At the beginning of the year the financial experts were forecasting a good year for the Australian stock market and there was a strong expectation that the All Ordinaries index might even climb all the way back up to the 6,000 mark by the start of 2015. Back in July when the index got to 5,500 it even looked like the forecasts of 6,000 by Christmas might even come true.
But then the price of iron ore started to slide heavily, followed by copper, nickel, and coal—not as badly as iron ore but going down instead of up.
So, as I key this at 00:36 a.m. on the 1st of January 2015 the All Ordinaries is at 5,388.6. This index started 2014 at 5,369.80. So in 12 months this key market index rose by about a third of one percent (0.35%) and nothing like the 10 to 11 percent forecast.
So, to put it another way, if you had $150,000 invested in the stock market spread across the All Ordinaries you would have made about $520. If you had borrowed this money to invest then you would have paid something like $8,200 in interest so you would be $7,680 behind. If your borrowing was negatively geared and you have income to offset against the negative gearing then you will get something like $2,700 of the interest back (depending on taxable income and margins), but that still means you are going to be around $4,900 behind.
None of this bodes well for superannuation funds which are one of the biggest investors in the stock market. I doubt we are going to see many double-figure performing superannuation funds for 2014.
It will be interesting to see what the 'experts' forecast for the market in 2015. You can be sure I will be getting next weekend's Australian and Financial Review newspapers.