What did you learn from the market’s performance this year? Did your predictions pan out? We asked the Experts what they think are the biggest investment lessons from 2014.

This discussion relates to the latest Wall Street Journal Investing in Funds & ETFs report and formed the basis of a discussion on The Experts blog in December.

A Simple Way to Calculate the Right Asset Allocation for You

MANISHA THAKOR: As a wealth manager, I’d suggest the biggest investment lesson from 2014 is:  Asset allocation matters.

Raffle tickets often have the disclaimer: “You Must Be Present to Win.” Market participants should take heed. To the surprise of many (including me!), 2014 was another strong year for stocks. If you went into 2014 with an asset allocation appropriate for your personal situation, you would have been exposed to a corresponding level of equities and thus participated proportionately in the market’s upward march. If, however, you were worried that after five positive years in equities we couldn’t possibly have a sixth good year and bailed out of stocks, you are likely kicking yourself. So what’s an investor to do?

I believe firmly that there is a simple, powerful answer to this dilemma. It starts with the humbling admission that no one knows with certainty what the future will bring. So waste no time trying to pin down something that is unknowable. Instead, focus on the intersection of what matters and what you can control as financial guru and iconic “sketch guy” Carl Richards would say.

And what is it that matters most? Asset allocation. This is the mix of stocks, bonds, hard assets, and cash in your portfolio. This one single decision will drive the vast majority of your long-run returns.

How do you know what is a reasonable asset allocation?  A rough rule of thumb you can use is 110 minus your age to arrive at the percent of stocks that should be in your portfolio. For example, if you were 45 years old this rule of thumb would imply a target exposure to equities of 65% (110 – 45 = 65). From there you can dial that number up or down based on your particular willingness, ability, and need to take risk. If you have already “won the game” and have reached your savings goal you may choose to dial down your exposure to stocks. By contrast if you, like most people, are feeling like you got a late start to the practice of saving and investing, you may need to take more risk by dialing up your equity exposure (and/or contemplate working more years). Please note, you should never have money you know you need to spend in the next five years in stocks—precisely because no one knows when those down years will come.

The bottom line is, the “right” asset allocation for you will incorporate an expectation that there will be rough patches in the stock market. With this as your foundation, you can make sure the rest of your portfolio is invested in such a way as to provide you with whatever liquidity you may need to weather the storm. This ensures that you will be in the market on the handful of key days in any given year when stocks make their (unpredictable) move toward the winner’s line. After all, you must be present to win!

Manisha Thakor (@ManishaThakor) is founder and chief executive of Santa Fe, N.M.-based MoneyZen Wealth Management LLC.

Here’s More Proof Why Timing the Market Is a Bad Idea

TED JENKIN: As 2014 enters into its final month, this should be a good time to reflect on the most important major lesson about investing: That you have the appropriate time frame to take the risk associated with investing in a particular asset class.

Time and time again, most average investors get caught up in trying to figure out the best time to exit the markets or enter the markets. This is challenging enough for the experts who are engulfed in this data every hour of every working day, let alone going at it as an individual investor.

Check out these predictions from January 2014 from over 30 of the major chief investment strategists at various leading firms. On average, the peer group had the S&P 500 growing 6% and the year to date return of the S&P is almost double that number. They also had oil in the $105-to-$110 range, with the lowest number from any one analyst being $80.  We all know that as of today, oil has dropped far below that $80 number, a far cry from a $105 prediction. What’s even more interesting is that Bitcoin was actually on the list of predictions as a major index.

While the S&P 500 is at all-time high and oil is in a precariously low price range, if these two asset classes belong in your portfolio and you have 10 years to invest your money, it isn’t something you should be overly worried about from a day-to-day perspective.  Studies have shown for a long time that you can often be your own worst enemy when it comes to your portfolio. Be careful about getting influenced by the latest news article and assess what risk you can take—and how long you have to invest the money. Timing the markets will often blow up in your face.

Ted Jenkin (@tedjenkin ) is the co-CEO and founder of oXYGen Financial , a financial advisory firm focused on the X and Y generations. He also blogs at yoursmartmoneymoves.com .

