Investments

(Community Matters) Have spent a fair amount of time this week reviewing investments performance and imagining the outlook for 2012. Lunch with my friend Eric Price (Price Wealth Management) yesterday where we discussed 2011 relative to 2008 and then more normal years of market performance. Emails yesterday with another investment-smart friend who told me to buy more Apple stock last fall – of course I didn’t but he told me yesterday I still should – and I will.

2011 was a very strange year. The risk of Europe unraveling threatened everyone and everything.

At dinner last fall, Warren Buffett said he thought US banks had contained their exposure to European risk and that the US wouldn’t suffer as horribly as it did in 2008 if the Euro failed or the European banks suffered sovereign defaults, but Pres Obama’s former senior economic adviser was at the same dinner and afterwards over drinks took exception to Mr Buffett’s optimism.  Germany & France are shoring up defenses for European banks (but is this just timing?); nevertheless, a European recession seems unavoidable given austerity measures. Hoping the new World Bank’s fund prevents the spread long enough for general economic recovery.  What’s the risk of Asian and other emerging markets slowdown?

Hard to navigate the conservatism of passive vs active investment philosophies. It certainly depends on investment objectives – mine: capital preservation & income for foundations, preservation and growth for mid & middle aged individuals, growth for youth. I’m definitely a fundamentalist more inclined to active (not trading but biases based on macro forecasts). I do note that passive money managers had a better year last year than most active managers and that those who bought 10-year treasuries beat us all (except for those who bought more Apple!)