Keep Your Eye on the Strait of Hormuz

One year ago, I wrote an article about what the experts were predicting for 2011. This is what I wrote at that time:

Even with the most optimistic forecast, reality often gets in the way, and sometimes when it’s least expected. “I can draw a scenario where we have a crash,” Baumohl says. “For example, let’s say a major war breaks out with Iran and they block the Strait of Hormuz, and oil shoots to $150 a gallon. What do you think will happen to the stock market?”

The above comment was made by Bernard Baumohl, chief global economist at The Economic Outlook Group and author of The Secrets of Economic Indicators.

And now, one year later, Baumohl's worst-case scenario could come true. In addition, watch Europe and see whether the debts can be paid. We should know by April.

Most important, the threat that the Strait of Hormuz might close will create havoc with the stock market. If you thought 2011 was volatile, compared to what could happen, 2011 will be like a walk in the park.