Happy New Year

A new year is upon us and with it comes an opportunity for a clean slate, so to speak.  This new year hasn’t been with us very long and we haven’t made too many mistakes so far.  Let’s see that we don’t knowingly make a lot of investing mistakes this year.  

For 2005 we didn’t see much movement in the major averages and it was a struggle to continue to pay attention throughout most of the year due to the Dow magnet of 10,500 even though the October rally pushed the Dow up near 11,000.  That magnet seemed active again in the last week of the year, as the Dow sank 165 points in those four days to close at 10,717 just about where it began the year.  All three of the major indexes we follow showed less than a 3% return for the year.  Our early mantra of “cash is king” was a particularly good strategy as the stable value fund, that most of my 401(k) money was in, earned about 4.5%.  How was your year?

[Speaking of your year, we are planning on sending out an email update sometime in the next couple of weeks to those people I have sent the WU to when I stopped writing it this summer.  I will include my little excel spreadsheet for calculating your net worth.  You should start collecting the year end mail that you receive in order to do your own calculation.  So, be on the look out for that email.]  

As for the new year, we expect a traditional rally for the first few days of the year. Although last week’s drop doesn’t really set the market up for any new high fireworks, it does set us up for a possible bounce up to create the illusion of a solid rally.  The market has shown nothing in the way of solid strength for almost two months so we’ll see how the first week can play before we get too excited about any upside.  

As the next few days of trading should tell us much about the current state of the market, we will hold off any changes until a clearer picture emerges.  We consider that any good rally will give us more opportunities to short.  This thought process will firm up quickly over the next few days so come back soon.

End of the year 2005 values (yes, I know, if only I could give you values for the end of year 2006):
Dow Industrials:  10,717.50
SP500:    1248.29
NASDAQ COMP:     2205.32
NASDAQ 100:   1645.20
RYVNX:  19.43
TLT:  91.90  
BEGBX:  13.03  (xdiv a few days ago of about 22 cents)