As I’ve said to many clients, the first item on any financial planner’s job description should probably be something like:”can accurately foresee the future, allowing clients to make money in all market conditions and be perfectly insured against all adverse events”. The investment world has a long, if not particularly distinguished history of people attempting to do just that, especially regarding market action. Sometimes the predictions are offered for the general good, sometimes specifically for clients or subscribers and sometimes basically to sell books.

Over the twenty-plus years I’ve been professionally involved in investing, I’ve noticed that one of the most common approaches to making predictions is to suggest that we’ll continue to get more of what we’ve recently experienced. In 1999, Harry Dent wrote a bestselling book called The Roaring 2000s, in which he predicted the continued upward movement of the stock markets, assuming tech stocks would continue to increase in value as they had through the late 90′s. He had an MBA from Harvard and used lots of charts and graphs to make his point. He appeared on various talk shows, sold a lot of books and even advised a mutual fund into which people invested over a billion dollars. The NASDAQ index was about 4100 when he predicted it would be somewhere between 13,000 and 20,000 by 2010. In fact, the decade has been called “lost” by many investment commentators with the NASDAQ finishing at 2650.

Perhaps commentators like Mr. Dent tend to predict “more of the same” because people find that approach logical, thus easy to accept. My research suggests that markets and rates tend to move in cycles instead, so I spend most of my time looking for signs of an impending change in direction. That said, I am no more capable of predicting markets than was Mr. Dent. But, predictions are expected of planners as the year unfolds, so let me offer some thoughts about what the rest of 2012 might bring.

An increase in First Class postage has already been announced, meaning a personal letter will cost another penny to mail. We have a supply of one-cent stamps here at the office for anyone who failed to lay in a stock of forever stamps and needs a few to round out their supply.

This being an election year, I’ve heard several suggestions that Congress isn’t planning to do much since it could all be undone next year. Without commenting on that approach, I think several items will have to be dealt with, including preferential treatment of capital gains. Right now, the thoughtful folks who write the Kiplinger Tax Letter seem to think the current top rate of 15% will be extended past the end of this year but nothing’s certain, so consider taking long-term gains this year. Investors who must take Required Minimum Distributions from their IRAs have been allowed to make a direct gift to a charity in several of the past years and the Kiplinger editors believe that option will be allowed again this year.

Presidential candidates seem to run on the economy, either taking responsibility for its success or promising to fix it. It’s entirely too early to conclude that ours has recovered but employment figures are improving and the inventory of homes for sale appears to be declining. However, there are still lots of foreclosures to be processed as the robo-signing issue is resolved and documents start flowing again. We believe this is likely to be another good year for stock markets but we continue to hedge our clients’ portfolios against other outcomes.

Except for California, where local laws have caused oil production to fall by a third over the past 20 years, I’d say $6.00 per gallon gasoline is not going to be a widespread problem. Capitalism has exhibited a remarkable ability to heal itself, as higher oil prices tend to bring additional capacity into service. More specifically, the recently announced slowing of China’s rate of economic growth will free millions of barrels of oil for use by the rest of the world.

If I might, I’d like to return to Mr. Dent for a moment as I conclude my thoughts. His mutual fund eventually closed and its remaining assets combined with another AIM fund but he hasn’t give up on making forecasts. He predicted another bull market in his 2006 book The Next Great Bubble Boomjust ahead of the market’s 2008 crash. His 2009 book, The Great Depression Ahead, was published just in time for the recovery which seems to be gaining traction.

Even as I make a few very general predictions, I know that I don’t have a secret window into the future. I’ve drawn today’s title from a comment about prediction-making that CNN correspondent Jeff Greenfield made on Jim Lehrer’s Online NewsHour: “It’s the least intellectually taxing question that somebody can ask or the least intellectually taxing answer somebody can give, and one of the least challenging discussions for an audience. You’re not actually talking about history, culture, facts. You’re talking about what one of my law school professors used to call breezy speculation, or the initials thereof.”