Salient to Investors:

John Paulson said the euro would fall apart and bet against the region’s debt. Morgan Stanley predicted the S&P 500 would lose 7 percent and Credit Suisse predicted wider swings in equity prices. Warren Buffett called bonds dangerous. The largest banks and most-successful investors failed to anticipate how government actions would influence markets in 2012. Helen Zhu at Goldman Sachs predicted the CSI 300 Index would rise climb 36 percent by year-end 2012 versus the actal 7.6 percent rise. Zhu sees a 9 percent for 2013.

Jeffrey Saut at Raymond James said they paid too much attention to the fear du jour. Khiem Do at Baring Asset Mgmt said analysts are trained to analyze economic data, not to predict political decisions.

The Bloomberg Global Aggregate Hedge Fund Index increased 1.6 percent in 2012 through November. Over 65 percent of S&P 500 index mutual funds trailed the Index in 2012. The 50 S&P 500 stocks with the lowest analyst ratings at the end of 2011 gained an average 23 percent versus 16 percent for the Index.

The average strategist predicted a 7 percent rise, underporming by the most since 2003.

Lloyd Blankfein at Goldman Sachs said the real risk was being too pessimistic.

The S&P 500 is valued at 13.2 times estimated earnings.

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