2016 again showed how difficult it is to predict equity market returns over time periods as short as 12 months. After a dramatic fall at the start of the year, the Australian equity market went on to produce its best annual return since 2013 and its fifth consecutive year of positive returns. A steady, if only modest, improvement in global economic growth, which was led by the US but also evident in large emerging countries like China, and the rally in commodity prices explains some of the advance but the reality is that about half of the market’s gains for the year happened after the election of Donald Trump as the next US president. That’s a lot of optimism for someone with a fairly untested policy agenda who is yet to actually take office.