It is worth recapping the scorecard for the record.

When you look at the major market indices this is how they fared for the 12 months ending December 2012*:

• Australian shares (S&P/ASX300 index): +19.7%
• Australian high-yield shares (FTSE ASFA High Dividend yield index): +24.9%
• US sharemarket - (MSCI US Broad Market index): +14.9%
• International shares - (MSCI world ex-Aust index): +14.1%
• Australian listed property trusts - (S&P/ASX 300 A-REIT index): +32.8%
• Australian fixed income - (UBS Composite Bond index): +7.7%

Those are a beautiful set of numbers from most investors' perspective. It is not every year that both growth and defensive assets post such strong returns but given what investors had to suffer during and in the wake of the global financial crisis you could certainly argue we were overdue some good news.

However, not all investors may be celebrating the sharemarket returns. For people sitting on the sidelines in cash or term deposits they can take comfort that they have enjoyed the peace of mind of capital certainty but as official interest rates have been steadily cut, yields have followed.

In some ways this is a troubling scenario for investors heavily invested in term deposits. As rates fall pressure may be building to maintain retirement income streams and perhaps that is starting to cause people to put a tentative toe back into sharemarket waters.

Some people may simply be surprised by the gains achieved because in the aftermath of the GFC they tuned out from watching sharemarket reports - or even, in one friend's case - looking at their super fund statements.

But within those strong headline numbers lies the risk of double disappointment - having missed the growth spurt in the second half of last year there is no guarantee that in the year ahead that local or international sharemarket returns will repeat the dose.

Investor research in recent years has regularly pointed to the need for a sustained period of better sharemarket returns to restore confidence and tempt people back into markets.

The problem with waiting for sustained proof of a rising market is that it means giving up on that initial upswing - it is the age-old dilemma for anyone trying to time markets and it is why short-term forecasts are not a very reliable basis for making tactical asset allocation shifts.

You only have to contrast the strong market returns with the subdued Australian GDP growth forecast of 3per cent among leading economists to understand the challenge of finding strong correlations or buy/sell signals from where forecasts say we are heading versus actual future market returns.

So this year when you are reviewing your portfolio pay particular attention to the diversification within the portfolio - how much is in growth assets versus defensive fixed income? Have the market rises in 2012 pushed things out of range? Consider taking a total return/risk view of the portfolio rather than being dazzled by short-term one-year performance numbers. Would a 20 per cent market drop be too much for you to ride out?

Then comes the tough part - having the discipline to rebalance across the key asset classes to get back into the comfort zone around how much risk you are taking. It may sound basic sense but in blunt terms it means selling winners and buying losers - something many people struggle with on an emotional level.

It is an area where a good financial adviser can add real value by helping keep you on track with an analytical, detached perspective.

Simply put, focusing on things that you can control like your diversification across asset classes will mean you can worry less about the flurry of market forecasts raining down us at the moment and get back to enjoying the real contests awaiting us on the sporting field.

By Robin Bowerman
Smart Investing Principal & Head of Retail,
Vanguard Investments Australia
14th February 2013