Listen! Do you hear that? Animal spirits are creeping back into the market. That’s my encapsulation of the 2012 prediction of the Metropolitan Grill‘s “Guess the Dow” panel of stockbrokers, analysts, and portfolio managers. Each year at this time, they assemble at the Met, tear into an iceberg lettuce salad and Wagyu steak, and try to answer the question, Whither the Dow?, while being grilled themselves by the Met’s genial owner Ron Cohn, who I believe to be Seattle’s Republican voter. (He claims his last youthful indiscretion was McGovern, but fairmindedly admitted that Jay Inslee had the best jump shot of the gubernatorial candidates.)

There are no experts in predicting the future, of course, but a good way to get a balanced view of the here and now out of people is to ask them about six months or a year from now, which tends to defeat the tendency of momentary worries to overshadow all else. On that basis, things are looking up: The group’s averaged guess for the Dow on December 31, 2012 was 13,482. The 2011 winner was Smead Capital‘s outspoken Bill Smead, who was also the overall winner. He called Dow 12,000 and it closed at 12,217. (Get into Cabela’s, he says.) In a victory for quants, the “civilian” winner (dine at the Met and you can enter to win) was Aaron Haskell, who said his 12,201 guess was based on calculus, not stock market smarts.

This year’s featured speaker, CEO of Washington Federal, Roy Whitehead, gave a textbook illustration of pessimism’s fear to tread. With investors soured on the whole financial sector, Washington Federal’s holding company stock (WSFL) is trading below its tangible book value. That can’t last. At some point, investors will have to agree to have money thrust into their hands, even if it’s from a bank. (Literally. WaFed is paying eight-cents-per-share dividends.)

Are there still storm clouds out there? Yes, agreed the panel, Eurozone impacts, Chinese recession. But, as rain falls on the just and unjust alike, then the U.S. is still a better place to get soaked than many. The question is, Are you positioned for a recovery, however slight? Green shoots will show first in the transportation and housing sectors, more than one panelist argued, and there are early-bird deals to be had. Locally, PACCAR‘s name came up frequently, but big changes are on the national horizon. As Modern Materials Handling will tell you, the 2014 opening of an expanded Panama Canal brings pain for West Coast ports:

Goods currently arriving on the West Coast from Asian sources will likely be faster and cheaper to instead ship through the expanded canal to East and Gulf Coast. In fact many of those ports have already undertaken initiatives to deepen harbors and expand cargo-handling facilities.

Go East(ern rail), young man, suggested RBC‘s Eric Brewe. Others had just one word for you: Aluminum. Zinc. (Certainly, if it’s a rare metal sourced for technology, get into it.) A new panelist, Diane Daggett from McAdams Wright Ragen, put forward Weyerhauser, remarking on Japan’s and China’s growing demand for what the company calls the “potential in trees,” besides the eventual return of a domestic new housing market. Summit Capital‘s Matt Rudolf is sick of bumbling Cray (“the Company expects to report an operating loss for the year“) but is sticking with them like a Cubs fan. Morgan Stanley Smith Barney‘s Lynn Lindsay said out loud that Microsoft might break $30 a share, and no one laughed.

Curiously, given the focus on tech, transportation, and the illustrative example provided by Cray, none of the panelists mentioned the vulnerability of the whole tech sector to extreme-weather-driven supply chain disruptions. It’s worth considering not just for the downside risks, but also because any suggestion that flooding could be more frequent will drive manufacturers literally to higher ground. Early movers could see distinct competitive advantages in being the only supplier on dry ground.

Closer to home, each panelist was asked to pick three Northwest stocks. I’ll list all of them, but let me highlight those from RBC’s Mary Ann Heeren, who has been the winningest in this department three years running: last year she selected SBUX, BA, SGEN; this year, it’s MU, PCAR, WFSL. And here is the rest of the Northwest stocks field, with bold indicating those which were more than one panelist’s pick:

Amazon (AMZN), Microsoft (MSFT), Expeditors International (EXPD), Greenbrier Companies (GBX), Intermec, Inc. (IN), PACCAR (PCAR), Nordstrom (JWN), Boeing (BA), Starbucks (SBUX), Dendreon (DNDN), Northwest Pipe Company (NWPX), Weyerhaeuser (WY), Amgen (AMGN), Micron Tech (MU), Washington Federal Savings (WFSL), Marchex (MCHX), Itron (ITRI), Zillow (Z), Banner Corporation (BANR), Northwest Pipe Company (NWPX), Cray Inc. (CRAY), Stillwater Mining Company (SWC).