The Boring but Necessary Secret to Successful Investing

ELEANOR BLAYNEY: The biggest investment lesson from 2014 is one we all love to hate, because it is just so tired and boring. But there’s no getting around it: Diversification works.

To illustrate the point, roll back to the beginning of 2014 when New Year’s predictions were being made for the economy and capital markets.  Central to most of these predictions were the anticipated actions of the Federal Reserve.  In late 2013, the Fed announced that it was going to phase out its purchases of Treasury and mortgage-backed bonds in the coming year. The bond-purchase program had been originally undertaken to stimulate the sluggish post-2008 economy by injecting more liquidity into the system.

Many prognosticators believed that the Fed’s decision to reduce, and ultimately end, quantitative easing in 2014 was tantamount to party crashing, economically speaking. Interest rates would rise in 2014, bringing down a long bull market in bonds and stocks.  Others anticipated a resurgence of inflation as a result of all the money the Fed had pumped into the system. This, in turn, would increase the prices of commodities and inflation-protected bonds.

All were reasonable predictions for 2014, based on macroeconomic theories of supply and demand. Problem is, however, few of these predictions have actually materialized in any meaningful way. Inflation is still low—lower, in fact, than even the Federal Reserve is comfortable with. Inflation-protected bonds have underperformed nominal bonds, and anyone who decided to drive rather than fly this Thanksgiving probably has a gut-level sense of how commodities (namely, oil) have been doing. Biggest surprise of all: Long-term Treasurys have knocked the bond ball out of the park.

As this nearly concluded year demonstrates, one problem with predictions is that they do not include an “error term” in the usual economic equations.  By definition, an error term is unpredictable, as it represents the economic impact of events and circumstances that cannot be anticipated before they occur. Examples of 2014 error terms might include the threat of ISIS and Ebola, or the Russian annexation of part of Ukraine. All of these factors have had the effect of enhancing U.S. capital markets relative to those of the rest of the world, and overwhelming—at least for the time being—the downer effects of higher interest rates to come.

So what’s an investor to do when these pesky error terms start interfering with the most predictable economic relationships? The answer; Get those errors to cancel each other out by diversifying asset classes. As 2014 has again demonstrated, diversification works because even the smartest predictions usually do not.

Eleanor Blayney (@EleanorBlayney) is consumer advocate of the Certified Financial Planner Board of Standards.

What Investing and Farming Have in Common

GEORGE PAPADOPOULOS:   To this day, I still run into investors who continue to wait on the sidelines, looking for “proof” that the market recovery is for real. Then there are others who have been expecting a crash and are convinced it is just around the corner after yet another market high. The former will finally get back in when prices have peaked. The latter will miss the next downturn, but also lose out on the positive returns that have historically outweighed the losses suffered in bear markets. U.S. stock-market history has given us an important lesson: You plant your seeds with the expectation that there will be bad crops from time to time, but that the unexpected boom years will more than make up for the losses.

The truth is, nobody knows what the future holds. We only know to expect surprises and market fluctuations, sometimes extreme. The six-year gains since the market downturn in late 2008-early 2009 have been extraordinary. At some point, the markets will give back some of the gains; it is a matter of when, not if. Long-term investors are like farmers who plant seeds with no foreknowledge of the weather during their growing season while knowing full well that whatever happened this year, good or bad, will have no impact on what will happen next year. Fortunately, in both markets, the good years have tended to outnumber the bad ones, so it makes economic sense for farmers to continue planting seeds each spring and for investors to stay invested in the stock market—and for both to marvel at the mystery rather than running from it.

We continue to focus on what we can control and let the markets do their thing. Anything is possible in the short term; we stay disciplined and remain humbled by sticking to our long-term approach of employing diversified, low-cost portfolios and rebalancing regularly while always being mindful of opportunities to save on taxes and minimizing trading costs. It is not terribly exciting; on the contrary it is as exciting as watching paint dry. Perhaps you should stick to excitement with your hobbies and not your nest egg and cherished long-term goals

George Papadopoulos is a fee-only wealth manager in Novi, Mich. serving affluent individuals and families. You can follow him at twitter (@feeonlyplanner ), connect with him at Google+ or visit his firm’s website .

