The past year has been a year of ups and downs. While 2010 saw a return to growth for many countries and businesses, it also furthered the debt crisis with both Greece and Ireland requiring massive bailouts. Equity markets rose and fell then rose again then fell leaving us all a little sea sick but no better off.

However, 2011 promises to be a better year. Company profitability is likely to reach record levels in April. An average increase in profitability of 37% over 2010 levels has been forecast. This will take earnings back above 2007 levels, the previous high. This is likely to cause stock markets to break their 2007 highs which were very similar to the previous highs reached in the year 2000 before the tech bubble burst.

With oil prices possibly rising back above $100 a barrel, energy company stocks are likely to be one of the best places to be in 2011. Same too with mining and resource stocks. While prices of metals may not rise much more above today’s value, there is significantly profitable production to be had at today’s prices. We may also see a rise in M&A activity with companies like Rio Tinto and BHP sitting on large cash reserves.

Brazil experienced a fantastic 2010. However, with its market at all time highs and its currency at a high level it is unlikely to be able to sustain this level in 2011. However there are significant opportunities elsewhere. The Chinese market fell in 2010 and is still more than 15% down from January 2010. While China is experiencing difficulty caused by house and food inflation recent government moves may have brought this under control.

India is seen by many as the best market of 2011. A recent survey in the UK had 9 out of 10 analysts surveyed predicting Indian equity to be the best performing asset sector in the world for 2011. Strong internal demand as well as rising exports were all cited as contributing factors for growth. By the end of 2010 almost every G8 leader has made a visit to New Delhi with the US, UK and France taking their largest ever trade delegations.

Meanwhile Russia enjoyed a strong 2010 and it is likely to continue to perform with high demand for oil and mineral.

In terms of currency, most analysts are piping sterling to be the best performer of 2011. The currency is still low, however the UK economy has returned to strong growth and the government seems to have gotten a handle on its deficit. The BOE may also begin raising rates later this year which will further add to sterling’s rebound.  The Australian dollar did well in 2010 however with the currency trading around parity to the US dollar and possible drops in demand for Chinese minerals it is unlikely to be able to go much further. The US dollar has significant downside in 2011. With a divided congress and a high budget deficit the US could be the next target for the bond vigilantes.

The Euro Zone crisis will likely continue for some time having a significant downside on the Euro going forward. All will depend on Spain and whether its government will need the mother of all bailouts. If they do, it will be very difficult for Euro leaders to continue on their present course.