Sam Stovall, CFP, Chief Investment Strategist, Standard & Poor’s  Sam Stovall: We have just entered a new calendar year and it is also an election year. I think heading into this year, investors are a little bit unnerved because the third year of our president’s term in office is traditionally the strongest. Up until 2011, it had never fallen in the third year since World War II, and the average price advance was 17%. That all flew out the window in 2011.  Stovall: Yep. The S&P was close to being break even in 2011, which is exactly what happened in 1947. We had a 0.0% change. This time we kicked the field goal. We hit the crossbar, but it bounced back onto the field rather than being a score. That was the first time since World War II that the S&P 500 declined in the third year of a president’s term in office.  Historically you could say that is a little bit of a negative omen. But I think it’s too early to count out the market’s performance in 2012. It’s not like a perennial losing team where on opening day somebody holds up a sign that says, “Wait till next year.”  I think that 2012 could be a good year, but definitely not a great year. I say that because the U.S. economy continues to show improvement. We’ve come to believe that the Chinese economy will engage in a soft landing and not suffer through a hard landing. And while Europe remains the wild card, we think that the IMF and the ECB, as well as the leaders in Europe, are trying to do whatever they can to contain the sovereign debt problem. Should the S&P 500 end up with the 8% earnings growth that we expect in 2012, we think that we could see a very low double-digit advance in the S&P in 2012.
S&P's Sam Stovall says recovery will continue through 2012, setting up a great 2013. Here's how to play it.