In 2012, remember that it’s a market of stocks!

Starting today, Tom Essaye will be your regular Wednesday morning Money and Markets contributor. But I’m not going anywhere. You can still find my columns and videos each Wednesday in Uncommon Wisdom Daily. Click here for your FREE subscription. — Kevin

When I was a trader on the floor of the New York Stock Exchange, I often heard an old saying repeated: “Remember that this is a market of stocks, not a stock market!”

The point of that old saying is to remind traders and investors that, even in the most macro-economically driven environments, there are still opportunities in the stocks of quality companies. It is a saying that reminded us to always look for opportunity in individual stocks, and to try to look beyond the headlines and macro-economic forces that were creating volatility in the overall market.

And it is a saying that could serve you well in 2012.

Later on in my career, after I had left the floor of the NYSE and joined a natural resource focused hedge fund, I often repeated that saying when I found myself getting too caught up in trying to predict the macro environment, and not focusing enough on finding outstanding companies in sectors ready to take off.

And I remember repeating that phrase to myself while I was managing the portfolio through the most difficult periods in recent history — the bear market of late 2007 through early 2009. Even during that tough time, investors who continued to focus on finding the individual stocks of quality companies were rewarded …

The average S&P 500 stock fell more than 54 percent over that period. But companies with solid business models and competitive advantages, such as Netflix (NFLX), Royal Gold (RGLD), Questcor Pharmaceuticals (QCOR) and medical device manufacturer Cyberonics (CYBX), actually rose in value.

And in this most recent year of macro-economic driven markets, there is ample evidence that identifying the stocks of quality companies could have yielded market-beating returns.

As long as macro-economic problems, such as in Europe, remain in the headlines, you can expect a volatile year ahead for stocks.

While the S&P 500 gyrated like crazy in 2011, whipping investors around on every headline out of Europe or Washington, shares in quality companies like McDonald’s (MCD) rose 35 percent. And shares in discount retailer Ross Stores (ROST) rose over 50 percent. Even in the beleaguered financial sector, where the macroeconomic environment simply couldn’t be worse, quality stocks held up. Examples include Webster Financial (WBS), which rose 3.4 percent despite a sharp decline in the sector.

As we enter 2012, we will no doubt continue to be buffeted by headlines streaming out of Europe and Washington. And it’s safe to say you can expect volatility similar to what we saw in 2011.

Instead of trying to predict and trade the enormously complicated macroeconomic environment, use the volatility to your advantage. Focus on finding quality companies that you believe have been unfairly beaten down by unrelated macroeconomic factors. Then, use weakness in the overall market to buy shares in these companies at fire-sale prices.

Good luck,

Tom