By now 2010 belongs to the history books, and what a fascinating chapter it occupies.  Before saying completely goodbye to 2010, let’s briefly review some of its pertinent performance statistics.
The past year’s performance of the major asset classes is summarized in the chart below – a set of numbers that indicates a healthy investor appetite for risky assets. Gold (+29.6%) was the star of the year, clocking its tenth consecutive annual gain. Equities, commodities and corporate bonds also gave investors reason to smile.
Although Treasury yields rose meaningfully since mid-October, government bonds still managed positive returns as a result of yields finishing the year lower than at the start – 54 basis points in the case of the 10-year Note and 20 basis points for the 30-year Bond. Notwithstanding a vast increase in supply, the U.S dollar surprised doomsayers by eking out a small gain (+1.3%)

Considering a more comprehensive array of asset types (obtained from Finviz.com), green dominated the trading screens as shown below. A few interesting observations are:

  • Palladium and silver performed even better than gold bullion.
  • Grains and beans – corn, wheat, oats and soybeans – occupied four of the top 10 positions.
  • Although commodities put in a stellar performance, a few such as natural gas, cocoa and rough rice ended the year in the red.
  • Small caps (as represented by the Russell 2000 Index) and the technology-heavy Nasdaq Composite Index showed the larger-cap indices a clean pair of heels.
  • Of the major stock markets, the Nikkei 225 Average was one of the few registering a loss for 2011. No wonder when one considers that the Japanese yen was the strongest of the major currencies, causing major damage to the revenue of exporters.

Click here or on the table below for a larger image.

The performance of various global stock markets is given in the table below in local currency terms for different measurement terms ended December 31. Notwithstanding a period of underperformance during the fourth quarter, the MSCI Emerging Markets  Index (+16.4%) had done enough earlier in the year to outperform the MSCI World Index (+9.6%) by a wide margin for the year as a whole. Although 2010 produced mostly positive returns, a few markets such as China, Japan and a number of heavily-indebted European markets closed in loss-making territory.
Despite solid gains since the March 2009 lows, only the Mexico Bolsa Index and the Tel Aviv 100 Index have been able to reclaim their 2007 pre-crisis peaks. India, Chile, South Africa and Venezuela could be the next countries to eliminate the bear market losses.
Not shown in the table, the gains still required in order to reach the 2007 bull market highs are: MSCI World 31.4%, MSCI Emerging Markets +16.3%, S&P 500 Index +24.5%, Dow Jones Industrial Index +22.3%, Nasdaq Composite Index +7.8% and Russell 200 Index +8.4%.
The bulk of the indices are in primary bull markets, trading above their 200-day moving averages. However, a number of markets have fallen below the intermediate term 50-day average.
Focusing on the S&P 500 Index, 51 of the 500 constituent stocks were up by more than 50% over the past year, whereas three stocks rose by more than 100%. Netflix (+218.9%), which was added to the index on December 10, is the top performer, with Cummins (+142.7%) and F5 Networks (+145.7%) as runners-up.
Click here or on the table below for a larger image.

The gains/declines mentioned above are all in local currency terms. However, converting the movements to U.S. dollar shows a worse picture for those countries of which the currency declined against the dollar, notably the eurozone (see table below). The Nikkei 225, on the other hand, looks much better as a result of the strong performance of the yen: +11.2% in dollar terms versus -3.0% in local currency terms.
Click here or on the table below for a larger image.

Considering a larger group of stock markets (via Emerginvest), top performers last year were frontier markets such as Sri Lanka (+96.0%), Bangladesh (+83.5%), Estonia (+72.6%), Ukraine (+70.2%), the Philippines (+56.7%) and Lithuania (+56.5%). At the bottom end of the performance rankings, countries included Bermuda (-44.4%), Greece (-35.1%), Cyprus (-34.2%), Nepal (-26.2%), Spain (-17.4%) and Macedonia (-17.2%). In addition to Greece and Spain, other debt-troubled countries such as Iceland (-16.1%), Italy (-13.1%), Portugal (-10.3%) and Ireland (-3.0%) were also big losers.
Of the 87 stock markets I keep on my radar screen, 66% recorded gains, 33% showed losses and 1% remained unchanged. The performance map below tells the past week’s rather bullish story.