Wild year for local stocks ends in draw

T he stock market ended a volatile 2011 on Friday just about where it started.

The S&P 500, one of the broadest measures of the overall market, was virtually unchanged during 2011, ending the year down a mere 0.04 points below where it began the year.

"It's been kind of Rip Van Winkle year, and if you just looked at where the market started and where it ended you might just say 'Ho hum, I didn't miss anything,'" said Tash Elwyn, a former Chattanoogan who will take over next week as president for Raymond James & Associates. "But the reality is if you were asleep this year, you missed an awful lot."

Amid the overall stagnant average, stock results varied widely.

After rising by double-digit levels in 2010, shares in most of Chattanooga's publicly traded companies fell this year. Three-fourths of Chattanooga's publicly traded companies lost value during 2011, including four that suffered double-digit declines.

Miller Industries, the Ooltewah-based tow truck equipment maker that landed numerous military contracts in the past year, was the best performing local stock in 2011. Shares in Miller Industries rose 13.8 percent.

Despite the lingering housing slump, floorcovering manufacturer Mohawk Industries also enjoyed a gain this year as it picked up market share and continued to pare expenses.

But other companies dependent upon carpet and the shipment of consumer goods, as well as most of Chattanooga's financial institutions, suffered losses in the past year.

The worst performance in 2011 came from First Security Group, which lost nearly three-fourths of its market value and had to do a reverse 1-for-10 stock split to keep its listing on the Nasdaq Exchange.

FSG Bank in December hired a former Ohio banker, Michael Kramer, to help turn around Chattanooga's biggest independent bank. The company's stock has already risen since Kramer's arrival.

The stock price of Unum Corp., Chattanooga's biggest publicly traded company, fell by 11.7 percent in 2011, reflecting investor concerns about most financial companies and the adverse investment environment for insurers with low interest rates and declining real estate values.

"This year was a tale of two markets," said Jim Campbell, co-founder of Campbell Asset Management LLC that manages more than $100 million of investments in Chattanooga. "Pharmaceuticals, consumer staples, utilities and other companies with steady, slow growth in a poor economy -- all did well. But most financial or materials companies had a rough year."

Campbell and other investment advisers expect 2012 to be another year of sluggish economic growth, keeping a lid on robust stock gains.

Patten & Patten, a 35-year-old portfolio management company in Chattanooga, projects inflation and economic growth will remain sluggish but market volatility will be greater than usual.

"Slow economic growth and high unemployment will continue," said Cartter Patten, co-founder of the firm. "Corporate profit margins will remain high. Volatility in global equity and fixed income markets will be above historic levels until the global credit system is fully repaired or completely restructured."

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