Roundtable: Top strategists' moneymaking tips for 2012

— -- The outlook for U.S. stocks next year is not wildly bullish. Nor is it depressingly dreary. The buzzword is "cautiously optimistic," say six top investment strategists and fund managers who took part in USA TODAY's 16th annual Investment Roundtable. The main source of trepidation is Europe. How its debt crisis plays out will largely dictate whether markets thrive or dive. U.S. politics could also move markets as the election nears. The good news? Barring a "shock," a recession is unlikely. What's ahead in 2012?

Q: Is it possible to make money in a world dominated by debt, deficits and doom and gloom?

Kate Warne: Yes. I will give you two reasons why. The first is, if you put money in at the stock market peak in October of 2007, and you owned 65% stocks and 35% fixed income, you actually would have been up 10% at the end of November. All you needed to do is rebalance your portfolio once a year. People have been really nervous. But if you stayed invested in a normal (balanced) portfolio of stocks and bonds, you did fine.

Second, the pessimism today is actually creating opportunities for investors. There are a lot of short-term concerns, a lot of serious risks, but investors really need to keep their eyes on the horizon, because we are also seeing strong fundamentals (such as strong profit growth from Corporate America and better economic data, including better news on the jobs front). And that is what is driving the market longer term. I am cautiously optimistic.

Q: Bob, are you optimistic about 2012?

Bob Doll: Cautiously optimistic. Europe is the main show on the stage. Everything else is a sideshow. And that is probably the case until we get a little more clarity there.

Can you make money? The probabilities go up depending on your entry point. And the entry point now is low expectations and pretty reasonable valuations. (Editor's note: The Standard & Poor's 500 index is trading at roughly 12 times next year's estimated earnings, says S&P Capital IQ, which is below the average P-E, or price-to-earnings ratio, of 15.) Look at October and how strong that was (the S&P 500 rose nearly 11%). We did not get good news; we got less bad news. I think if we get some more of less bad news, it will allow us to make some money in stocks.

Q: Ann, do all the fears make your job more difficult as a stock picker?

Ann Miletti: The volatility makes it difficult, but the fact that expectations are low is the best thing we have going for us. People are afraid, and there is a lack of confidence. But that is when you actually want to put money to work. When there is comfort and euphoria, that is probably when you want to start selling. There is a lot of uncertainty in Europe, as well as domestically with our deficit and upcoming election year. But once we have all of the answers, it will already be priced into the market.

Q: Rich, what's your outlook for next year?

Richard Bernstein: Investors have always been able to make money. People still talk about the lost decade in equities. That is absolutely wrong. The question is: Where did you invest?

If you go back 10 years ago, people were all excited about the U.S. and technology. People thought this was the place you had to invest, and the next 10 years turned out to be completely different. Emerging markets and commodities outperformed.