2014 was the year to have invested with the C.I.A. (China, India and America). The Shanghai Composite gained 53%, despite the slowdown in China’s growth rate, while India’s Nifty Fifty ended 2014 with a gain of 31%.

It was a good year for U.S bondholders and equity investors. Abundant liquidity, a return to strong U.S. growth as well as relatively lackluster performances from emerging markets, drove stock indices to record highs. The S&P 500 ended its third straight year of double digit percentage gains, rising 13.7% on a total return basis.

Stock pickers encountered difficulties this year in part because of concentration at the top of the market. Just five stocks – Apple, Berkshire Hathaway, Johnson & Johnson, Microsoft and Intel – accounted for 20% of the market’s gains. According to Lipper, 85% of all active stock mutual fund managers trailed their benchmarks this year, the worst year for active managers in three decades.

On the fixed-income side, most investors were expecting this to be the year in which Treasury rates began to rise. Instead, yields on the 20 year Treasury bond fell from 3% to 2.2%.

Commodities had a good start in 2014, but as the U.S dollar continued to build strength in the latter half of the year, commodities began to suffer, especially oil, which fell 44.5%.

After a lot of ups and downs, including a new record high in September, the Canadian market (TSX) ended the year up 10.5%. That was a rather remarkable result, considering the energy sector fell almost 20%, metals and mining lost 14%, and gold was down 7%. The standout sectors, as in the U.S, were consumer staples and information technology.

How did we fare?

Surprisingly well in both countries, as well as globally.

We have always had a preference for consumer staple, health care and technology stocks in the US, which stood us in good stead last year. Our core Holdun US portfolio increased 21.8% versus the S&P 500 (13.7%).

In Canada, we had help from Tiny Tim, as we tiptoed through the tulips. As we eschew most commodities most of the time, this was a distinct benefit to us in 2014.

  • Our core Holdun Canadian portfolio was up 16.5% versus the TSX (10.5%)
  • Our Canadian Growth portfolio rose 14.9%
  • It pays to be in dividend stocks in more ways than one, as our Canadian Dividend portfolio rose an outstanding 26.9%, fully 16% better than the index

Our global tactical portfolio, in which we could have any mix of asset classes (stocks, bonds, cash) and any mix of countries, increased 13.7%.