A Few Surprises Could Make 2011 a Winner



It's hard to anticipate the direction of financial markets. Even knowing where economies are headed sometimes is of no help to an investor.

Two of the best-performing major economies in 2010 were China and Brazil, with growth estimated at 7.5% and 10.5%, respectively. But as of Dec. 23, stock markets of both nations were in the red for the year.

By contrast, the U.S. economy is likely to have expanded at only about 2.6% for the year. Despite that limp growth, major U.S. stock-market indexes are up between 11% and 20% for the year. Despite problems in many European economies, Germany's main stock index, the Dax, rose about 16% in 2010.

The unpredictable nature of markets is a reason to focus on possible surprises for this year. Big profits generally come in being early to the next trend, or by predicting events that catch others by surprise. Last year, The Wall Street Journal Sunday anticipated a number of surprises, such as the resilience of the U.S. dollar and problems for municipal bonds. But expectations of gains for health-care shares and weakness for oil prices proved misplaced.

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