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What Will Make Money In The FTSE 100 Next Year?

So what kind of 2014 have you had? Well, as an investor, I’ve had a torrid year. Many more of my shares have lost money than have made money.

After the tech crunch and the credit crunch, it’s difficult to think of a moniker to name the current bout of bearishness. We seem to be in the midst of a commodities crunch, where resources ranging from oil to iron ore and precious metals have been falling. But we also have a bear market in small caps –something that has hit me particularly hard, because of my bets on a number of growth companies.

This year has been about avoiding losers, not picking winners

Then another theme of this year has been the fall of the supermarkets, with companies such as Tesco, Sainsbury and Morrisons taking a tumble. What about the blue chips that constitute the FTSE 100?

Well, these have also performed poorly, with the index down overall. But there hasn’t been a consistent trend: some shares have risen, and many have fallen. Overall,  this year has not been about picking winners, but sidestepping losers. Stockpickers have had a very difficult time of it, and it has been hard not be caught out.

How about 2015? There are several trends that I expect to continue. I’m afraid resources companies will have no respite: oil and gas prices will remain low, so the share prices of companies such as BP, Shell, Petrofac and BG will continue to slide. What’s more, I think mining companies such as Rio Tinto and BHP Billiton will fall as well. This is definitely a sector to avoid.

What about the supermarkets? They have endured a terrible year, but will they recover in the next 12 months? I am not convinced. I fear that it will take several years to turn around these retail giants. This is another sector to avoid.

Buy telecoms, banks, housebuilders and China

On a more positive note, tech, telecoms and broadcasting have been progressing well, and this is an area to invest in: I am hopeful that the shares of ARM, BT and Vodafone will rise next year.

Another sector that I think will progress, as the economy continues its recovery, is the banks: they have had a disappointing 2014, but next year businesses such as Barclays, Lloyds and Royal Bank of Scotland are likely to move ahead. Likewise, I expect the housebuilders to have a positive year, with the housing market further strengthening.

What of small caps and growth companies? Well, the current bear market has thrown up some astonishing bargains. But this is a sector where investors will need to be patient. This might be a year to tuck away a few cheap growth shares, but small caps are unlikely to push ahead until 2016.

Then there are emerging markets. I expect countries dependent upon oil and iron ore, such as Russia and Brazil, to struggle. In contrast, no one seems to have noticed that China was one of the best performing markets this year. I think it will make further gains next year.

So these are my predictions; but let me emphasise, these are only predictions. Somehow reality, and events, always has a habit of getting in the way. See you in 12 months’ time.

Some might say making predictions is a mug's game, but it is fun to try and see into the future. What's more, looking ahead is part and parcel of investing.

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Prabhat Sakya owns shares in Vodafone, Barclays, Lloyds, Royal Bank of Scotland and Fidelity China Special Situations. The Motley Fool UK has recommended shares in ARM Holdings and owns shares in Tesco and Petrofac. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.