The past year won't have made many investors rich, but what are the prospects for 2011?
Will stock markets finally claw back their losses from the credit crunch or should we brace ourselves for another collapse? Will emerging markets outperform again or will the West strike back? And where is the next bubble developing? China? Or perhaps commodities and gold?
One thing is clear - there are more questions than answers.
James Thomas, regional director at Acuma Wealth Management in Dubai, says 2010 was a year of ups and downs, and we can expect more of the same in 2011.
So brace yourself for a combination of rising share prices and sudden market scares, primarily from the eurozone.
"Last year, we had Greece and Ireland," Mr Thomas says. "In 2011, it could be Portugal's turn. Let's hope contagion doesn't reach Spain, which could be too big to save."
Hang on tight if you're paid in US dollar-linked UAE dirhams, because the dollar is set to remain weak. This is also likely to drive up the oil price, which is priced in dollars, as well as precious metals such as silver and gold, Mr Thomas adds.
Emerging markets will continue to lead the field, notably the three future World Cup hosts: Brazil, Russia and Qatar. Their economies should get a real kick out of planned investment in new stadiums, hotels and infrastructure.
It may be a new year, but old investment principles continue to apply. "Investors can expect volatility to continue and should protect themselves by diversifying their investments and looking to the longer term," Mr Thomas says.
As ever, markets will be exposed to unexpected events.
"What you can't predict are left-field issues that could flare up, for example, further tension on the Korean peninsula."
Dan Dowding, chief executive officer for Middle East and Asia at the independent financial advisers Killik & Co in Dubai, also anticipates a modest rise in the oil price, which he predicts will average around US$95 (Dh349) a barrel in 2011.
But the commodities to watch are rare earth metals. Apple's new iPhone, flatscreen TVs, electric cars, wind turbines, lasers and a host of new technologies rely on rare earth metals such as Cerium, Thulium, Promethium and Yttrium. China has 97 per cent of the market, and is increasingly reluctant to share with export rivals such as Japan.
"If this causes a global shortage, prices could rise sharply," Mr Dowding says. "My preferred way of investing in rare earths is via Market Vectors Rare Earth Strategic Vectors ETF, a recently launched exchange traded fund that tracks stocks in this sector."
It could prove a bumpy ride, so be prepared for volatility. Mr Dowding predicts moderate stock-market growth in 2011, with markets rising by about 10 to 15 per cent. Japan could be the surprise package.
"It has been stagnant for years, but 2011 could be the year that finally changes. You can invest in Japan via funds such as JP Morgan Japanese IT or Neptune Japan Opportunities Fund," he says.
The biggest threat to the global economic recovery is Chinese inflation. "The Chinese government is desperately trying to stop its economy from overheating, but it's an uphill struggle. If China slows, so will the global economy."
And next year's hot investment theme? Rising consumption in the developing world, Mr Dowding says. Brazil, Russia, India and China have young and increasingly wealthy populations running into hundreds of millions, and they are more enthusiastic consumers than their parents.
One way to play this boom is to invest in companies specialising in luxury goods, such as Gucci, Tiffany & Co, Rolex or Louis Vuitton. There is also an investment fund targeting luxury stocks - JP Morgan Global Consumer Trends. Fund manager Peter Kirkman says emerging market demand for luxury goods is growing rapidly.
"Large, respected western brands with well-established distribution networks will be the beneficiaries," he says. "My fund is tapping into this by investing in a selection of luxury stocks such as LVMH, Gucci, Guess and Tiffany."
Alwyn Owens, an investment adviser at Dubai Financial Advice, agrees that emerging markets will continue to generate the best returns. For investors who want to cash in on Asia's growing wealth, he recommends the investment funds First State China, HSBC China and Jardine Fleming India, all of which boast good long-term track records.
Mr Owens also recommends two funds investing in Russia and Brazil- Baring Eastern European, which grew 25 per cent in the past 12 months, and Baring Latin America, which grew 20 per cent.
Demand from booming emerging markets is forcing up the price of energy and other commodities, and Mr Owens recommends the established commodity fund JPM Global Natural Resources, which invests in energy, metals and gold companies. It returned 33 per cent over the past year.
He expects the UAE will steadily shrug off its recent troubles. "Dubai is coming out of recession. Property is still a big problem, but the supply of new properties should peak by the middle of the year, at which point sales should rise as new people arrive taking jobs. Dubai World has restructured its $25 billion debt and construction projects are kicking off again. Locally, things should get much more positive as the year develops."
Getting the 2022 World Cup was great news for Qatar, and will have a positive effect across the Middle East, he says.
While emerging markets rise, the West will continue its decline.
"The West has peaked. The UK has been in decline for a century. The US is following a similar path. The eurozone has serious structural problems. There will be a long, gradual fall from grace."
But old investment principles still apply, even in a new year.
"Markets can go down as well as up, and they always will," Mr Owens adds.
"But you only lose money if you sell at the bottom. If you can sit it out and weather the storm, you will come out on top. You just have to give it time."
