But Russ Koesterich, the new Chief Investment Strategist at BlackRock Inc., one of the world's largest fund managers with more than $3 trillion in assets, is relatively bullish on investing prospects for 2013, and especially equities, which more or less have been dead money since 2010.

Koesterich joined Headline this week to have a lively discussion on looking back at 2012 and looking forward to investing ideas in 2013. And, contrary to much of the thinking out there, the Canadian energy sector is one place an investor might want to consider putting their money.

First, the big picture view from Koestrich, who was named Chief Investment Strategist at BlackRock in November. (He did the same job for BlackRock's iShares division for the past few years. And before that, he held similar roles at State Bank Corp. and Barclays Global.) He makes the case for equities despite the fact that many investors don't trust stocks because there is too much volatility. He says that while equities indeed are volatile, the outlook for stocks looks better than for fixed income prices. In addition, Koesterich says that the valuations on stocks are generally much lower than they once were, say, a dozen years ago. Back in 2000, the S&P was trading at a multiple of 33 times earnings. Today, it trades at a multiple of 12 or 13 times. Koesterich also makes the point that bonds are not perhaps as stable as they might appear.

"As coupon rates have fallen, bonds are more rate sensitive, so there is more volatility in a bond portfolio," he says.

So if equities are the place to be, according to Koesterich, which type of equities should you invest in as 2012 ends and a new year begins?

He suggests a "broad international equity allocation," casting a wide net over faster growing emerging markets, for example, or even looking for "positive surprises" in places such as Japan.

"While growth in emerging markets has slowed dramatically since 2010, the growth is still faster than here," he says. "And the advantage is that the valuations are cheaper than in developed economies."

Koesterich is also going on a limb to suggest euro zone financial stocks may be the place to be.

"Europe has turned the corner and the European Central Bank is going to do what it can to keep the euro zone in place," he says, adding that euro zone fiancials are a "very cheap asset class" and most of them are trading well below book value.

"You don't need much of an increase to get a nice return," he says.

Koesterich adds an investor might want to consider "smaller developed" markets such as Australia, Switzerland, Singapore - and Canada.

"These are countries that exited the financial crisis in a better position than the U.S. or Europe," he says.

And when it comes to investing in Canada, the energy market is one that is particularly interesting to Koesterich, even though it is a segment of the market that disappointed in 2012. Much better growth is expected for this sector in 2013, he says, and taking a position in Canadian energy stocks "could provide a hedge for the escalating volatility in the Middle East."

Canadian energy stocks could also benefit from generally higher oil prices in the long-term.

"With the cost of supply rising, as you get increasing demand, oil prices will stay higher as supply is constrained."

Kosterich adds the same argument can be made for investing in metals with "long-term supply gaps."

Copper is one metal hat Koesterich would focus on.

"While we're not running out of copper, the grades are going down, the prices are going up and this creates long-term support for higher prices."

And while China's economy is not growing as fast as it did, that doesn't mean its slowdown is a signal the commodity bull run is over forever.

"As China experiences a consumption-led recovery, housing will be part of that, and housing is a very copper-intensive sector."

But wherever investors put there money, one of the biggest questions out there looming over the markets is the 'fiscal cliff' - which comes in the new year when tax hikes and spending cuts come into effect, unless a new deal on U.S. fiscal policy can be reached. This could have a major impact on the economy.

Koesterich's verdict on what will likely transpire?

"A mini-bargain, one that avoids major tax increases but a fiscal drag nonetheless. And the hope that a much more comprehensive deal will be reached in 2013."

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http://www.bnn.ca/News/2012/12/14/So-where-to-put-your-money-in-2013-.aspx

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