Looking back on one’s predictions is an often humbling exercise. It is now time for me to look back on my ten surprises for the tumultuous year that was, 2011.First let’s recap. The year 2011 started off on a relatively strong note then the markets became dominated by a resurgence of fears related to the European sovereign debt crisis and a potential global economic downturn.Most areas of the world experienced growth slowdowns while emerging markets were plagued with inflationary concerns.Natural disasters (the Japanese earthquake and tsunami, Australian floods, and Hurricane Irene, to name a few) rocked various regions of the world, disrupting local trade and commodities markets.The year 2011 was one of the most volatile years in the stock market on record.So with that background I’m going to look back at my ten potential surprises for 2011 that I made at the start of last year.It looks like about half of them actually did come to pass. Quite a surprising success rate considering these predictions, at the time, tended to be far from consensus opinion.1) U.S. economy expands 4% - This was clearly not the case and it looks like real growth will come in around 1.8% for the year.A confluence of factors obviously created a great deal of economic uncertainty during the year which likely depressed confidence and consumption. The job market surprise did develop, however, as unemployment fell below 9%.2) I stated “animal spirits” would return and the S&P 500 would trade near 1450 at some point. The high reached during the year was 1370 so some 80 points away. Close, but arguably not “near”. My prediction of operating earnings near $100 was correct. It appears operating earnings will come in around $99 for all of 2011 a surge of nearly 16%.And the U.S. stock market did outperform the emerging markets. This was a rather bold suggestion because at the time everyone seemed to be in love with the emerging market “growth story”. But, dear reader, valuation does matter.3) Although “political gridlock in the U.S.” did “create little headway in tackling the issue of the deficit”, bond yields did NOT increase to over 4.25% on the ten year treasury.In fact one of the most surprising aspects of 2011 which I never foresaw was a record LOW ten-year bond rate which currently sits at about 1.9%. If I told you at the beginning of 2011 that U.S. debt would be downgraded by a major rating agency and Congress would do nothing to alter the course of escalating deficits all while the ten-year yield stood at an already ‘low’ 3.5% would you have been bullish the treasury market?High yield bonds appear to have offered decent returns (around 7% according to the iShares iBoxx High Yield Corporate Bond Fund) but nowhere near the long duration treasury market returns of nearly 35% according to the iShares Barclays 20+ Year Treasury Bond Fund.4) My commodity surprises where severely affected by some natural disasters. The devastating earthquake and tsunami in Japan brought the entire nuclear industry to its knees.As a result uranium prices did not soar and in fact have fallen over the course of the year as nuclear expansion plans have been curtailed or cancelled. Water scarcity issues did not develop during the year and soft commodities in general have fallen as well (although I still believe this may be a future surprise at some point).My suggested surprise was for gold to “go nowhere” but in fact it actually looks like it will end the year up some 10% even after its recent spectacular collapse.Oil did push over $100 a barrel and has staged somewhat of a recent rally on worries over Iran. Natural gas has not rebounded and has fallen even more as the proliferation of shale gas production has been immense and continues to defy skeptics.5) I suggested the U.S. dollar could rally some 10% over the course of the year and it actually has gained marginally for 2011, up only about 2%.I suggested that “fixing the European problem is like plowing the sea” and that we could be surprised to see the Euro at $1.10. Although the Euro is the worst G10 currency versus the dollar it has not fallen to that level….yet.My prognostication on a surprise drop in the Yen wasn’t even close. The best performing currency versus the dollar of the G10 was in fact the Japanese Yen.6) The surprise of a Nikkei 225 staging a sort of contrarian rally never developed. Again, I failed to see one of the worst earthquakes the world has ever witnessed come to pass, the yen never weakened and the economy remains mired in a deflationary abyss. My “contrarian senses”, however, are tingling….7) Israel did not launch an attack on Iran in 2011. Although 2012 may prove that my timing was just a bit off…8) The surprise of a double dip in U.S. house prices does look like it did occur in 2011.As of the 3rd quarter according to the FHFA House price index, home prices have fallen about 3.5%. This is not as bad as far as my predicted surprise of a 10% drop, possibly due to the fact that interest rates did not rise.9) The “biotech bloom” did begin to gather steam in 2011. Mergers and acquisitions in the global pharmaceutical space surged to nearly $100 billion up from about $45 billion in 2010 as many large pharmaceutical companies did acquire various biotech companies.Also major developments have continued relating to Alzheimer’s (plaque theory seems to be refuted?), stem cells (U.S. scientists for the first time have used a cloning technique to get tailor-made embryonic stem cells to grow in unfertilized human egg cells), and cancer vaccine development continues (Oncothyreon has an innovative cancer vaccine in a phase 3 trial).The Nasdaq Biotech Index outperformed the market rising about 11.5% for the year.10) Maybe this was not so much of a surprise but Bermuda’s economy does look like it will contract again in 2011.According to the Pre-Budget statement, “the Ministry of Finance still anticipates that the economic slowdown will persist through the majority of 2011 and estimates that Bermuda’s GDP in real terms will decline slightly in 2011”.The reinsurance market so far has still been “plagued by weak pricing, overcapacity and a secular shift to exchange traded products” (think insurance linked securities and catastrophe bonds).My surprise of a major fund administration company leaving was correct Citigroup is closing up shop.I was also correct in suggesting a surprising closure of three retailers (it’s likely more than three closed in 2011), and correct in forecasting a foreclosure of “one major hotel” Newstead was foreclosed on by Butterfield Bank.I’ll have my 12 Surprise for 2012 out in the next few weeks.Thank for reading and Happy New Year!