“Every year I talk to the executives of a thousand companies, and I can't avoid hearing from the various gold bugs, interest rate disciples, Federal Reserve watchers, and fiscal mystics quoted in the newspapers. Thousands of experts study overbought indicators, oversold indicators, head-and-shoulder patterns, put-call ratios, the Fed's policy on money supply, foreign investment, the movement of the constellations through the heavens, and the moss on oak trees, and they can't predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.” Peter Lynch from ‘One Up on Wall Street'Forecasting in general is foolish. Situations in financial markets are very fluid and change over time thus all prognostications are instantly stale. No one can truly claim with certainty that they know what tomorrow will bring and if you meet someone who does you should put your hands in your pockets to check for your wallet and slowly back away.The term surprise means an unexpected event that is currently an out of consensus view. I have tried to list a few I think actually do have a chance of happening but are not really expected because they are under-recognised probabilities. I have written these in the spirit of nudging one to look “outside-the-box” and consider a disparate view of things that may cause some cognitive dissonance. I also have included investment vehicles or strategies where appropriate to track aspects of these calls (see important disclaimer at the end). To be clear, what follows is NOT an investment strategy but a list of potential surprises for 2012:1) Bermuda reinsurers rally over 20 percent. Valuations revert to near 10-year average levels on a price to book basis due to mid-single digit reinsurance rate increases, a benign catastrophe year and a modestly better US economy which more than offsets weak investment income and reserve releases.Strategy: Buy Bermuda reinsurers that sell at more than a ten percent discount to book value.2) Bermuda economy double dips. After a surprisingly flat 2011 GDP number, 2012 GDP falls by low single digits on the back of weaker international business compensation and lower consumption levels due to a reduced population. Commercial and residential rents contract a further 15 percent and retail and restaurant closures continue. To counter the contraction the Bermuda Government considers a “blue card” immigration policy much like that adopted in Germany.3) Despite a floundering economy, the Bermuda Stock Exchange rallies 15 percent as the 60/40 rule is abolished for publicly listed companies. International equity managers allocate a small share of capital to include securities in their holdings helping drive flows into the market as value investors seek deeply discounted shares.Strategy: Buy locally-listed Bermuda shares like Butterfield Bank (NTB BH) etc4) The period of reunification commences. Cuba is liberalised and opened up to the United States as Raul reconciles. Kim Jong-Un (a Swiss educated man who loves basketball) begins a long awaited unification with South Korea to open up the struggling north.Strategy: Buy Herzfeld Caribbean Basin Fund (CUBA).5) S&P 500 approaches all-time high and rallies north of 1,450. Confidence returns. Fear resides. Europe doesn't implode. Part of the propellant for the market is buybacks and dividends that hit record highs. The economy's real GDP accelerates over last year's number and operating earnings per share hit a new record. Mutual fund flows begin a reversal of redemptions and return with a vengeance.Strategy: Buy SPDR S&P 500 ETF Trust (SPY).6) Financial shares in the US outperform. Only 10 percent of money managers in a recent Barron's Big Money Poll like financials and nearly a third of money managers expect them to be the worst performing sector. Asset quality is higher, international loan exposure to troubled areas is minimal, funding and liquidity is substantial and loan demand begins to pick up. US regional banks perform very well.Strategy: Buy Financial Select Sector SPDR Fund (XLF) or SPDR S&P Regional Banking ETF (KRE).7) Hong-Kong dollar rallies as the peg to US is adjusted upward.Strategy: Buy Hong Kong dollars.8) Gold stocks outperform the gold commodity. The valuation of gold embedded in gold equity shares is at a significant discount. This gap closes somewhat in 2012.Strategy: Buy Market Vectors Gold Miners ETF (GDX) and sell SPDR Gold Trust (GLD) .9) Hedge funds underperform … again. After underperforming the MSCI World Index for five years, hedge funds continue to struggle despite persistent volatility and a macro driven market.Strategy: Sell the HFRX Global Hedge Fund Index and buy the MSCI World Index.10) Chinese growth comes is slightly weaker than expected as fixed investment continues to cool. China's growth model is questioned as the unsustainable rise in debt from bank lending is seen to be fuelled by capital misallocation. India's economy slows considerably as its oppressive government bureaucracy puts sand in the gears of economic advancement. As a result of slower emerging market growth and weak developed market growth commodities stagnate and post flattish gains for 2012. Crude struggles and eventually average less than 2011 even in the face of Middle East tensions.Strategy: Stay neutral on ThomReuters/Jefferies CRB Commodity Index (CRY Index).11) Money shifts from bonds to equities. High quality corporate bonds and US Treasuries post slightly negative total returns for the year.Strategy: Avoid iShares Barclays 20-plus Year Treasury Bond Fund (TLT) and iShares iBoxx Dollar Investment Grade Corporate Bond Fund (LQD).12) Europe pulls together. Despite a very scary start and more domestic rioting in the peripheral countries, European leaders come to a more successful policy solution. The Eurozone recession is mild and European equity markets rally. The core European countries like Germany and France (which now trade at single digit price earnings ratios) outperform as the euro continues to fall versus the dollar. European companies become the target of cross-border mergers as a cheap currency spurs consolidation by companies looking for European company's emerging market exposure.Strategy: Buy iShares MSCI Germany Fund (EWG) and iShares MSCI France Index Fund (EWQ), hedged to US dollars.Disclaimer: This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Anchor Investment Management Ltd to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. Readers should consult their financial advisers prior to any investment decision. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.