Taking stock (and stocks)

I was looking over my posts from the past year and I'm pleased that my prediction record wasn't so bad. Unfortunately, however, it's looking like my worst call will end up being my most recent one - that the fiscal cliff would be averted. I still think it'll play out in a way favorable to Dem policy priorities, but after Boehner's debacle Thursday night, I'm not so confident a deal will be reached before 12/31, if only because it appears there's too many GOP Representatives who can't vote for anything that has the appearance of a tax increase. To that, I would note that timing is everything: while Obama's offer is a big tax hike relative to current policy, as of Jan. 1 a vote in its favor would actually be a vote to cut taxes. As b.s. as that sounds, the distinction may be important to Republican representatives who have gerrymandered themselves into ideological straitjackets.

The other prediction I wanted to mention was my argument this time last year for US stocks as a good long term investment. The market is up double digits since then, but what I really wanted to point out is that my most important argument, that relative income yields indicated that stocks were cheaper than bonds, is still true. So if the fiscal cliff noise causes some big market gyrations, long term investors could do worse than take advantage of the buying opportunity.

Finally, while it's useful to take stock of the past year, it's also worthwhile to zoom out further, because in so doing you may appreciate that despite the wall of worry our economy is climbing and the insanity of our political culture, and despite the occasional heartbreaking tragedy, the basic measures of humanity's progress are moving in the right direction and at a decent clip, too:

1. People are living longer than ever - even in North Korea!

2. The number of people living in extreme poverty has been cut in half since 1990 - the upside of a globalized economy?

3. The world is a far less violent place than it pretty much ever has been. 'nuff said!

I'm not saying we don't have big problems, just that while there's been a lot to fret over these past few years, in the grand scheme of things there's good cause for optimism.