It has been a turbulent year for investors, but there are lessons to be gleaned from it. Here's a sample of what 2012 has taught us.
it's always dangerous to think of anything as obvious in the world of investment. Logic seemed to dictate that the horrible mess in the euro zone should see the euro rapidly diminishing in value. So I sold euros and bought Norwegian kroner. Norway has a sound economy, a sound budget, and generally seemed like a solid alternative to keeping money in euros.
Yet the euro has defied gravity and remained remarkably strong, not least against the kroner. Why? Well, I stupidly forgot that currencies are one of the few investments almost entirely at the mercy of rigged markets in the form of government intervention. Governments, not just in the euro zone itself, had an interest in keeping the euro high, and managed this feat quite successfully. If you wonder at the strength of the euro, glance at the strength of the US dollar for proof of this assertion.
I usually regard equities as the best of all investments, especially at times when shares fall into disfavour. At the beginning of the year, stock markets were uncertain and bonds were all the rage.
Instead of taking sufficient advantage of market weakness, I was overly cautious - but thankfully not entirely so. In Hong Kong, the average price of stocks has climbed more than 20 per cent this year, making it one of the best performers in the region. Chinese equities had a wretched year, which suggests a number of bargains here.
Funny little markets such as Venezuela's performed ecstatically, yielding a rise of some 300 per cent, but shares in this Central American venue are not much of an option for the average investor. More logical and more accessible is the German market, up some 30 per cent on the year, thanks largely to a sound underlying economy. This serves as a reminder that investors should as much as possible focus more on fundamentals than fads.