Do yourself a favor. Find one of the articles discussing how many record highs the S&P 500 set in 2014 (53 as I write this on December 29) and save it. Whenever the next bear market strikes—and it will at some unknown point in time—reread the article to reminder yourself of the upside momentum the market can experience. The record highs are Mr. Market’s way of rewarding those who put up with his temper tantrums.
Last year (2014) was a good year to be in large-cap stocks, with the exception of oil stocks. (We’re just now one slightly better-than-average year away from Dow 20,000!) It was a tough year for small-cap strategies. Early indications suggest that active managers struggled as well.
It was also a good year for those who stuck with higher-quality intermediate and long-term bonds. Yields on the benchmark 10-year Treasury note are ending 2014 approximately 80 basis points below where they started.