This year will likely continue the trends we saw in late 2011, but there are still some stocks worth buying, writes Ron Rowland of All Star Fund Trader.

With 2011 now safely behind us, we can take a look back.

It was a good year for coupons. Retailers enticed consumers with discounts, and investors clamored for a chance to clip bond coupons even at miserably low interest rates. A TV program called Extreme Couponing turned into a hit.

The preference for fixed income was driven by a Eurozone sovereign debt crisis, which dominated headlines for most of the year. The idea that once-safe governments could be either unable or unwilling to stand behind their debts drove capital to supposedly "safe" government bonds elsewhere.

The US was the prime destination. Despite having its own credit rating cut by S&P in August, the US Treasury was still preferred over anything else. Interest rates dropped to record lows. Long-term Treasury benchmarks, including capital gains, posted annual returns close to +30%.

Moreover, it wasn't just government bonds. Both investment-grade and high-yield corporate bond indexes were up on the year.

While at least some private borrowers are still considered creditworthy, investors were less confident in equities. The MSCI All Country World Index dropped 6.9%, including dividends. The ACWI Index was propped up by an S&P 500 near break-even and the Dow Jones Industrial Average gaining more than 5%.

Losses in many other places were severe. Commodities were a mixed bag. Industrial materials were weak in the face of possible worldwide recession, but gold and oil performed well.

They would have done even better if not for the US Dollar's persistent strength. Among major world currencies, only the Japanese yen managed to appreciate against the greenback. The euro—a currency whose very survival is still an open question—dropped against both the dollar and the yen.

Where we will go in 2012 is far from clear at this point. Our best guess is that Europe will return to the headlines. The latest proposals are unlikely to solve anything, and austerity measures will increase the odds of political chaos.

This suggests the flight to safety will continue. US assets are less than attractive in many ways, but they seem to be more attractive than anything else.

The last week of 2011 was among the year's calmest and uneventful. The S&P 500 ended 2011 off just a fraction of a point, closing at 1,257.60 versus 1,257.64 at the end of 2010. While we can't recall a year as close to "unchanged" as that, the months in between were anything but stable.

On a closing basis, the S&P 500 high in 2011 was 1,363.61 and the low was 1,099.23, for a range of 24%. The broad market was calm in comparison to the financial sector's 51% range, as measured by the SPDR Financials Select Sector (XLF).

Our small stock portfolio proved more potent than many fully-committed strategies in 2011, demonstrating the value of staying defensive. We will remain so today, though if this morning's strong action continues we may get more bullish as January unfolds. McDonalds (MCD) remains particularly impressive. Continue to hold MCD along with Apple (AAPL), Perrigo (PRGO), and Walgreens (WAG).

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