Ruiz: Columnist had mixed investment predictions for 2011

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Updated: February 10, 2012 8:22AM

Each January for the past couple of years I have done a financial prediction column for the year ahead and I also written a “grade” column for my predictions from the previous year.

2011 was once again volatile year for the financial markets with expected events like the European debt crisis causing havoc and some unexpected events like the Japanese earthquake contributing to the craziness as well.

I’ll handicap my grade by saying the volatile environment made it almost impossible to get much right in 2011, but I’ll try to be fair on the grading scale none the less.

I predicted the U.S. stock market would remain volatile but post nominal single-digit gains at the end of the year. This prediction ended up being largely correct with the Dow Jones Industrial average finishing up about 6 percent, the S&P 500 finishing virtually flat and the NASDAQ closing down about 2 percent.

I suggested investors remain wary of metals and mining, which was a good call as that sector closed down almost 30 percent in 2011. But I also said I liked energy, which was down 2 percent; technology, which was down 1 percent; and agriculture, which was even. This is a tough one as I got a lot about 2011 right in this category. I’m giving myself an A-.

In regard to bonds, I predicted short-term bonds would be the place to be and that the municipal bond market should be avoided. I also predicted that our government’s fiscal mess may start causing interest rates to go higher.

Well, long-term bonds were the big winners in 2011 returning nearly 30 percent, and munis returned about 9 percent. And the U.S. government did see its credit rating downgraded by S&P but that actually caused scared investors to seek the safest investments they could find, ironically U.S. Treasury securities. This actually ended up driving interest rates down.

Performance in the bonds market really defied any reasonable form of logic and if you followed my suggestion you certainly didn’t get hurt. At the end of the day, though, I totally missed my calls there. I have to give myself a D.

I suggested that brave investors tinker a little with European stocks (down 2 percent), look to Singapore (down 8 percent) Brazil (down 18 percent) and Canada (down 5 percent) and avoid China (down 14 percent). There was really no way to be right with international stocks in 2011, and in practice my exposure there was light, so I’ll say C-.

I accurately called that the dollar would strengthen. I predicted precious metals would stall a bit. They went higher but at a slower rate. I said oil would be up slightly, which was on the money. I thought agriculture prices would stall out at higher levels, which also occurred. So in the commodity and currency space it’s a B+.

So during a really tough year it’s an A, B, C and a D. Let’s hope things settle down a bit in 2012. Next week, we look ahead.