Below is the full 2012 Bespoke Roundtable Q&A with Josh Brown of The Reformed Broker.


The answers provided are solely the opinions of Joshua Brown and not to be construed as the opinions of Fusion Analytics. These opinions should also not be interpreted as research, advice or an invitation to buy or sell any securities.


1) Looking back on 2011, what were your best and worst calls?


I think my best call was to overweight defensive, dividend paying stuff this spring and stick with it for the year.  My worst trades were getting excited about gold and silver at what turned out to be a top, fortunately I did not stick around long in those trades but in hindsight it looks idiotic of me.


2) What surprised you the most about financial markets in 2011?


Treasury strength has been unbelievable, especially after they were downgraded by S&P, one of those delicious ironies that few could have foreseen.


3) The S&P 500 hit its bull market highs in April 2011.  Which will happen first?  Will we first take out the April highs or have we entered a new bear market (a decline of 20% from the highs)?


I think the range is the range until something major changes, but I am not sure what the catalyst might be.  If I were a day or swing trader, I would be fading breakouts and breakdowns until the cows came home.


4) Depending on your answer to question 3, how long do you expect the bull or bear to last? 


We believe the market is in the same secular bear market that began in March of 2000 and that historically speaking there could be at least another 4 to 6 years before "the next 1982."  We are investing accordingly.


5) How should an investor with average risk tolerance be positioned for the year ahead?


Light and defensive.  If we are really heading into a new bull market there will be plenty of time to buy.


6) How do you see the European sovereign debt crisis playing out in 2012?


Less surprise with every headline, investors will begin to take the horrendous condition of these nations and banks in stride. 


7) How bullish or bearish are you on the following markets: The US, Europe, Developed Asia, China, Emerging Markets?


I am most potentially bullish and fearful of emerging markets.  A lot is hanging on the Chinese being able to orchestrate a soft landing.  If they do, emerging markets will be a great place to be in 2012, but if they miss the runway, all bets are off.


8) What do you believe is the contrarian call on equities right now?


There is zero consensus and so everyone thinks they are the contrarian now.  It is an amazing time in the stock market.


9) How confident are you that US companies can live up to current consensus earnings expectations?


Estimates seem high.  I am not optimistic.


10) Are US stocks cheap right now based on the valuation methods you rely on most?  Will multiples expand or contract in 2012?   


Stocks are historically cheap in the US, but they have been cheap for a long time.  The discounting is coming from systemic uncertainty and the frustratingly slow pace of GDP growth.  It is hard to see multiple expansion coming when interest rates are already at their lowest levels possible, government spending is guaranteed to shrink (one quarter of GDP) and corporate profit margins are already at absurdly high (some would say unsustainable) peak levels.


11) Describe some of your favorite market indicators and what they are signaling for stocks in 2012?


We follow credit spreads, equity risk premiums, leading economic indicators, money flow, momentum, valuations and technicals.  It is a fucking mess, nothing confirms anything else. 


12) What are your favorite and least favorite sectors for the year ahead? 


I am starting to get very interested in valuations for places like Brazil, but it is a bit early.  The energy infrastructure story is also interesting, from pipelines to transport.  The trade has gotten crowded as many of these companies pay high yields, but I think there is still room there. 


13) What is your outlook for Financials?


I have no interest in these stocks until they are either trading 6 times earnings or paying 3 percent yields.  Until then, I do not even look at them.  I do like certain nonbank financials like Visa, Mastercard and Met Life though.


14) What is in store for the US economy in 2012?


More of the same: grindingly slow growth with lumpy progress made here and there.  Obama will lose this November as unemployment will remain too high for him to win.


15) Economic indicators as a whole came in better than expected in the fourth quarter.  Do you expect this trend to continue in the first part of 2012?


The most frustrating thing is how lumpy this data has been.  We get alternatingly good and bad readings and the market has no true trend to react to.  More of the same on the way, I fear.


16) What is your take on the employment picture in the US?  Will we see the unemployment rate get below 8% by Election Day?


Unemployment rate should ameliorate as more boomers leave the workforce and retire.


17) Are Ben Bernanke and the Fed helping or hurting the recovery?


There is little the Fed can do at this point.  It is a balance sheet recession and the only true fix is spelled T.I.M.E.


