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8B Daily News – Tuesday, January 3, 2012 How investors fared: A 'pretty good year' LOS ANGELES (MCT) — When it comes to stocks, the U.S. is unexpectedly sit- ting on top of the world. Stock markets from Berlin to Shanghai to Sao Paulo ended 2011 with dou- ble-digit losses caused by the European debt crisis and fears of slowing economic growth in China. That was a blow to investors who have been counseled in recent years to broaden their port- folios to supposedly faster- growing venues overseas. Even in a year when America's own credit rating was slashed, the nation's biggest stock indexes some- how sidestepped the global rout. The Dow Jones indus- trial average rose 5.5 per- cent and the Standard & Poor's 500 index broke even. The rebound left sea- soned investors pleasantly surprised. "It feels like it's just been horrifically bad, like we've gone through another crisis and like the market must be off 30 percent," said Jim Paulsen, chief investment strategist of Wells Capital Management in Minneapo- lis. "But it's turned out to be a pretty good year." U.S. stocks benefited from strong corporate earn- ings and investors' desire to huddle into the perceived safety of larger companies. The market also was boost- ed in the last month by data indicating that the domestic economy is holding up in the face of Europe's troubles and may be gaining traction going into the new year. When 2011 year-end statements arrive in the mail next month, many individ- ual investors may be sur- prised to find that their port- folios held up better than they expected. That's what Paul McGhee has been telling his friends and family. An avid investor who works as a computer programmer at ESPN in Connecticut, he's heard lots of griping from people about their supposed investment losses in 2011. But when he examines their accounts he finds they haven't lost money. "People tell me their portfolios did terribly and I'll pick it apart for them and I'll find they did OK, up 2 percent or 3 percent," McGhee said. "People are discouraged about investing and their investments when, in fact, this was an OK year in the equity markets." Investment performance depends largely on where people stashed their money. Investors who plunked big portions of their portfo- lios in European, Asian or emerging market bets undoubtedly are hurting. European and other interna- tional stock markets were pummeled by fear that the Are you paying too much for life insurance? 5 3 0 - 2 3 3 - 0 3 3 4 Christina M. 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Utility stocks, histori- cally an investor refuge in turbulent markets, soared 15 percent while financial shares skidded 18 percent. Bank of America shares, the Dow's worst-performing stock, tanked nearly 60 per- cent. Losses were tempered by the solid showing of U.S. large stocks, bonds and gold. The average intermedi- ate-term bond fund rose 5.7 percent, according to Morn- ingstar, as moves by the Federal Reserve to spur economic growth pushed down long-term interest rates. Gold had a record march higher this year, fin- ishing 2011 up 10 percent. Yields on Treasury bonds fell sharply as investors rushed into U.S. government debt amid the world's financial uncertain- ty. U.S. bonds were viewed as far safer than most of their European counterparts as the continent struggled with its debt crisis. Investors' overall returns also were boosted by things such as dividend payouts and employer matches on 401(k) retirement plans. 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"For all the dramatic headlines and the volatility and the crazy market moves, there will be a col- lective sigh of relief as (investors) see that at the end of the year they're large- ly unharmed," said Don Montanaro, chief executive of online broker TradeKing. Many investors found it hard to stay in the market given the extreme volatility that caused prices to whip- saw back and forth late in the year. Consider this for volatility: The Dow rose or fell more than 100 points on 104 trading days this year. And investors fled. Through November, skittish investors yanked more than $100 billion out of stock funds in 2011. As they were driving to a University of Michigan football game during the market sell-off in Septem- ber, a friend told Rick Mas- such that the fluctuations were wreaking havoc with his emotions. "He said, 'I can't deal with this. I've got to get out,' " said Massuch, 53, a con- struction company owner from New Hudson, Mich. Massuch and others who stayed in the market were rewarded as share prices rebounded in the final two weeks of December. "It was a lot better year in the stock market than the volatility would have indi- cated," said Joe Magyer, senior analyst at the Motley Fool investment website. Stock prices began the year by climbing steadily through April as enthusi- asm built that the economy was turning up. But the market tanked over the summer when Standard & Poor's downgraded the U.S. credit rating, unnerved by the internecine political gridlock in Washington. The Dow fell almost 17 percent from its late-April peak to its early-October low. It has risen almost 15 percent since then. Many investment pros are cautious as they look toward 2012. They think earnings will remain strong, with cumula- tive profits for S&P 500 companies projected to rise 10.4 percent in 2012 after an expected 12.6 percent advance this year, according to FactSet Research Sys- tems. But investment pros are bracing for continued volatility as prices are likely to sway in tandem with day- to-day sentiment about the European crisis. "It's probably going to be an OK year — but then when you throw in what's going to happen in Europe, that's the big 'I don't know,'" said Sam Stovall, chief investment strategist at Standard & Poor's Corp. gibbsautobodydsl@chiconet.com 780 EAST AVE. (behind Food Maxx) Since 1950 530-527-2649 WE ACCEPT ALL INSURANCE COMPANIES Voted BEST in Tehama County '06, '07, '08, '09 & '10 We understand you have a choice, thank you for choosing us!