Morse code: Middle East events confound big picture forecasts

We are only two months into the New Year and many forecasters have torn up their predictions for 2011.

No one foresaw the popular uprisings in the Arab world, but investors’ reactions to the protests have been largely confined to local markets. Oil has risen on supply fears, but panic has not swept into Europe. The events go to show how difficult it can be to paint the big picture before you have a clear view of it. This is why a focus on the stocks you hold and their long-term prospects is more important than the distraction of macro events. Another factor of this year is stocks that were hit hardest in the second half of 2010 – those caught in the sovereign debt crisis in Portugal, Ir...