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2011 - the year in hindsight

16 Jan 2012 14:19Peter Waring
2011 – The year in review. Looking back a year on it’s interesting to see how my predictions actually went. Unfortunately I have not had much time for this blog in the last year due to extreme busyness at work and in my personal life too. Here’s a wrap-up of how my predictions actually went.

The NZD (New Zealand Dollar)

The NZD/USD had a volatile year, and went much higher than I predicted, but ended up in the range that I thought the currency would trade in over the year. At the peak the NZD/USD hit 87c, which had every newspaper clamouring that the Kiwi (NZD) was headed towards parity with the US dollar. This would have been the time to sell NZD, in hindsight. The NZD/USD fiinished up the year at about 77c which is in the range I thought the currency would trade in.

The Stockmarket (S&P500 and NZX50)

I was almost bang on with my predictions about the stockmarket. We had a rally from the beginning of 2011 until April 29th where the market peaked. The market then struggled to regain form, suffering a large and sharp summer correction. The market bottomed on October 03 (the beginning of fall) and rallied somewhat until the year end but did not reoup it’s losses since the peak in April.

It was a very lacklustre year for the stockmarket and anyone on the long side would have really struggled. I know New Zealand investors that got completely hammered trading NZ stocks (the NZ market generally tracks the S&P500) – with some stocks down 60% or more. I was lucky enough to sell my holdings mid-Feburary, which was mainly for personal reasons rather than having a crystal ball (I was planning a wedding and needed the cash!). I am glad in hindsight that I did.

I dipped my toes back into the market in about August but none of those stocks have done that well, being down about 15% each. In hindsight would rather have stayed out of the market altogether, although I did expect the end of year rally to be much more pronounced than it actually was.

The NZ housing market

OK, I was almost on the money here, but still slightly too pessmimistic. I predicted there would be a very slight dip in prices (in the order of 1-2%) but instead prices were stable and even slightly up in Auckland (depending on the suburb). As for the rest of NZ, it still looks in pretty dire shape, prices may still be falling in coastal areas and small towns, although this has little impact on National statistics due to the low volumes and low values in the smaller cities. The housing market in Auckland has been very resilient, most likely due to the influx of people from earthquake-damaged Christchurch.


2011 was a very difficult year for anyone trading or investing, with no really easy wins. There are huge global forces pushing the markets around, such as the European debt crisis. The Western world is mired in debt and doing its best to recover, but it seems to be a long and tough battle. Until the European debt situation is resolved I can’t see huge growth coming from anywhere anytime soon.

I think we are in a similar time to the Great Depression from 1929-1948 where we have had so many years of debt building up that it needs to be washed out of the system, and that is going to take a very long time and will mean slow growth for 2012 and the forseeable future.
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