Market Update 12.26.10

Going into 2011, how do we see the markets behaving. The BFIA model signals that the investment for the year is select emerging markets with small but sufficient allocation to REITs, Energy, and Gold. Some of those select emerging markets include south africa, mexico, malaysia, korea, and Russia. We also are taking a look at some developed markets including Canada and Japan. BFIA model sees the Japan market as under valued, however, there are no signals as for as the timing to when the Japanese market will appreciate greatly.

Our prediction for the US market is based on the following reasoning. The agent-based model signals that the US market will behave similar to the US market in 2005. Based on these signals we see an appreciation of the S&P 500 of around 9%. The US market is still under valued based on our model but there is not much room until it becomes over valued.