My Thoughts on This: Many of us in the investment world are wondering, as we always do at the beginning of every year, how this new one is going to unfold. After all, we get paid to help our client’s accounts grow, not shrink.

So we read the tea leaves like everyone else and come to some conclusion that we can express intelligently and then sit around as the year goes by, making adjustments from time to time that we hope will be good for everyone.

This year, there has been a heavy expression of optimism about 2013, especially for the equity markets. Not so much for the bond markets since they’ve been on a roll for years and sooner or later interest rates are going to start upward. But here’s an interesting summary that you might find useful. I did.

January 4, 2013 • Evan Simonoff

Anyone who watched the national debate unfold during this election year could be forgiven for viewing the United States as a place any shrewd investor would avoid at all costs. The dysfunctional behavior of politicians, coupled with the paralysis of business leaders, hardly paints a picture of an environment possessing real economic potential.

Yet a growing chorus of professional investors is increasingly convinced that the U.S. economy may be about to break out of a decade-long malaise, punctuated by five years of recession and anemic growth, and resume a faster expansion. “If you permitted me to lock up money for five or 10 years, I’d overweight the U.S. and emerging markets,” says Bob Doll, chief equity strategist at Nuveen Asset Management.

America is coming out of the worst recession and financial crisis in 80 years in “far better shape than anyone else,” economist Ed Yardeni told attendees at the second annual Fiduciary Gatekeepers Investment Research Manager conference in October. That sentiment was echoed last summer by Ray Dalio, the founder of Bridgewater Associates, the nation’s largest hedge fund. In an interview in Barron’s, Dalio remarked that the United States has executed a masterful job of deleveraging since the financial meltdown.

If all this sounds a little strange to you, it should. In the five years since the financial crisis began, the U.S. government has added more than $1 trillion in debt each year. But watching government debt too closely without looking at corporate and consumer borrowing could be a big mistake when trying to read tea leaves.

Former Merrill Lynch chief investment strategist Richard Bernstein, who today runs his own eponymous advisory firm, remarked in October that total U.S. debt—meaning government, corporate and consumer debt—has declined from its peak of 350% of GDP to 320%. Bernstein admitted he was stunned to discover this. While the decline may be small, the change in trajectory is significant. By his reckoning, total U.S. debt has never fallen at as fast a rate before. Look around the world and the U.S. is, in Bernstein’s words, “the smartest kid in summer school.”

The Big Game-Changer

Still, the biggest game-changer working in America’s economic favor is its declining dependence on foreign energy. For the first time in more than half a century, the U.S. is poised to become a petrostate, and this has far-reaching ramifications. The Vienna-based International Energy Agency predicted in November that by 2020 U.S. oil production would climb to more than 11 million barrels a day, exceeding that of Saudi Arabia, and bringing a decline in U.S. imports to 4 million barrels a day from the current 10 million.

At the same time, the IEA predicts that the U.S. is expected to emerge as a major exporter of natural gas in the next five years and that it could become energy independent by 2035. This is a far cry from the looming peak-oil theory that dominated the conversation among global thought leaders only five years ago. And the U.S. isn’t alone; much of the rest of North and South America suddenly is using new technology to replace energy reserves at the fastest rate in decades.

Source: http://www.fa-mag.com/news/the-smartest-kid-in-summer-school-12931.html