Despite huge swings, in the U.S. markets ended the year remarkably close to where they began.
Despite huge swings, in the U.S. markets ended the year remarkably close to where they began. - 

A graph of the stock market in 2011 looks like a contour map of Death Valley glued to the Himalayas. Despite huge swings, the S&P 500 index ended the year remarkably close to where it began.

Derek Jaskulski is a principal at Portland Global Advisors in Portland, Maine. He says you got to hand it to a market that can go through such scary volatility and still end up pretty much with a shrug. Jaskulski says it could be credit to a geniune balance of opinions in the market after all.

Looking ahead to 2012, Jakulski says he's watching three main things:

  • In the US, the bottoming in the housing market vs. the drag on earnings from the strong dollar.
  • In Europe, the futility of austerity and the fact that everyone in the world cannot run a trade surplus.
  • In the emerging markets, many are currently suffering from end-of-year tax selling and whether their central banks have room to ease the pressure.

Jaskulski says most people think a strong dollar's a good thing. It is if you're earning money overseas. A strong dollar means you'll get more back in the U.S. But there is a downside -- one that has real impact for U.S. manufacturers -- f you make something to sell overseas, a strong dollar makes your product more expensive. With more U.S. goods being sold on foreign shores, a strong dollar could cut into corporate earnings in the coming year.

Follow David Brancaccio at @DavidBrancaccio