How to Create Your Own Asset-Allocation Policy

LARRY ZIMPLEMAN: 2014 has turned out to be another interesting year in investment markets. At the beginning of the year there was a strong consensus that markets were poised to see higher interest rates, which would cause negative bond returns and also tend to make equity markets challenging. Instead, interest rates have actually decreased over the year, making bond returns positive again in 2014. This has also allowed the U.S. equity markets to show positive returns. Another area of real surprise in the markets in 2014 is the collapse of many commodity markets, but most especially oil.

As we look to the new year, there is an understandable tendency to assume that recent trends will continue into the near future. However, when considering investment markets it is important to think about both “macro” factors (i.e. how will global economies, central bank policies, etc. impact markets?) and “micro” factors (i.e. what will happen to corporate profits, how will consumer demands change, etc.?). Let’s just think about the U.S. equity markets. The recent robust returns in U.S. equities have some saying we are nearing a “bubble” and investors should be cautious. Others would note that corporate profitability has been good the past few years and is what has really been driving the overall U.S. equity market performance.

I think it is important for investors to create their own overall asset-allocation policy based mostly on their ability to tolerate risk—risk being the potential that the market value might decrease and continue to be decreased for several years. Then, as we enter a new year, investors can try to assess how to weight the broad asset classes within the context of the current macro and micro environments.

Here’s a basic example: Let’s assume I am a 45-year-old middle income investor and, while I understand markets can be volatile, I’m not a market expert and therefore I seek a broadly diversified asset-allocation approach. In this circumstance, I might have a broad asset-allocation policy like this: 1) fixed-income investments from 15% to 35% of my portfolio, and 2) equity investments from 45% to 70% of my portfolio, and 3) other investments (real estate, commodities, etc.) from 10% to 25% of my portfolio.

My own macro view is that interest rates are likely to continue to be low throughout 2015 and U.S. equity markets are likely to see somewhat muted returns due mostly to an increase in corporate profitability. An area of opportunity may be in some of the “alternative” sectors, like REITs, commercial real estate, private equity, etc. Within the broader asset-allocation policy I mentioned earlier, I would be inclined to have about 25% of my portfolio in fixed income, 55% in equities (with 75% of that in the U.S. and 25% in other international markets) and 20% in alternative assets with a focus on REITs and possibly commercial real estate (in markets outside the major financial centers where prices have already gotten back to pre-financial crisis efforts).

The “bottom line” to all of this is to maintain a broadly diversified portfolio, because no one can consistently time investment markets. Know your risk tolerance, stay broadly diversified and you will both sleep well and see your investments increase over time.

Larry D. Zimpleman is chairman and chief executive officer of Principal Financial Group .

Why Investors Should Ignore Economic Forecasts

CHARLES ROTBLUT: The record highs set by large-cap stocks this year, the pullback in bond yields relative to the end of 2013, and the drop in oil prices revealed just how difficult it is to predict what the financial markets will and won’t do. Investors who avoided stocks or bonds out of fear of falling prices missed out on the price gains in both. Investors who assumed oil prices would rise, or least stay at higher levels, lost money.

This isn’t to say that every forecast was wrong. There were likely some correct forecasts, though making a correct forecast often has more to do with margin of error and luck than an innate forecasting skill. We know from history what the typical range of volatility for an asset class is. Based on this data and analysis of prevailing conditions, it’s possible to identify potential outcomes. Predicting the actual outcome on a consistent basis is extraordinarily difficult.

As forecasts for 2015 are published, think about how much you want to base your financial decisions on expectations of what might happen. Many people will make confident-sounding forecasts about 2015 and many of these prognosticators will be wrong. As humans, our natural tendency is to be drawn to what sounds confident. Confidence and accuracy, however, are two different things.

If you accept the uncertainty of not knowing what will happen, you will make better decisions. Those who ignored the forecasts and stuck to a long-term allocation strategy likely did better this year than those who adjusted their allocations based on what they thought would happen. A similar difference in portfolio outcomes is likely to occur in 2015 and beyond.

Charles Rotblut (@charlesrotblut) is a vice president with the American Association of Individual Investors.

