What a year 2024 has been. Most investments have performed extremely well despite continuing armed conflict overseas and surprising political developments. The typical diversified portfolio with up to seventy per cent in growth assets earned 19.7 per cent for the twelve months to November 30.

Investors focused on high growth earned over 20 per cent. Even conservative investors with less than a third in market linked growth assets such as shares and property earned 11.7 per cent on average over the last year according to Lonsec Research. 

Nearly all sectors have done well. The All Ordinaries Index of Australian shares provided 23.5 per cent total return including dividends paid. Both large and small companies did well. IT related companies did best while mining and energy companies had a bad year.

International shares did even better. The MSCI All Country Ex-Australia Index earned 28.4 per cent according to Lonsec. In the US the S&P500 returned 32.1 per cent. The London market was one of the slowest at just 11.2 per cent.

Australian share market listed property was the standout performer with an unbelievable 39.2 per cent jump over the last twelve months. Global listed property made 18.8 per cent while global infrastructure earned 26.4 per cent.

Even fixed interest securities such as government and corporate bonds paid 5.2 per cent due to the relatively high interest rates. One big disappointment was direct unlisted commercial property which lost 11.8 per cent on average.

These excellent returns occurred while both the Ukraine War and the military conflict in Gaza continued. The US election fuelled division and President-elect Trump has made some worrying promises. Meanwhile the French and German Governments have been unstable for months, and both collapsed. 

It is remarkable that the extreme returns have been achieved while all these negative influences were at work. The big positive influence has been the promise of interest rate cuts to come, a lower cost of capital. Those cuts are now real in Europe and the US but still only expectations in Australia.

Interest rate cuts will eventually happen here too. The exceptional returns are unlikely to be repeated in 2025 but returns could still be satisfactory. President Trump will probably be good for the US economy and markets, but a problem for China and Europe.

Are investments overpriced, especially shares? Probably some are a little, but there doesn’t appear to be a major problem. A collapse seems unlikely. It may be time for investors to be a bit more cautious but there doesn’t appear cause for alarm.