Investing Legend Byron Wien Predicted 10 Big Surprises For 2012 — Here's How They Actually Did

byron wien

Photo: Bloomberg

Blackstone Vice Chairman Byron Wien has a long history of guessing what could surprise us in the upcoming year. He’s posted a list every year since 1986, which includes his time at Morgan Stanley.”My definition of a surprise is a market-influencing event that the average investor would assign only a one-out-of-three chance of taking place during the year,” writes Wien.

Typically, around half of his surprises actually happen.

We’ve checked Wien’s 2012 surprises, and we’ve given him an above-average score of 50.3 per cent.

Some of his surprises were spot on. Some were dead wrong. And some were worthy of partial credit.

Oil prices decline to $85 a barrel.

RIGHT

Wien really hit the nail on the head with this call, correctly forecasting the price drop due to increase share of shale and less dependency on oil from the Middle East. After a brief spike in early 2012, oil prices hit $85/barrel and reached a low of $77.72 on June 28. Currently, the price per barrel hovers from $85 to $90.

Tally: 1.0/1.0

Source: St. Louis Fed

S&P 500 heads above 1400.

RIGHT

The S&P 500 started the year below 1300, but eclipsed 1400 in March before reaching a high of 1465.77 in mid-September.

Tally: 2.0/2.0

Source: Yahoo Finance

Real GDP growth exceeds 3 per cent, unemployment drops below 8 per cent.

HALF RIGHT

In the third quarter, unemployment managed to break through the 8% barrier, making half of Wien's prediction come true. However, GDP growth remains mired below 3%.

Tally: 2.5/3.0

Source: Y Charts

Obama beats Romney, Dems win House, GOP wins Senate.

PARTLY RIGHT

The Republicans squandered the opportunity to reclaim the Senate, while Democrats fell short of the 25 seats they needed to pick up to avoid being the minority in the House. However, he was bang-on in predicting 'Romney is the Republican nominee, but is viewed as lackluster.'

Tally: 3.0/4.0

Source: Business Insider

Europe finally develops a long-lasting plan.

RIGHT

This one is a bit harder to score as a 'long-lasting' plan can only be confirmed after more than a year. But we're giving Wien full credit on this one. Euro leaders have agreed on a plan that keeps Greece solvent and in the E.U. The effects are already being seen in Europe, where stock markets are up and yields are down.

Tally: 4.0/5.0

Source: Business Insider

The computer becomes the new weapon of choice.

WRONG

Though there has been a definite increase in awareness of cyber threats, there has yet to be a reported incident in which a government or a bank fell prey to a major cyber attack. There were no short-term bank closings or a G-20 meeting on the matter, which Wien predicted.

Tally: 4.0/6.0

Source: Business Insider

Investors shift currency buys to Australia, Scandinavia, Singapore, and Korea.

HALF RIGHT

When it comes to currency performance against the US dollar this year, the Aussie dollar is flat, Scandinavia is flat, the Singapore dollar is up, and the Korean won is up.

Tally: 4.5/7.0

Source: Y Charts

Congress finds a way to cut $1.2 trillion over 10 years.

WRONG

Congress is certainly doing its fair share of talking about spending cuts as the fiscal cliff looms, but this talk has yet to translate into any action. The only cuts locked in for 2013 as of now are the Super Committee's sequestration cuts.

Tally: 4.5/8.0

Source: Business Insider

The Arab Spring matures: Al-Assad is deposed, and Hamas, Hezbollah, and Iran are weakened.

PARTLY RIGHT

This prediction is a mixed bag for Wien. Al-Assad seems to be on his way out of office, though he has not been formally deposed. Iran's economy has been devastated by crippling sanctions. However, reports which indicate that Hamas has never been stronger and the continued unrest in Egypt make the Arab Spring look like a teenager with growing pains -- not a mature adult.

Tally: 5.0/9.0

Source: Business Insider

Indexes in Brazil, China, and India gain more than 15 per cent.

1/3 RIGHT

India's BSE 500 was the only index to meet Wien's criterion, with a YTD return over 27%. By comparison, the Shenzhen 'A' Share Index has declined by about 2.7% this year, while Brazil's Bovespa Index returned slightly over 3%.

FINAL TALLY: 5.3/10.0

Source: Y Charts

Now, check out how another one of the top market minds did with his predictions:

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