2010 is now history and it caps a wild three-year ride in the financial markets.

We ended 2007 near all-time record highs in the U.S. stock market, but then the wheels fell off. In 2008, markets fell dramatically and the world economy nearly imploded. In 2009, we realized that the world was not going to end and markets began to recover. In 2010, things started to stabilize and return to some level of "normalcy." As the chart below indicates, 2010 was a solid year in the equity markets and a strong year for gold, commodities, and real estate.

But, it wasn't smooth sailing by any stretch of the imagination. Here are a few of the year's key events, according to The Wall Street Journal:

·        On May 6, the Dow Jones Industrial Average plunged nearly 1,000 points in a matter of minutes and then turned around and finished the day with a loss of "just" 348 points. A report released later in the year said a combination of factors led to the plunge including a large hedging trade made by a mutual fund company. It exposed the still fragile state of the markets.

·        Several days later, the European Union agreed to a massive $955 billion bailout plan for euro-zone economies in an effort to prevent a sovereign debt crisis from imperiling the world economy. It led to a 404 point jump in the Dow the next trading day.

·        In the mid-term elections, the Republican Party won control of the House while Democrats retained control of the Senate. The election results suggest policy changes may be forthcoming that could affect the markets and the economy.

·        In November, the Federal Reserve announced that it would start another round of "quantitative easing" and buy $600 billion of government securities. This program was designed to "rev up the economy."

·        To put an exclamation point on the end of the year, the president announced a deal on December 7 to extend the Bush-era tax cuts, reduce payroll taxes for a year, extend jobless benefits, and set the estate tax at 35%.
 

Taking a page from the "six-word memoir" idea, these six words might be an apt description of the year just passed...bailouts, flash crash, stimulus, politics, hope.

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  N/A means not applicable or not available.