With just two weeks left in 2024, I think it’s fair to say it’s been a successful year for my Stocks and Shares ISA. The value of my investments has surged by more than 50%. The only downside is that a house purchase earlier in the year meant I had to sell some of my investments before they boomed.

So what made 2024 such a great year and how can I prepare for 2025?

A model that worked for 2024

Currently, I have just short of 30 investments in my Stocks and Shares ISA — most of them stocks. They cover a diversified range of sectors and geographies from the chip sector and biotech to banking and insurance.

Right now, my largest investment represents around 8% of my portfolio and I typically reduce my position when I company exceeds around 15% of my portfolio. My largest holdings include AppLovin, up 830% over 12 months, and Celestica, up 230% also over 12 months. Other sizeable positions include Barclays, Powell Industries, and Nvidia.

However, I’ve had losers too, including Nordic American Tankers, Li Auto, and Vistry Group. While it’s disappointing to have stocks underperform, I bought these on the assumption that they were the best buys in their sector. Unfortunately for me, the tanker industry’s down as oil prices fall, Li’s simply undervalued, and Vistry Group let us all down by miscalculating costs.

That however, is the beauty of a diversified portfolio. Some you win, some you lose. And if you invest using a winning model, you win more than you lose. My model performed particularly well in 2024 because I put plenty of emphasis on momentum, and that hasn’t been in short supply, in the US especially.

More of the same in 2025?

I’d be a fool not to stick to the model that has brought me so much success over the past 12 months and before that. However, I need to take account of what has changed over the past year. US stocks are now at all time highs and the outlook’s mixed as the expected strong earnings growth doesn’t justify the extraordinarily high valuations.

Firstly, I’ve started selling some of my positions and building a larger cash position. However, that doesn’t mean I won’t continue buying stocks. Typically, I invest in stocks twice a month, and I still believe there are pockets of value to be found.

Airlines are already well represented in my portfolio, but I could be tempted to buy some more IAG (LSE:IAG) shares, or even a peer like United Airlines.

IAG stock has great momentum, especially for a UK-listed company, boosted by positive earnings over the past year and an improving environment for the sector. This includes falling interest rates which will contribute positively to consumer spending on discretionary goods and services.

Moreover, we’re also seeing jet fuel prices fall to lows not seen in two years. For context, fuel prices represent around 25% of operating costs.

While there are dangers that a bump in inflation could keep interest rates higher and that an escalation in the Ukraine conflict could push oil prices higher again, I think the broader picture is particularly positive.

This strong outlook’s supported by industry-topping margins, an attractive valuation, and strong growth forecasts.