The US Federal Reserve's decision to embark on a second bout of quantitative easing has sent a wave of liquidity washing around the world, says Philip Poole, head of investment strategy at HSBC Global Asset Management. Investors can surf this wave but should watch out for storms and squalls.
"The big four threats are a double dip in the US, continuing troubles in the eurozone, collateral damage from currency wars, and emerging-market asset bubbles and inflation," he says.
Like most analysts, Mr Poole expects emerging markets to continue their recent outperformance. Countries such as India, Russia and Indonesia are pouring money into infrastructure, and rapid urbanisation should also boost investment returns.
Among the big four BRIC (Brazil, Russia, India and China) countries, the Russian stock market appears to offer the best value. "China and Brazil look fairly valued, but India appears relatively expensive," he adds.
Mr Poole says we are likely to see further skirmishes in the global currency wars, as countries compete to debase their coinage and keep exports cheap.
If this happens, gold could be the biggest beneficiary.
"Central banks are also moving into gold, in a bid to diversify away from the weak dollar."
Gold has soared in recent years, but its price should remain relatively stable in 2011, says Ben Yearsley, investment manager Hargreaves Lansdown, an independent financial adviser based in the UK .
"If the global economy continues to improve, boosting confidence, I don't expect a big rise in the price of gold," Mr Yearsley says.
"But with the dollar likely to stay weak, I don't see it falling either, because people will continue to use gold as a store of value."
Mr Yearsley adds that the big question is whether we get deflation or inflation. "Central bankers will be tempted to ramp up inflation, given the massive debts in the West. If you have two or three years of inflation at 8 per cent or 9 per cent, you knock 25 per cent off your debt in real terms.
Can they resist? And if they do let the inflation genie out of the bottle, what impact will this have on emerging markets, which are desperately trying to keep prices under control?"
Central banks are likely to fire up their printing presses in 2011 to keep the global recovery on track, says Trevor Greetham, asset allocation director at Fidelity Investment Managers.
"Growth rates in developed economies are likely to remain tepid, limited by the tight availability of credit. Housing markets are weak, and austerity measures are about to kick in. I expect more central banks, led by the Bank of England, to follow the example set by the US Federal Reserve and print more money."
This is likely to weaken both the dollar and sterling, especially against emerging-market currencies. If you are looking for a win-win bet, take a punt on commodities.
"They are likely to perform well if US growth is weak, because this will lead to further liquidity injections from the Federal Reserve. But they may also do well if US growth recovers, as this will boost demand," Mr Greetham says.
Next year's outlook may be uncertain, but this isn't the time to play it safe by leaving your money in lower-risk government or corporate bonds, says Percival Stanion, head of asset allocation at Baring Asset Management.
"Growth is largely on track, the industrial sector is showing booming profits, corporate-debt markets are open and the consumer is still shopping. We are confident that 2011 will present a number of relatively attractive investment opportunities."
Buy shares, not bonds, he says.
"The Federal Reserve is printing money, the Bank of Japan is printing money, the Bank of England will print if necessary and perhaps even the European Central Bank will print eventually.
"This seems designed to beat the prudence out of investors, dragging them kicking and screaming into higher risk assets."
Equities outlook positive
The year drew to a close on a welter of surprisingly positive news, and this augurs well for 2011, says David Kuo, the director at the stocks and shares website Motley Fool (www.fool.com) in the UK.
The FTSE 100 hit a 30-month high to close at 6000 points on Christmas Eve, after rising more than 8 per cent in December. The Dow Jones also joined in the “Santa rally”, growing 5 per cent in December and a total of 11 per cent in 2010.
There is also plenty of good economic news around.
“China’s manufacturing is rising faster than expected. In the UK, manufacturing is growing at its fastest rate since 1994. Consumer confidence in the US is starting to rise and the European Central Bank is determined to bolster financial stability,” Mr Kuo says.
Shares look more attractive than cash, property and bonds, he says. “With interest rates expected to stay low in 2011, most people will struggle to get more than 1 per cent or 2 per cent on their cash. If you can take a bit of risk, it makes more sense to invest in global companies such as oil giant Royal Dutch Shell, pharmaceuticals company Glaxo and mobile-phone firm Vodafone, all of which yield more than 5 per cent a year, plus the chance of capital growth on top.”
Mr Kuo is bullish for 2011.
“Multinational blue chips can expect to see their earnings rise by around 15 per cent this year, and stock markets could rise more than that. In the UK, that would see the FTSE 100 rise to within touching distance of 8,000 points.”
What the fund managers say
Mark Lyttleton, manager of BlackRock UK Absolute Alpha: “Valuations on equities are compelling and corporate profitability is high. Shares will struggle to go up by 40 per cent next year but a 20 per cent rise would not be dramatic.”
Jeremy Tigue, manager of the F&C investment trust: “Companies took rapid action in 2008 to reduce their debt and reaped the benefit in 2010. We expect corporate profits and dividends to grow in 2011 and this should provide strong support for stock markets.”
Mike Kerley, manager of Henderson Far East Income: “Equity valuations across Asia look pretty compelling and we believe it will outperform the West in the next six to nine months. It won’t be all smooth sailing though.”