Mix together a European debt crisis, a looming fiscal cliff and the uncertainty from a presidential election and what you’ve got is a down stock market, right?

Wrong.

In a year that had all the earmarks to be a disaster, it turned out to be anything but that as the market righted itself in 2012 and the Dow finished with a 10.2 percent total return to mark its best performance since 2010.

The winning year played into the hands of mega-bull Dwight Melton, co-founder of the Hawaii Stocks and Options Group. Melton, the most aggressive of all the local experts in the 11th annual Star-Advertiser investment contest, fashioned a 49.9 percent gain to finish first with $29,985.99 in his hypothetical $20,000 portfolio. It was the fourth title for Melton, who also won in 2007 (13.3 percent), 2005 (72 percent) and 2004 (23.3 percent), and it broke a tie he held with Barry Hyman at three championships each.

Hyman, private client group vice president for the Maui branch of FIM Group Ltd., took second with a 19.9 percent gain that boosted his portfolio to $23,987.45. Richard Dole, chief executive of Hono­lulu investment adviser Dole Capital LLC, was next with a 15 percent return to $22,989.78. Norm Caris, a Kauai resident and managing director for Los Angeles-based investment bank B. Riley Caris, rounded out the group with a 1.6 percent loss to $19,687.07. Caris was formerly with stock research firm Caris & Co., which was purchased in December by B. Riley & Co.

Melton said the market’s returns "were hardly historic," but they were strong enough to gain the attention of investors. Besides the Dow’s gain, the Nasdaq had a total return of 17.7 percent, while the Standard & Poor’s 500 index climbed 16 percent.

"The strength was even more noteworthy as it came in spite of uncertainties in Washington and the economic woes in Europe," he said.

Melton, whose fourth-quarter holdings included financial, retail, energy and S&P 500 index funds, is optimistic about this year.

"Assuming a budget deal gets done in a reasonable time and the economic fundamentals stay fairly positive, we could see the equity market push modestly higher in 2013," he said.

Hyman said he wasn’t surprised by the rebound in stocks in 2012, because global markets began last year selling at decent valuations.

"Central banks enticed investors into risk assets by pushing the real (inflation-adjusted) return on government bonds, CDs and savings to zero and into negative territory," he said. "Major European and Asian indexes began 2012 20 to 30 percent cheaper than those in the U.S., and they subsequently rose more than U.S. indexes."

The Euro Stoxx 50 rose 22 percent, and the MSCI Asia APEX increased 25 percent in U.S. dollars.

Dole said low interest rates, liquidity from the federal stimulus package and a lack of attractive alternative investments were the main drivers of the economy in 2012.

"Low interest rates have increased liquidity," Dole said. "I don’t see any major stimulation of the economy from low interest rates until people spend money and money turns over. If there is confidence in face of the risks, the economy should be stimulated."

Although Caris finished the year with a slight loss, he hit the jackpot with Netflix, the world’s largest online-video service. Netflix soared 70.1 percent during the final three months of the year to help boost his portfolio in the quarter by 5.1 percent, the best fourth-quarter return of any of the stock experts.

"The stock market performed in line with our expectations, which is to say action was largely dominated by the politics coming out of Washington, D.C.," Caris said.