How Did the "Sure Things" Fare in 2010?

Last Updated Jan 18, 2011 9:38 AM EST

In 2010, we started keeping track of some of the predictions made by the financial gurus and the media at the beginning of the year. In April, we noted that there were five big financial predictions -- five sure things -- made by investors and commentators for 2010:
  • Gold would rise.
  • Bond yields would rise.
  • The dollar would fall.
  • Inflation would be rampant.
  • Real estate was the asset class to avoid.
So let's go straight to the bottom line.

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.

Inflation
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 More on MoneyWatch:
How Sure Are "Sure Things"? 16 Financial Resolutions for the New Year TIPS Update for January 2011 Why Good Economic News Isn't a Good Indicator for Stocks ETF Tradability Can Hurt Your Returns
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.
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    Larry Swedroe is a principal and director of research for the BAM Alliance. He has authored or co-authored 12 books, including his most recent, Think, Act, and Invest Like Warren Buffett. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.

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