The market's powerful final-four-month run saved what was shaping up to be a lousy year for stocks. But after a year-end rally and the strongest December in almost 20 years, the stock market put up double-digit percent gains in 2010. That it did so in gut-wrenching fashion came as no surprise to Teddy Weisberg, founder of Seaport Securities -- and he expects more of the same in the new year.
The veteran NYSE floor trader divines three important lessons from the markets in 2010 that should serve as guideposts for 2011. First, the rise of high-frequency trading is ushering in a new, more violent kind of volatility, Weisberg says. Just witness the infamous Flash Crash of early May, which wiped more than a thousand points off the Dow in a matter of minutes before the market snapped back. That's neither bullish nor bearish for equities, Weisberg notes, but it means we'd all best stay frosty.
Second, the market likes the new balance-of-power arrangement in Washington, he says. Look no farther than the compromise to extend the Bush-era tax cuts. The Federal Reserve's money-printing policies are also to the market's liking, Weisberg says. Expect more of the same.
But most important -- and most bullish -- was a decisive, if subtle, shift in sentiment. Says Weisberg: "2010 was the year the market stopped seeing the future as a glass that's half empty and started seeing it as half full."
For more on Weisberg's take from the floor of the New York Stock Exchange (NYX), see the video above.