The weather is cold, the holiday decorations are out, and that means it’s time for a little reflection on the year that was. In terms of market news, there’s never a paucity of prodigious headlines to contemplate for a “top stories” list. However, this year there were so many good ones, it was difficult to narrow them down to just 10.
Now admittedly, this list is subjective, and some readers might disagree with either the order of my ranking, or the fact a story even made the list. Fair enough. In that case, we want you to make your voice known and tell us what stories you think were the most important, and which you think should have been left off of the list — or which stories you think should have been included that weren’t on the list. So let us know by voting on the right side of the page (scroll down), or leaving a comment below.
Here are my top 11 market stories for 2011:
#11: Occupy Wall Street
The malcontent movement started in New York City but quickly became a nationwide and even global phenomenon. Although the movement’s message is far from cogent, protestors did unite around issues such as the unfairness of bank bailouts, growing income inequality and the prevalence of crony capitalism.
#10: Osama bin Laden Killed
The taking down of the world’s biggest terrorist was beautiful music to the ears of nearly every American, but particularly those of us who work on Wall Street — the main target of al-Qaida’s wrath. As someone who once worked at the World Trade Center, the elimination of Osama bin Laden was justice long overdue.
#9: Arab Spring
Democracy movements in the Middle East are few and far between, and this year we saw them pop up in Egypt, Libya, Syria, Tunisia and Yemen. The ousting of Egypt’s Hosni Mubarak and Libya’s Moammar Gaddafi represent the biggest victories in what has been deemed the Arab Spring, but the uprisings clouded the security of energy supplies in the region.
#8: Steve Jobs’ Death
The death of the Apple (NASDAQ:AAPL) co-founder and former CEO was perhaps the saddest news the market had to grapple with all year. Jobs was an incredible genius who changed the world for the better with his innovative products and masterful marketing. His efforts not only created billions of dollars in wealth for Apple shareholders, but they also provided users with brilliant tools to increase productivity. If only there were more CEOs like Steve Jobs.
#7: Operation Twist
The Federal Reserve didn’t want to initiate another round of quantitative easing, so instead they decided to “twist” the maturities on their bond portfolio by selling medium-term bonds and using the proceeds to buy longer-term bonds. This was designed to drive down interest rates on the 10-year bond, and by extension, interest rates virtually across the board.
#6: Japan Earthquake and Tsunami
The devastating earthquake off the coast of Japan created one of the worst tsunamis in that country’s history. Then the real damage came, as a near meltdown took place at nuclear plant in Fukushima. The economic and human costs of this tragedy will never be fully known, but suffice it to say that this natural disaster literally and figuratively rocked the entire world.
#5: MF Global
The bankruptcy and alleged fiscal malfeasance at securities firm MF Global shook the financial world. Former New Jersey governor, U.S. senator and Goldman Sachs (NYSE:GS) chief Jon Corzine was put in the hot seat by Congress to explain what happened to the $1.2 billion in missing customer funds. This infuriating story demonstrates that even politically connected Wall Street titans can put investor capital in jeopardy.
#4: S&P Outlook Downgrade
In April, ratings agency Standard & Poor’s downgraded its outlook on the U.S. debt to negative from stable. Then in August, the agency cut its long-term credit rating for the first time in the history, lowering it one notch from AAA rating to AA-plus. In a statement accompanying the downgrade, S&P said, “We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.”
Translation: The lack of political will in Washington to address the nation’s fiscal problems is the reason for the downgrade.
#3: Debt Ceiling and Congressional Supercommittee Failure
The aforementioned S&P downgrades can be directly linked to Washington’s political gridlock on issues such as lifting the debt ceiling and reining in debt. The failure of the congressional supercommittee to manage to curtail the rate of spending by a meager $1.2 trillion over the next 10 years highlights this massive failure on the part of our elected representatives to do their jobs.
#2: Extreme Volatility
The market saw some wild price swings this year, and since August we’ve seen stocks go from angry bear to jubilant bull seemingly at will. We witnessed multiple days of 300- and 400-point swings in the Dow, and big spikes in the CBOE Volatility Index, or VIX. The rampant volatility in stocks caused traders some big headaches this year, as many were caught long when the market tanked, and short when the market surged. This extreme volatility has made 2011 one of the toughest years for investors trying to time the market.
#1: European Debt Crisis
One huge reason for the crazy volatility in stocks was Europe’s debt crisis. The euro zone is facing serious fiscal issues, with Greece, Italy, Portugal and Spain all staring down the barrel of potential sovereign debt defaults. The financial turmoil in the region forced the Greek and Italian prime ministers to resign, and only recently have European leaders cobbled together some sort of coordinated effort to bail out the region. Failure to find some sort of short-term solution to the region’s fiscal woes threatened a major meltdown in global markets, and whether the most recent European deal will succeed is far from determined. Fear of this kind of pernicious European debt contagion — and the stranglehold it had on U.S. markets — made this the biggest market story of the year.
As of this writing, Jim Woods did not hold a position in any of the aforementioned stocks. Check out InvestorPlace.com’s other looks back at 2011 and ahead to 2012 here.