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By now, most of the confetti in Times Square has been cleaned up or blown away and most people have already fallen behind on their New Years’ Resolutions. In addition, perhaps the 2011 slate has been wiped clean. Of the first two suggestions, I am confident; of the last one, not so much. We enter or should I say stagger into 2012 having experienced a gut wrenching 2011. Most of us didn’t expect the predictability of a slow moving carousel, but we didn’t stand in line for Mission to Mars either. In the play, Joseph and the Technicolor Dreamcoat, Joseph is gone so long, his brothers don’t recognize him. So it is with normal advancing markets. They have been away for so long, that we might not recognize them when we see them again. Not to worry, I don’t think we will see them, at least early on in 2012, although, markets have gotten out of the gate in good form, if for no known reason. Perhaps, patience will be rewarded in the 2nd half of the year. Let’s look in detail.

Here are my sophisticated predictions for 2012:

We will have a presidential election;

Congress will not be able to pass anything meaningful;

Europe will continue to live on the edge of the Debt Abyss;

Primary Season is now underway with no clear Republican front-runner;

Housing Recovery and Employment will continue to be elusive, if not teasingly optimistic.

Those are just some “predictions” of which we can be sure. The big question is how do folks approach this year, given these and other unmentioned issues?

I firmly believe that all these headwinds will cause global equity markets to suffer during the first part of the year. Not only is the European situation not fixed, there is no agreement on how or who to fix it. I believe that Christmas sales will be unexciting, with a few exceptions. Now that consumers spent for Christmas, they will hunker down and worry about paying off the bills. For those of us with January birthdays, that’s not good news.

Winter weather seems finally to be making an appearance and with it the high cost of keeping warm will also reappear. January and early February are also notoriously slow travel times and you will hear from the airlines how tough it is, but fares will keep going up. Deals will be out there, though. In addition, more fees are sure to make it on to those “low” fares, ultimately making it more expensive to travel.

Many American based companies are not doing that poorly. The problem is that the rest of the world is now slowing and how much of an impact that has on these corporate profits remains to be seen. Companies have gotten quite adept at cutting expenses (people) when the going gets tough. As long as this is the pattern, and I believe it will be, unemployment will not come down in a meaningful way (yet, December’s report stated we were at 8.5%). By the way, look for the unemployment rate to bump up as the seasonal workers are once again, unemployed. Some companies are hiring, but very carefully. They wonder about future tax and health policies which will and have come out of Washington. There are even rumblings that the Supreme Court is saying it may not be able to hear the case against ObamaCare until 2015; talk about long term uncertainty which will be a drag on the economy.

However, as we move through January, many experts, and I, are expecting a modest recovery to continue in certain sectors. If this is combined with a bottoming out of the housing market prior to interest rates rising, things could move along slowly, but surely.

Europe remains a large headache. In fact, as if things couldn’t get any weirder, just recently S&P downgraded the Euro Zone Rescue Fund. So, we now have rating agencies rating piles of money!! Whereas the gravity of the situation can’t be overstated, I wonder if our own personal retirement plans will be subject to downgrade if the S&P gets bored.

If Europe cannot solve its’ financial challenges by at least putting forth a workable plan, the world’s economies will suffer. Just how much remains to be seen. Don’t look for any real solutions to be worked out until summer or even later. It certainly has been serious to watch this European financial drama play out, but it will probably get more serious before there is any headline relief. In any event, I firmly believe that all Americans should be watching this play out as many of our European brethren have very high pension, health care and “cradle to grave” financial promises to keep and the fact is that they just can’t do it. Given our current national debt and the promises Washington is starting to make to our citizens, we run the risk of going down the same road in less than a generation.

So, as we witness 2012 play out, excitement will not be in short supply. It is important to establish and maintain investment objectives suitable to your situation. In this manner, if the markets surprise to the upside, you will participate if you are invested in equities. If the markets surprise greatly to the downside, portfolios are built to sustain losses and move forward during market recoveries. So, leave the planning and investing to me and go out and enjoy 2012.