 2011.

  13. Consumer Obligations Low Versus Income Household Financial Obligations Ratio Recurring Monthly Payments as a Percent of After-Tax Income Source: Federal Reserve Board. Data from First Quarter 1980 through Third Quarter 2011.

  14. S&P 500 Index 1552.50 7/13/2007 1527.46 3/24/2000 1357.99 5/10/2012 815.28 9/30/2002 676.53 3/9/2009 Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  15. S&P 500 Index Theoretical 8% compounded growth Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  16. S&P 500 10 Year Rolling Return Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  17. 10 Year US Treasury vs. Earnings Yield Returns are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  18. Valuation Comparison of S&P 500 Current Compared to 20 Year Average Price/ Book Price/ Cash Flow Price/ Sales 20 Years 20 Years Current 20 Years Current Current Data obtained from the Compustat database. Data as of 2-28-2012. Comparisons are for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

  19. Bond and Stock Inflows Source: ICI, FT Advisors

  20. Certain Considerations These slides were prepared by First Trust Advisors L.P. (FTA) and reflect the current opinion of FTA. It is based on sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. The information does not constitute a solicitation or an offer to buy or sell any security. Investing involves risks, including the risk of loss. An investment in common stocks involves risks such as an economic recession and the possible deterioration of either the financial condition of the issuers of equity securities or the general condition of the stock market. An investment in small-cap companies or mid-cap companies is subject to additional risks as the share prices of small-cap and mid-cap companies are often more volatile than those of larger companies due to various factors, including limited trading volumes, products, financial resources, management inexperience, and less publicly available information. An investment concentrated in common stocks of issuers from a specific industry sector is more risky than a broadly diversified portfolio. An investment in foreign securities is subject to additional risks, such as currency fluctuations, political risk, the lack of adequate financial information, withholding taxes, and exchange control restrictions impacting foreign issuers. Risks associated with investing in foreign securities may be more pronounced in emerging markets, where the securities markets are substantially smaller, less developed, less liquid, less regulated, and more volatile than the U.S. and developed foreign markets. An investment in U.S. Treasury securities involves certain risks including changes in interest rates, economic recession, deterioration of the U.S. Treasury market or investor’s perception thereof, and possible downgrades by credit rating agencies.

  21. Q & A • Questions & Answers • Thank you!

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