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December Outlook and Review December 5th, 2011 By Kim Mailey, CFP

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After a volatile month, global stocks ended November just about where they had started.

	November	Year-to-Date	1 Year	3 Year	5 Year	10 Year
TSX Composite	- 0.4%	- 9.2%	- 5.8%	+9.6%	- 0.9%	+ 5.19%
S&P 500 (C$)	+ 1.9%	+ 1.6%	+ 4.9%	+ 4.6%	- 4.49%	- 3.4%
MSCI (C$)	- 3.0%	- 11.9%	- 7.7%	+ 0.1%	- 8.7%	- 2.1%

A rally in the final week of November was triggered by renewed optimism in a European debt solution and allowed markets to recoup losses from earlier in the month.

U.S. stocks had their biggest three-day rally since 2009, with the S&P 500 Index rising 7.6%. European stocks also surged - Germany's DAX rose 12% in four days buoyed by successful bond auctions in Spain and France, as well as falling borrowing rates in Italy and the announcement of joint action by the world's major central banks.

Six of the world's major central banks announced a joint action on Wednesday to provide cheap U.S. dollar loans to banks in Europe, in order to ease the strain of the debt crisis on global markets. While industry slumped in China and Europe, manufacturing in the U.S. grew at the fastest pace in five months in November. Canada's GDP is growing faster than expected in the third quarter; rising at a 3.5% annualized pace, fueled by record output from the mining and oil and gas sectors and overall export strength.

Consumer debt levels are stabilizing, with the average Canadian's non-mortgage debt declining to $25,594, marking the third quarterly decline following 26 straight increases. America's biggest shopping weekend was a hit, with sales 6.6% higher than last year, making it the best Black Friday since 2007. U.S. consumer confidence surged the most in eight years - November posted the biggest monthly gain since April 2003, according to the Conference Board. Ratings agency Fitch warned the U.S. of a downgrade to the country's AAA rating unless it comes up with a "credible plan" by 2013 to tackle its ballooning budget deficit. The 2013 deadline leaves the job in the hands of the next administration, which will be elected in late 2012.

A quick look at the chart below tracking the leading economic indicators paints a picture of hope.

Let me be clear, there are still lots of significant hurdles to overcome, but I do remain confident that the Euro crisis will ultimately be resolved. Corporate cash levels are now at a 60 year high. As consumer confidence increases their debt levels decrease, corporations will spend some of their war chests of cash to expand plant and equipment and hire new employees.

Volatility will be with us for some time to come, but if you have cash on the sidelines that you have been hesitant to commit to longer-term opportunities, there are many attractive targets for us to discuss.

Summary:

For investors, the good news is markets will recover. The best investors will stay focused on long-term objectives and be opportunistic in their outlook. Having the correct asset allocation will ensure money that you need in the short term is available to you when needed with no market timing risk, money that is needed in the next three to five years is set aside in laddered guaranteed investments, and the only money that is exposed to the multitude of opportunities that I believe the stock market currently offers is the money that is not expected to be needed for the next three to five years.