2011 was characterized by exceptionally wild swings in stock prices returns from week-to-week and even day-to-day; but measured over the full year most markets went backwards in US dollar terms. Only the S&P 500 managed to stay out of the red, being essentially flat for the year in price terms and returning a measly 2.1%, with dividends reinvested. Speculators that thrive on macro noise had a lot of news to chew on. Sentiment swung between extreme pessimism, centred on talks of a Eurozone break-up and Chinese growth deceleration, to extreme optimism that was typically fuelled by empty promises after each of the different Eurozone summits held during 2011. It was one of those years though where doing less generally ended up adding more value to portfolio returns.

Although sovereign debt was downgraded in the US and parts of Europe, the place to have been in 2011 was in bonds, particularly Japanese and UK, which returned 14.4% and 17.4% respectively in US dollars and similarly in pounds sterling. US bonds did not perform badly either returning 9.9% in US dollars. These returns were driven by the flight to safety which also saw strong demand for gold bullion (+18% in the year). The unpredictability of markets caused havoc to many notable investors including Stanley Druckenmiller (Duquesne Capital Management), George Soros (Soros Fund Management), Bill Miller (Legg Mason Capital Management), Bill Gross (PIMCO) and Warren Buffett (Berkshire Hathaway) - some of which opted to retire rather than continue to face the carnage.

It was an up and down year for major developed market currencies, however by year end most had returned to within 5% of where they began the year. In developing markets, one of the worst performing currencies was typically the South African rand, which depreciated by 18% versus the US dollar.