Global stocks had a great year in 2013 with the U.S. and Japan leading the way with 30%+ returns. The TSX, by far the largest holding in the average Canadian household’s portfolio, ended the year up about 10% . A satisfactory return, but far off its American counterpart. Bonds, typically seen as “safe” investments, ended the year slightly negative as yields started to rise in 2013. Finally gold plummeted over 28% in 2013, its largest single year drop since 1981.

If you had a long-term, “growth-style” portfolio, you were likely exposed to ALL of these markets to one extent or another. Each year brings a new set winners and losers among major markets. Sometimes this is a continuation of a recent trend (U.S. returns), sometimes it comes as pretty sudden and surprising (Gold’s quick drop). The lesson to take away is that it is nearly impossible to consistently predict the top performers each year, that you should abide to a preset and well-diversified asset allocation and to only make small tactical increases/decreases to your portfolio each year.

Here are some key market returns for 2013, from highest to lowest. All returns are in local currency:

• Nikkei Index (Japan): Up 56.7%. 39.9% in Canadian dollar terms
• Nasdaq (U.S): Up 38.3%
• S&P 500 (U.S.): Ended 2013 at a record closing high of 16,576, up 29.6% or 31.5% if we include dividends. Best year since 1997
• Dow Jones (U.S.): Ended 2013 at a record closing high of 1,848 up 26.5%. Best year since 1995
• FTSE (England): Up 14.4%.
• TSX (Canada): ended 2013 at 13,621, up 9.6%
• Crude Oil: Up 7.2%
• Dex Universe Bond Index: Down -1.19%
• MSCI Emerging Markets Index: Down -5.0%
• The CAD/USD ended at 94.02, Down -6.4%
• Gold: Down -28.0%. Worst in 32 years.

Sources: TD, Globe & Mail, Bloomberg.

Diversification