18) The Fed's Zero Interest Rate Policy (ZIRP) has really hurt savers and anyone out there looking for yield.  Where should investors go to find yield right now?


We like investment grade, intermediate term bonds (they have done very well this year) and some MLPs.  High dividend equity ETFs are also attractive.


19) The housing market continues to struggle.  Are we close to making another bottom in residential real estate?  Are there specific areas of the country that you are more bullish or bearish on?


We are headed back toward longterm trend, we probably correct the rest of the way through time rather than price.  A dull, slow process.


20) Will the Dollar (US Dollar Index) be up or down in 2012 and why?  Are there any other currencies that you have a strong opinion on?  How much trouble is the Euro in?


The dollar is going to formidable in 2012.  Especially versus the EUR.


21) Gold has underperformed stocks in recent months.  Will this continue in 2012?  Will gold see gains in 2012?


Not sure, does gold want to act as a safe haven or another risk asset next year?  That is the question.


22) The ratio of platinum to gold is currently at its lowest level ever (platinum is actually cheaper than gold right now).  Is platinum a good buy relative to gold?


Silver is for crackheads.


23) Where is the price of oil headed?  How about the spread between Brent Crude and West Texas?


Oil is a lot like Courtney Love: It is filthy and unlikely to get past the 90s.


24) What are your predictions for the 2012 election?  Which party will win the Presidency, the House and the Senate?  Who will become the GOP nominee, and what are the chances that nominee will beat President Obama?


I would guess Mitt Romney is the next President.


25) How will the elections impact the stock market in 2012 and beyond?


Very little.


26) Will the US Supreme Court rule that ObamaCare is unconstitutional?


No idea.


27) How do you see the US tackling its debt problems in the years ahead?


Mixture of pushing them out further and spending less.


28) What are the biggest threats to the global financial system right now, and are they avoidable?


Shadow banking is still very much a threat.  Derivative bets with insufficient oversight are all over the place.  We will see someone else blow up soon enough.


29) Hedge funds as a whole underperformed the S&P 500 in 2011.  How will hedge funds perform in 2012?  What is your take on the hedge fund model in general?


Like mutual funds, 90 percent of hedge funds are pointless, expensive me too vehicles.  There are too many of them all in the same trades.  People are paying too much money to underperform the market.


30) Will the following be up or down (positive or negative) in 2012?  Where noted, what are your 2012 year-end price targets?  The price targets are meant to obtain a wisdom of crowds consensus number from all Roundtable participants.


-S&P 500 (up or down and year-end price target) Slightly Up, 1300 to 1325 perhaps

-Long-Term US Treasuries (up or down) Down

-Corporate Bonds (up or down) Flat

-Junk Bonds (up or down) Down

-Gold (up or down and year-end price target) Down, $1500

-Oil (up or down and year-end price target) Flattish, $90

-Dollar (up or down) Higher

-Average US Home Prices (up or down) Flattish

-China's stock market (up or down) Wild Card, Either Up or Down Big


31) Please provide readers with any stocks that you really like right now for 2012 and beyond.


I like V and ARCO


32) Where is Apple headed as both a company and a stock?  How about Google?


Apple stock will struggle this year, but the company will do just fine.  Google breaking above 630 would get people very excited about the company again as a growth stock.  But not until.


33) Facebook is expected to IPO in 2012.  Would you be a buyer or seller of the stock at its opening price on the day it goes public?  How long would you hold it?


I would sell it at any price, walled gardens prove to be terrible investments in the end.  This thing has done all its hyper growth as a private investment.


34) Which technologies are you currently the most bullish or bearish on?  Are any of them game changers like the PC or the Internet were?


Cloud still major growth.  Mobile video as well.


35) What are the website, magazines, newspapers, books, apps that you use the most and would recommend others to use?


Barrons, Bloomberg Businessweek are the only mags I subscribe to.  I recommend my own site, as I am frequently pointing people to other sites for a well rounded take on the daily news. 

36) What are your favorite Twitter feeds?

Best Twitter feeds are @TheStalwart @Moorehn @counterparties @robdelaney

37) Do you have any other advice that you would like to share with readers as we enter 2012?

Time flies.  Cut the amount of financial stuff you read in half next year.  It will not matter in the end, nobody ever foresees the big stuff.