The fiscal cliff is drawing closer in the US as the recession in
Europe rolls on, but the major asset classes overall posted a modest
gain for November. The Global Market Index (GMI) earned 0.8% last month
and is up 9.8% on the year. The big winner in November: foreign stocks
in developed markets as tracked by MSCI EAFE, which climbed 2.4% last
month. But EAFE's fixed-income counterpart (Citigroup World Government
Bond Index ex-US) was on the leading edge of losses, closely followed by
REITS—each posting 0.4% declines. Otherwise, the month-to-date numbers
were red-ink free.
For the year so far, the performance ledger has remained comfortably
in the black for all the major asset classes. Cash, of course, continues
to go nowhere fast, but risky assets have delivered varying shades of
gain so far this year. By some accounts, it's an odd sight—broadly
distributed profits for all the primary markets amid so much anxiety
over what happens next for the big picture.
"Washington brinkmanship and a delay in reaching an agreement on the 'fiscal cliff' are likely to rattle markets," says
John Praveen, chief investment strategist at Prudential International
Investments Advisers. "These risks and uncertainties are likely to keep
markets volatile."
The volatility so far in 2012 hasn't been a problem. But if there's a
price to pay for so much uncertainty, will December become the weak
link in an otherwise profitable year?