What columnist can resist a year-end round-up at year-end? Not me. In fact, this is my second one.

Last week I talked about what I see as 2009's biggest investment story. I said that the panic in February and March was driven by political chaos with the arrival of a charismatic new president and a Congress strongly dominated by a single party. Recovery set in when the Obama administration skillfully resolved the banking crisis. But stocks have staged an historic rally from the March bottom in part because the political chaos has subsided. Other than February's stimulus bill, the Obama administration and the Congress have done precisely nothing. For stocks, political gridlock is always best.

Now, let's take a different approach to the year. Let's look at 2009 s most winning and losing investments and ask why they ended up where they did. (By the way, I'm writing this with one trading day left in the year, but I don't think the relevant numbers will change much.)

What was the biggest loser in 2009? (I'm not talking about the reality television show where people compete to lose weight. I'm talking about the real world where investors compete to not lose money but often do.) In this riskiest of years, the biggest loser was the least risky investment: government bonds.

Say you got burned investing in real estate a couple years ago when houses were "safe. So, you took your losses and invested in Treasury bonds because they were "safe. Sorry. That didn't work out. If you bought 10-year Treasurys at last year-end, you've lost about 11%. If you bought 30-year Treasurys, you've lost brace yourself about 35%.

How could that have happened? Easy. Everyone was so scared a year ago that they threw all their money at "safe" investments like Treasury bonds, driving their yields down to crazy lows. Last year-end, the yield on the 10-year was just 2.25%, and on the 30-year it was 2.69%. They've since risen to 3.82% and 4.64%, respectively.

We all know that when interest rates rise, bond prices fall. Plus, if you bought the bonds at low yields, you don't have much income to offset the falling prices. But wait it gets worse. Bond geeks know about a concept called "duration," which is basically a measure of how sensitive a bond's price is to changes in yield. When the interest rate paid by a bond is lower than normal, its duration is higher. So when rates rise, you get more than the normal negative price effect. That's just what happened here. Ouch!

Who got stung? Ordinary investors who panicked but also the big boys. This year, the Federal Reserve has bought $301 billion in long-term Treasurys. Commercial banks, in the aggregate, have bought $178 billion. Those buys were spread out over the year, so the banks didn't pay top dollar for every single bond, but still, that's gotta hurt.

Speaking of banks, you might think that bank stocks were the year's big winner for investors. That's true, if you start from the very bottom in early March. Measured from there, the S&P 500 financial sector has rallied 134.2%.

But you had to be really lucky (or smart) to buy at that panic bottom and earn that great return. If you bought the financials at last year-end, you'd be up only 16.5%. That's not so bad, but the rest of the S&P 500 that is, everything but the financials would have given you a 28.5% gain. (Overall, the S&P 500 gained 27.0%.)

Intuition might have told you that the financials would have done better than the overall market. After all, at last year-end, they were clearly on the brink of disaster and were already selling at bargain-basement prices because everyone was terrified of them. If it's axiomatic that you will always get killed trying to avoid risk as I've described above with Treasury bonds then shouldn't it also be the case that you can make big gains by stepping into the breach and taking lots of risk?

That sounds good if you say it fast. But it's not that easy. It turned out that many of the fears investors had about the financial sector were true. Yes, you can make money by taking risks when all the other scared investors are wrong. But not when they are right. Sometimes it's right to be scared, and this was one of those times.

True, the big banks didn't go out of business, so that worst of all fears was wrong. But to stay in business, they had to raise enormous amounts of new capital to absorb the losses from the past and prepare to do business in the future. That means the banks had no choice but to issue new shares and when any company does that, it inevitably dilutes the interests of the existing shareholders.

Look at Citigroup (C), the holding company of Citibank. At year-end 2008, Citi had 5.4 billion shares outstanding. As of its last SEC filing for the third quarter of 2009, the company had 22.8 billion shares outstanding. To make the math simple, suppose at year-end you owned a billion shares of Citi. That would entitle you to 18.5% of the company's earnings and net worth. That same billion shares now , after 17.4 billion new dilutive shares were created, entitles you to just 4.3% of earnings and net worth. Your reward for taking risk at last year-end? You got diluted by a factor of more than four.

What were the biggest winners for stock investors in 2009? Two very strange bedfellows, representing you might say the economy's future and its past. First-best was the technology sector, up 62.3%. Second-best was the basic materials sector, up 49.3%. It's easy to see why tech shined. In a global financial crisis where nobody can get any credit, the tech sector was uniquely positioned to thrive. Most big tech companies Google (GOOG) or Microsoft (MSFT), for example are sitting on mountains of cash. They are lenders, not borrowers. No financial risk whatsoever.

Materials did well because the global economy ended up avoiding a new Great Depression so the demand for metals, chemicals, paper, fertilizer and so on held up better than anyone could have hoped at last year-end. And it helped that giant commodity consumers like China were sitting on even more cash than Microsoft and Google. When the crisis hit, China and other cash-rich emerging economies had no trouble at all funding massive stimulus programs.

Enough looking backward. How about some fearless predictions for 2010? Coming right up... in next week's column.