At the start of every year, Blackstone Advisory vice chairman Byron Wien creates a list of 10 crazy things he thinks have a good chance of occurring over the next 12 months.

He's been doing this for 26 years. Like most prognosticators, he's had his share of drubbings. That's given. But Wien's annual list is always anxiously anticipated because his track record is far better than most.

In 2009, he predicted that the S&P 500 would rise to 1200 on the back of "anticipation of a second-half recovery in the U.S. economy" and improving "from a base of investor despondency and hedge fund and mutual fund withdrawals." He was slightly off on the number, but that's basically what happened.

Last year, he predicted that "The S&P rallies to 1300 in the first half of the year, declines to 1000, then settles around 1115." Again, the figures were slightly off, but he nailed the general trend -- rally early on, a summer sell-off, then a year-end rally.

Wien just released his list of 2011 surprises. You can view the full list here, but I thought these three in particular would interest the Fool community.

1. Encouraged by renewed economic momentum the Standard & Poor's 500 rises close to its old high of 1500. A broad range of sectors participate, but telecommunications and utilities lag. With earnings improving, valuations seem low and individual investors return to equities for the first time since the financial crisis. Merger and acquisition activity becomes intense and the market reaches a blow-off euphoria. Stocks correct in the second half as interest rates rise.

The thought of stocks at all-time highs might sound absurd. But I don't think it's that far-fetched. Earnings are expected to hit an all-time high in this year, after all. 1500 on the S&P would be a 17% rise from today's prices -- not a ridiculous gain. And with earnings estimates of $93, 1500 on the S&P would bring a P/E ratio of 16. That's not exuberant. It's about average.

It gets really interesting at the individual-company level. Microsoft (Nasdaq: MSFT), Intel (Nasdaq: INTC), and Cisco (Nasdaq: CSCO) could all rise 25% and still trade for a P/E ratio of less than 15.

2. Although inflation remains benign, the price of gold rises above $1600 as investors across the world place more of their assets in something they consider "real." Sovereign wealth funds of countries with significant dollar reserves also become big buyers. Hedge funds keep thinking the price rise is becoming parabolic and sell their positions and some even short the metal but gold keeps climbing and they scramble back in.

I actually don't think this would surprise anyone. If you're a gold bull, $1,600 is probably a low target and easily backed up by fundamentals. If you're in the gold-bubble camp, you're resigned to the fact insanity can last for a long time. In either case, I tend to agree with my colleague Alex Dumortier: Massive volatility in the price of gold seems likely. It's just what happens after large moves.

3. The prospect of increasing Federal budget deficits and rising government debt finally begins to weigh on the bond market. The yield on the 10-year U.S. Treasury approaches 5% as foreign investors become more demanding. Spreads with corporate fixed income securities narrow.

Wien makes a good point about this prediction on CNBC: "Usually at the point in the cycle [the 10-year Treasury] is at 7%. Five percent is a bargain!"

That's important to keep in mind. A lot of people pretend like 5% is high. It's not. It's just higher than what we're used to:

Editorial

Source: Yahoo! Finance, author's calculations.

What's dangerous is that we've become accustomed to extremely low interest rates. You think housing is bad now? Think the federal budget deficit is ugly? Watch what happens when rates surge. And by surge, I mean revert to historic averages.

What do you think? Scroll down to the comments section to let your fellow Fools know.

Fool contributor Morgan Housel owns shares of Microsoft. Intel and Microsoft are Motley Fool Inside Value selections. The Fool has created a bull call spread position on Cisco Systems. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended buying calls on Intel. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Microsoft. Motley Fool Alpha owns shares of Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.