as the market goes in January so goes the entire year

January 14,2006

Hello,

As they say as the market goes in January so goes the entire year ,some would even contend that the entire year reflects the first five days as they did last year, well lets hope so for if that is the case happy days are hear a again! I know I have been saying this market can only go up from here for the last couple of years and yes I was WRONG ,ok I admit it the head wind of incremental rate raises and insecurity over war ,coupled with higher oil prices has simply overwhelmed the market . No matter how big the productivity increases ,how enorumous the corporate profits ,how many stock buy backs ,how many mergers and acquisitions or how many companies were pulled off the boards by going private the market continues not to budge . Well folks the day of recogning may be upon us. It seems long over due that equity valuations would begin to equalise. It has been five long years since 2000 and the NASDQ towered around 5100 ,today it still only stand at 2317 and still needs to more than double just to break even with 2000. Notice in the below table of Gross Domestic Product (the sum total of all goods and services produced In the USA per year) .The GDP in 2000 was $9.8 trillion dollars and the DOW Jones was aproxomatly 12000 and NASDQ was 5100 by 2004 the GDP had grown to $11.7 trillion dollars a little over a 20% increase in 4 years and the Dow Jones today stands a little under 11,000 and the NASDQ abit over 2300 ,folks I will say it again equity valuations will catch up to GDP growth eventualy . Looking at the below table you will notice that the GDP tripled in the 18 year period from 1982 -2000 and the DOW Jones moved from 776 to 12,000 in the same period .For those of you who say well you have said that before and you were WRONG remember even a broken clock is right twice a day.

GDP DATA 1982-2004 (in trillions) Bureau of Economic Analysis

1982 $3,255.0
1983 3,536.7
1984 3,933.2
1985 4,220.3
1986 4,462.8
1987 4,739.5
1988 5,103.8
1989 5,484.4
1990 5,803.1
1991 5,995.9
1992 6,337.7
1993 6,657.4
1994 7,072.2
1995 7,397.7
1996 7,816.9
1997 8,304.3
1998 8,747.0
1999 9,268.4
2000 9,817.0
2001 10,128.0
2002 10,469.6
2003 10,971.2
2004 11,734.3


Don’t for get to look for regular update onmy blog and website

http://www.jamesfoytlin.com/
http://onesmallvoice.blogspot.com/

James