Last Updated Jan 18, 2011 9:38 AM EST
- Gold would rise.
- Bond yields would rise.
- The dollar would fall.
- Inflation would be rampant.
- Real estate was the asset class to avoid.
Gold We ended the year with gold trading at just over $1,400 an ounce after starting the year at $1,113. So far, so good with one winner.
Bond Yields The 10-year Treasury note began the year yielding 3.85 percent. We ended the year with the yield at 3.30 percent. Those investors who stayed short because yields were sure to rise not only missed the rally, but also paid a steep price for staying short as the yield curve was very steep.
Dollar The Euro began the year trading at around $1.44 and finished the year at $1.34. Another sure thing that failed to happen.
For 2010, inflation was at a mere 1.5 percent, which is almost half than the 2.7 percent we experienced in 2009.
Real Estate The Vanguard REIT Index Fund (VGSIX) returned 28.3 percent for the year, turning in a spectacular performance, despite all the bad news on commercial real estate.
The message remains the same: The bottom line is that out of five sure things, only one turned out to be right. And, despite all the problems we've faced this year -- economic and political, domestic and international -- equity markets around the globe provided strong returns.
Despite all the academic evidence demonstrating you're best served by ignoring the so-called experts, most investors continue to base investment decisions on economic and political forecasters. The winning strategy remains the same: have a well-designed plan and stick to it, ignoring what the noise of the market.
With that said, here is our list of 2011's sure things. We will keep track of how well the forecasts turn out. Please leave a comment below if there are any sure things that you think I missed.
2011's Sure Things
- China is the place you want your investment dollars to be.
- This is the year of large-cap stocks.
- Inflation will take off.
- Interest rates will rise.
- There will be massive defaults on municipal bonds.
- Gold will continue to soar.
- Oil will be well above $100 a barrel.
- 2011 will prove to be a stockpicker's year. (We already know how that will turn out.)
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Hear Larry Swedroe discuss current investment trends and topics every Sunday at noon on 550 AM KTRS in St. Louis or streaming via the KTRS Web site. Can't catch the show? Download the podcast via www.investmentadvisornow.com or through the Buckingham Asset Management podcast page on iTunes.