Markets see boost from inflation in 2010
Double dip anyone? No? Funny how fast moods change.
Four months ago, deflation and a second dive into the recessionary pool was sending investors into a tizzy.
Not now. Inflation is all the rage, and so far we are only seeing its beneficial effects on equities.
Copper is up at record levels. So Antofagasta is up 60% this year. Oil is up, so is Shell, Exxon and all the others.
We haven't yet started to worry seriously about rising interest rates.
Speculation in the UK over rates climbing to nearly 3% by Spring 2012 has been greeted with so-what shrugs.
The Bloomberg World Index rose a respectable 10% in 2010, and the New Year is starting off in optimistic mood.
Small and emerging
But last year's best-performing markets were small and emerging - Sri Lanka (up 92%) and Mongolia (up 136%).
Sri Lanka is still receiving its peace dividend from the victory over the Tamil Tigers in May 2009.
That doesn't just mean a revival of the tourist sector - there are up to 75 initial public offerings lined up for next year, privatisation is being accelerated and there is a thriving IT sector.
It also has one of the world's most technologically advanced stock exchanges.
Meanwhile, Mongolia is bracing itself, like an astronaut on a launchpad, for 2013 when the International Monetary Fund expects its GDP growth to accelerate from 8% up to 28%, as it unleashes gold, copper and coal from its new mines on to the world markets.
The problem that beset all the markets was Europe's sovereign debt crisis, starting initially in Greece and then spreading to Ireland, Portugal and Spain.
The damage done to bond markets was considerable; equities were shaken, but remained reasonably intact.
The reason was largely the success the central banks had (after much dithering) of assuring the markets that responsibility for the debt would not be passed on to private investors (ie the banks) and that the tax payers instead would pick up the tab.
Whether they will be so sanguine as interest rates start to rise is a different matter.
So the European markets broadly reflected their recovering economies.
London's FTSE 100 index of leading shares gained about 10%, led on by its huge mining sector that has been riding the tiger of emerging market growth.
The German Dax index closed up about 16%, driven by exports and, encouragingly, the consumer.
Paris's Cac-40 index had a hard time, losing about 3% in 2010.
"The problem for the French equity markets is largely sectoral," says Julian Callow, chief European economist at Barclays Capital.
"In Germany, industry and the markets are dominated by the capital goods sector, which has benefited in the recovery. France's market though is more oriented to the consumer sector, which is still vulnerable and hasn't seen the same sort of growth."
But the profits made over the last 18 months mask a continuing question that many investors find hard to shake off: whether equities, as represented by the indices, have really ceased to outperform Treasuries or bank deposits in the long term.
Over 10 years, most people will have lost money investing in any major Western index.
The Dow is 7% higher, the FTSE 4% lower, the Dax 8% higher, but the Cac in Paris a dismal 34% lower.
Japan is, predictably, 24% lower.
But if you had bought into many emerging markets at any time between 2001 and 2005, your returns would have been handsome.
Brazil's Bovespa showed a 329% return from 10 years ago. India's Sensex has risen 390%. Mexico is up 546%.
However, the stock I am proposing as the best performer is Australian miner Fortescue Metals.
According to Bloomberg's ranking of the Sydney all-ordinaries index, $1,000 invested in 2001 would have yielded you an astonishing $820,000.
If you had sold out in 2008, you would have pocketed well over $1m.
Originally Allied Mining & Processing, it discarded its operations in medical products distribution and gold in 2003 and concentrated on iron ore, developing Western Australia's Pilbara region and - this is the clincher - the Chinese market.
Not just commodities
India has thrown up a different type of stock market leviathan, more diverse, but still bound in to emerging market growth - Jindal Steel and Power.
Its share price in 10 years has risen almost 250 times.
With the acquisition of Ispat Industries from the Mittals, it will become the biggest steel producer in India, with mines and mills in Asia, Africa, South America and Australia.
To see these figures, you would imagine that the only way to have made money since 2001 was to invest in commodity or infrastructure stocks.
But the US tells a different story.
The best performers there are dominated by Flir Systems (thermal imaging) Apple and Priceline (internet travel agency), all of them up between 3,500-4,500%.
There are only three commodity or infrastructure stocks in Bloomberg's top 10 of the S&P 500.
In 2001 the world was watching the tech bubble burst, and we were all wondering how on earth we could have all fallen for that New Paradigm baloney.
Well, the bubble may have burst 10 years ago, but the tech revolution never stopped.
Its investors are now proving there is more to making money than simply buying iron, oil and concrete.