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2013 outlook: Love risk by managing it

Overview

After a contentious political battle in the U.S., investors may be hoping for a little reprieve from politics. Sadly, we don't think 2013 will give investors that type of break. In February, there will be an election in Italy. In June, there will be an election in Iran. In September or October, there will be an election in Germany. Each of these events could be preceded by market volatility. Even in the U.S., the fiscal cliff debate didn't set the stage for a politically quiet two years as we wait for the 2014 mid-term elections. With uncertainty comes risk, and we believe risk management should be front and center for investors in 2013. Sitting in cash is costly in terms of lost opportunities and the corrosive effects of inflation—even if inflation stays low. Trying to jump on and off the risk-on/risk-off train could be a dangerous game as well. Staying globally diversified and adapting to emerging opportunities and threats may not let you love risk, but at least it might help you stomach it.

The views expressed are as of 12-18-12 and are those of Chief Portfolio Strategist Brian Jacobsen; Chief Equity Strategist John Manley; Chief Fixed-Income Strategist James Kochan; and Wells Fargo Funds Management, LLC. The information and statistics in this report have been obtained from sources we believe to be reliable but are not guaranteed by us to be accurate or complete. Any and all earnings, projections, and estimates assume certain conditions and industry developments, which are subject to change. The opinions stated are those of the authors and are not intended to be used as investment advice. The views and any forward-looking statements are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any mutual fund. Wells Fargo Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements.

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