We're in the midst of the holiday season, but there's something about reflecting on the financial markets in 2012 that makes me want to say "bah humbug." To me, the year was lots of talk – Spain, Facebook, BCE, fiscal cliff, Nexen/CNOOC, Mark Carney, RIM and the NHL strike – and little action. But despite being personally underwhelmed, there were some important trends that changed direction in 2012.
Starting with the most important stuff, in my favourite sports there was a passing of the torch. In golf, the veterans (Phil, Tiger, and Furyk) ceded the crown to Rory and a herd of young bucks. The old guys just didn't have it on the important Sundays. In basketball, the rock was passed from one unlikable multimillionaire (Kobe) to another (LeBron).
Speaking of unlikable, 2012 will go down as the year that Apple and Google vied to take the "Evil Empire" mantle away from Microsoft. Some post-Jobs slip-ups (iMaps and the new iTunes), Google's moves to constrain user choice and a general arrogance is starting to make both firms' disciples a little uneasy.
Americans started the year worrying about where their next barrel of oil was coming from and finished feeling confident they didn't need the Middle East any more, let alone Canada. Indeed, the prospect of U.S. self-sufficiency woke Canadians up to the fact that the delivery system for our abundant energy resource is seriously deficient – our pipelines ship oil and gas to where it's no longer needed.
In 2012, we saw a trend reversal in residential real estate on both sides of the border. For the first time in five years, U.S. housing activity turned up and became a positive economic force. In our market, the change was less definitive, but we started to see weaker volumes and lower prices.
On the good news front, 2012 was a seminal year for the wealth management industry with regard to fee and performance disclosure. No, the abysmal state of client reporting didn't improve, but the Ontario Securities Commission threw down the gauntlet. Within two years, dealers will be required to tell their clients how much they paid and how well they did. The OSC made it clear that no amount of industry whining would derail this "radical" concept.
And as the year comes to an end, I wonder whether Mr. Carney identified the biggest trend change of all by switching teams – going from high-flying, can't-get-any-better Canada to down-in-the-dumps, it's-all-upside-from-here Britain.
Expecting and hoping
For 2013, the changes I'm looking for may be more hope than reality. Nonetheless, I do expect that NHL owners will finally realize the league has been on strike for more than 10 per cent of Gary Bettman's tenure. After the season starts on the May long weekend, they'll push him out.
On the music front, I'm hoping 2013 will be the year that aging rock bands cede the arena stages to younger artists who are creating fresh, original music. In Vancouver this fall, we had three geriatric groups come through in 10 days. It's time the baby boomers got inspired to refresh their playlists, perhaps with some talented Canadian artists like Arcade Fire, Metric, Serena Ryder, The New Pornographers, Tegan and Sara, and the Wainwright clan.
There are lots of interesting things going on in social media, but like tech stocks in 1999, it feels overhyped. In 2013, more and more companies may decide they don't need to be a player on Twitter, Facebook and LinkedIn.
Oh yes, investments. In the world of exchange-traded funds, more growth and a steady flow of new funds will continue, but a new trend will emerge – fund closings. This year a meaningful number of ETFs disappeared in Canada (14) and the U.S. (95), but there's still a glut of illiquid, uneconomic funds. In 2013, I'm expecting anything and everything from the stock market. I'm absolutely certain we could have a good, bad or indifferent year. I'd like to make a more definitive call on interest rates, but won't. Whenever I write about the risk factors related to higher rates, I'm firmly rebuffed and told rates aren't going up any time soon. Although I've been looking in both directions for important change, good and bad, there's one trend that is intractable. We're blessed to live and invest where we do.
Tom Bradley is president of Steadyhand Investment Funds. He can be reached at firstname.lastname@example.org