20 Surprises for 2008

10. Financial stocks fail to recover. No financial company is immune to the eroding market conditions, the spike in market volatility, the uneven direction in commodities and currency prices. Even the leader of the pack, Goldman Sachs(GS), makes several bad bets in the derivative, currency and commodity markets, and its shares begin to underperform its peers as profit forecasts move lower.

Citigroup(C) halves its dividend, and the shares briefly trade in the mid-$20s. Asset sales and writedowns leave the bank crippled, and in late 2008 (after another capital infusion by Abu Dhabi), Citi is merged with Bank of America(BAC). Its new name is its old name: CitiBank!

Bear Stearns(BSC) is acquired by HSBC(HBC) in a take-under (well below today's price) -- as investor Joe Lewis loses nearly $350 million on his near-10% position in the brokerage firm.

Mutual fund outflows and uncertainty regarding the integrity of money market funds result in the asset-management stocks being among the worst-performing sectors in 2008. With private-equity deals at a standstill, Blackstone(BX) shares trade down close to $10 a share. Late in the year, CEO Stephen Schwarzman and his management group take the company private.

11. With the economy weakening and corporate profits tumbling, investors pay up -- real up -- for growth. The three horsemen -- Research In Motion(RIMM), Apple Computer(AAPL) and Google(GOOG) -- move into bubble status, and short interest triples as the naysayers increase their bets. Their shares double in 2008 even as most equities decline.