How Crises Affect the Stock Market

MICHELLE PERRY HIGGINS: Don’t try to time the market in the midst of chaotic or scary events. This valuable investment lesson was new to some and a reminder to others in 2014.  We have seen a number of shocking events and crises this year. They include the tragic shooting down of a Malaysia airliner, the emergence of ISIS as a brutal and destabilizing force in the Middle East, and the spread of a truly frightening disease, Ebola, throughout much of West Africa. Taking a closer look at the downing of the Malaysia airliner, it was shot down on July 17, 2014.

S&P 500 Index close:

July 16, 2014 1981.57

July 17, 2014 1958.12

July 18, 2014 1978.22

The market took this event in stride. For the entire year so far, U.S. stock markets have performed strongly in spite of these horrifying events. Even when we look at truly traumatic events that occurred in other years, the lesson still stands. The chart below lists a number of events and shows us the effect on the Dow Jones Industrial Average 12 months later. In almost all cases, the DJIA was up at the end of that period. Clearly, it is difficult to predict the effect such events have on financial markets. However, if investors can stay disciplined and calloused to the volatility, their portfolios should be rewarded in the long term.

Michelle Perry Higgins (@RetirementMPH ) is a financial planner and principal at California Financial Advisors.

Why Investors Should Have Their Eyes on Global Politics

FRANK HOLMES: One of the biggest investment lessons from 2014 has been to pay close attention to geopolitical situations around the world, especially new government policies being put into place.

At U.S. Global Investors, part of our investment process states that “government policies are a precursor to change,” and in 2014, this could not have been more true. From tensions in Russia and Ukraine to fears of stalled growth in China and Europe, it is prudent to remind ourselves how much these events truly impact the stock market and commodities.

It’s vital to have an eye on the global landscape, not to infer that all geopolitical events are worrisome, but rather that they deserve attention and understanding. Many changes around the world in policy and leadership are advantageous for certain investments and countries.

For example, this year we saw the newly elected prime minister of India, Narendra Modi, announce to the U.S. that India is now open for business. In late September, Mr. Modi met with President Barack Obama, various politicians and CEOs of top American corporations. Now that India is in the driver’s seat of global resources demand and production, the country is opening its wallet to international sellers and gaining attention across the globe. This is a lesson from 2014 because Mr. Modi is an ambassador for his country, representing change for the future.

Being up to speed on new initiatives and changing policies that could influence global investment allows us to anticipate before we participate in the market. We need to know how one policy will affect the next and so on. Could further monetary stimulus measures in Europe affect the American or Chinese economy? Will swings in Russia’s currency affect the power of the U.S. dollar? Would new gold import duties in India affect how we position our precious-metals funds?

Political, environmental, health-care, industrial and workforce changes all relate back to managing expectations. Remembering this makes it easier to quickly recognize these changes and adapt accordingly.

Frank Holmes is chief executive and chief investment officer of U.S. Global Investors.

The Investment Lesson From 2014? The Same as Always.

RICK FERRI: The biggest lesson to take away from 2014 is a familiar one. Don’t try to time market tops and bottoms. That strategy cannot work in the long term because no one has a crystal ball. Pick an asset allocation that’s right for you in the long term and stick with it during all market conditions.

Through November, U.S. stocks were up almost 14% including dividends. This is following a huge 30% year in 2013. There hasn’t even been a 10% correction during this surge. One hiccup in October was followed by a speedy recovery and new market highs.

Nearly every economist predicted higher interest rates in 2014, yet rates fell most of the year. Rates didn’t even jump when the Federal Reserve ended the tapering of its bond-buying program in October. You just can’t trust interest-rate forecasts.

Commodity prices continued to fall. Who would have guessed gasoline would be selling for $2.50 a gallon during the holidays? Gold is at its lowest level in years and continues to drop.

My prediction for 2015 is that the same lesson will be learned again. Don’t try to time markets. Pick an asset allocation that’s right for you and stick with it through thick and thin.

Rick Ferri is founder of Portfolio Solutions LLC and the author of books on low-cost index fund and ETF investing. His blog is RickFerri.com .