Aren't share markets meant to do well when interest rates drop?
I think Mr ASX missed that memo…
Because after approximately 252 days of trading in the local sharemarket, the S&P/ASX 200 (ASX: XJO) (INDEX: ^AXJO) is up just 1.4% in 2014.
Hardly an impressive return.
With inflation averaging 2.73%pa in the first three quarters this calendar year, let's just hope all those Aussie's with index funds didn't have to pay huge management or account keeping "fees".
But it's not just index huggers who've had a tough run in 2014.
Term deposit holders won't have much to brag about at the next dinner party, either.
Thanks to the official RBA cash rate being just 2.5%, recently-opened savings accounts and term deposits are likely yielding between just 3% and 4% per year.
After tax and inflation, they're unlikely to break-even.
Speaking of breaking-even, it's been a hot topic in the mining and resources sector throughout 2014. I should have paid closer attention.
Prices of key Australian exports like iron ore, thermal coal and oil have been smashed throughout the year.
My instalments warrants in iron ore miner Rio Tinto Limited (ASX: RIO) were one of my worst investments to date. In the space of a few months, I lost 54% of my investment.
So much for the resources sector being a good place to search for yield.
But not all investors' search for yield have been in vain. There's also been some great performers in 2014.
Source: Google Finance. Click to enlarge.
Over in the local bond market, benchmarked by the S&P/ASX Australian Fixed Interest Index (INDEXSP: SPBDASXT), investors have enjoyed 10% returns.
By all accounts 2015 could be another good year, especially if interest rates drop.
In addition astute sharemarket investors, who avoided resources sector and bought quality companies at good prices, have also enjoyed 2014.
Scott Phillips, our ace stock picker in charge of Motley Fool Share Advisor, has handily outperformed the market by doing just that.
In September 2012, Scott told readers of The Sydney Morning Herald to avoid iron ore and gold, "The impacts of supply and demand don't bode well for iron ore… I find the fascination with gold a little hard to understand." Since that time gold's down nearly 30% whilst iron ore is down much more.
Some forecasters tipping it'll go even lower in the coming year.
Luckily, I maintained a diversified portfolio throughout the year…
My portfolio's sector weighting leading into 2015. Click to enlarge.
Despite hefty losses on small-caps like Senex Energy Ltd (ASX: SXY) and Newsat Limited (ASX: NWT), a diversified portfolio has enabled me to weather those losses and come out ahead.
Boosted by strong performances of great companies like Slater & Gordon Limited (ASX: SGH), NIB Holdings Ltd (ASX: NHF) and Shine Corporate Ltd (ASX: SHJ) – up 32%, 15% and 70% since January 2nd – my portfolio is sitting pretty, up 13.1% since this time last year.
I also had some dazzling performers too, like my small holding in speculative energy play, Liquefied Natural Gas Limited (ASX: LNG), up 740% for the year.
Foolish Takeaway
In 2014 I've had my fair share of losers, many of which I probably could've avoided. But investing successfully in the share market is all about learning, listening to those around you, developing a plan and following through. Year after year.
I know it's evitable that I'll lose money on some stocks but I'll win on the others.
Here's to another successful year on the Australian sharemarket.
