all hands on deck

January 26,2005
Hello,
Ok, Ok it the worst start for the market since 1982, but what happened in August of 1982? The start of the major bull market that went from 1982 till 2000 producing outsized returns close to 15% a year and pushing the DOW from just under 1000 to over
12000. It gets particularly ugly for the short term investor just prior to the start of the next secular Bull market. Post bubble time periods share many of the same trading phenomenon; first and for most Index Funds tend to underperform the market as the Indexes themselves seem to tread water showing little or no direction. 2nd Momentum investing fails to produce consistent returns and stock pickers out perform. We may have period of lower highs and lower lows punctuated by big short term rallies and longer sell offs. Investors should be using these sell offs to accumulate positions in equities. Once many of the optimists throw in the towel on the market, overwhelming pessimism will signal the beginning of a new super bull market. Look for a big bump up in volume to signal the turn.

The other big issues that has begun to trouble me more and more is the attempt some politicians to tell you how to invest and know what right for you based on after the fact information. As a financial professional I consider it part of my job to protect you and your money from the media, the firms, the industry and yourself, but I am going to add one more group Uncle Sam and his minions of regulators namely at the moment Elliot Spitzer (NY Attorney General). Though Mr .Spitzer has positioned himself as the white night for the small investor and on many issues like getting directors of companies like ENRON to pay up he can not be impugned, but he is going a bit to far when he starts to interfere with the investment process deciding which type of mutual fund pricing structure is right for you. Only you know your particular situation and can weigh the funds pricing structure which best meets your plan and goals and your needs. Mr. Spitzer would be better to spend his time protecting the public from over inflated asset valuations based on false premises ie…political corruption and bad accounting.

And finally despite efforts by terrorist and their allies in the media and in the US Senate to stop the move toward freedom and democracy, Iraq will hold historic elections. People have the right to determine there own destiny. The secret weapon of all democracies is women. Women of Iraq will prevail and vote in great numbers .No mother wants their son or daughter to grow up to be a suicide bomber. The vote of women has done much to destroy the Taliban as a political force and other tyrannies. Women set free to express their voice also brought Japan from an absolute tyranny to the more open global competitor and the ally that it is today. Liberty is calling and the people of Iraq will answer in great numbers. Democracy is a process not an end result. It is not lost on those who defend our freedom that the forces of tyranny and nihilism emanate primarily from the part of the world that has seen the smallest growth in freedom and democracy. While the amount of Democracies in the world has almost doubled in the last 30 years the mid east stands alone in the lack of participation. At the moment Israel is the only representative democracy. What does this all have to do with the stock market? Freedom and Democracy lead to stability, prosperity and peace and in case you missed the last 20 years, that’s good for the stock market!


James

www.jamesfoytlin.com