That was a helluva surprising year, to say the least: The Market sold off mid-year, but rallied back harder than many people (me included) anticipated; By just about any measure, 2006 was a much stronger year than most had forecast. By the numbers, the Russell 2000 surged 17%, just edging out the Dow’s gain of 16.3%. The Standard & Poor’s 500 lifted 13.6%, while Nasdaq Comp was the laggard, gaining "just" 9.5%.
Oil gained exactly one penny over 2006 — but it sure didn’t feel that way. Natural gas plummeted -44% for the year. Gold was a winner, up 23%, but the yellow stuff couldn’t keep up with either Copper (+41%) or Silver (+46%). The US Dollar, measured by the J.P. Morgan Dollar Index, lost about 4%. Overseas markets were also up big, with most outperforming the U.S. Indices.
Let’s take a look a the key stories gone by — and those that will matter in 07: Its the last linkfest of 2006!:
INVESTING & TRADING
• "LET’S DISPENSE WITH THE SUSPENSE. We already know what 2007 will mean for the stock market: Because it is the third year of a presidential term, the market will be up dramatically, as has been the case in such years. But because it’s a year ending in "7" that is not the second year of a presidential term, 2007 will not be as good as typical third years of the election cycle. And let’s not forget that because it’s a "7" year that’s also the fifth year of a bull market, we’ll see a late-year crash, a la 1937 and ’87." So said Mike Santoli, with tongue planted firmly in cheek, in this week’s Barron’s Trader column;
• How the Bulls Stole Wall Street (WSJ)
• Floyd Norris asks: Does the S.E.C. Know What It Is Doing?
• Given the underperformance of the Nasdaq, its no surprise we witnessed a Nasdaq Trend Break
• There are tons of year end reviews and previews:
Year End Review & Preview Marketwatch
2006 Revisited: Spanning the Globe Marketbeat
Markets Scorecard 2006 WSJ (free)
What to Watch for in 2007 WSJ (free)
10 stocks that could outperform in 2007 (Marketwatch)
• And since it is that time of year: Seven Pointers for Parsing Predictions (Real Money)
• Here’s a surprise NONE forecasted: Securities Fraud Lawsuits Fall to 10-Year Low in 2006
• Its been a very long time since we saw a S&P 500 2% Correction?
• Does your financial advisor add value? A seminal study this year suggests most do not…
• S&P’s Sam Stovall Says History Supports a Continued Bull Market (video)
• The WSJ looks at Bosses’ Pay: How Stock Options Became Part of the Problem
• Take a look at this 4-year chart for the dollar Ouch!
• Doubling Down on Emerging Markets (Barron’s)
• The Telegraph (UK) asks: M&A bankers enjoy the boom, but is the bubble about to burst?
• Good advice for the New Year: Resolve to Save More, Cut Debt
• Tips for Donating Your Used Junk (note the timely tax factor)
• Finally, under personal finance, the reporters of the WSJ’s Strategies for SavingTime and Money;
This week, the Wall of Worry eased back a bit:
• Mark Hulbert asks: Is the Market signaling recession? Taking all the recent information assimilated by the financial markets together, the message is that an economic downturn may be on tap.
• Mike Darda of MKM Partners Sees Economy Growing at About 3% in 2007 (video)
• ATA Truck Tonnage Index Plummeted 3.6 percent in November (lots of comments andhere discussion )
• This is intriguing: Does Consumer Price Index overstate food inflation? Consider the Impact of Big-Box Stores on Retail Food Prices
• John Mauldin took the weekend off, so he used a commentary I had written for the office as a guest piece: Real Estate and the Post-Crash Economy. It is a long analysis that attempts to put the real estate boom into some context: how it developed, whats gone right and wrong, and what could happen going forward.
• TheStreet.com’s Marek Fuchs asks "Is there Too Much Housing Hope?"
• Good news for bargain hunters: Distressed Real-Estate: Priced to Sell in 2007
• Well, which is it?:
• Meanwhile, REITS — with their emphasis on commercial real estate — have avoided the residential woes: Housing Fall off Hasn’t Troubled REIT Funds
• Good advice for the future: Making Your House Pay in Retirement
Its been quiet on the Fed front for a while (a little too quiet). Here’s what caught my eye this week:
• Is the Fed painted into a corner? Economists see Fed’s rate-hike pause lasting for another six months ; See also It’s the Fed vs. the markets as main event of 2007
• Econogeek! I love this monthly collection of charts published by the St. Louis Fed’s Monetary Trends
The post-mortem on Holiday shopping
• An extensive look at The State of the Consumer, by the Numbers via Northern Trust;
• Which is the perfect lead in for Caroiline Baum: Christmas Is Over. Let the Sales Angst Begin!
• Barron’s: "What strikes us about the current investment scene is how defensive, even delusional, the raging bulls are. And despite rolling in the long green by grace of the big market year, what a bunch of sore winners they are, insistent that everyone else is bearish and only they, brave souls, have the courage to be optimistic." (if no Barron’s go here)
• One of the more difficult aspects of transitioning from trader to strategist is reconciling the short term technical aspects of the
market with the longer term macro environment. Since
July, we have seen a decaying macro picture concurrent with a strong
market trend. If you follow both, it can make you schizoid.
• Study: Iran faces crisis as its oil exports drop (no excuse for a nuclear program, though)
• uh-oh: U.S. Official Overseeing Oil Program Faces Inquiry (It may be considered bad form get paid as a consultant for oil companies hoping for contracts that you are overseeing)
• Chris Edmonds Says Oil Prices Could Spike to $80 in 2007 (Video)
• How Much Should Be Shown of a Hanging? In the NYT, Network Executives Wonder and Wait. The Washington Post has partial video of the hanging. Meanwhile, you just know this will eventually show up on either YouTube or Rotten. (Much more below under War/Politics). Here’s a slightly skewed perspective on Saddam’s execution (NSFW).
UPDATE: Video footage is here.
• US funds the Taliban? Israel & Iran hold secret talks? The Top Ten Stories You Missed in 2006
• WSJ.com’s Best Read of 2006 (free)
• Dow Jones Chairman Peter Kann lists "10 current trends in the mass media that ought to disturb us". "Too many instant celebrities, too many two-day crises, too many ‘defining moments’ from people in search of instant history: The Power of the Press
Speaking of which: the WSJ OpEd continues not to get blogs (or a whole lot else): Journalists, Heal Thyselves
• Macaca, Menaissance, Herstory, Global Warming Denier: The Top Politically inCorrect Words for 2006
• BBC: Photos of the year 2006
• War & Politics
"They said you was hung."
"And they was right."
Thus ends the saga of Saddam Hussein: dictator, madman, tyrant, collector of miniature antique doll houses. News reports poured in from all over:
• The Associated Press assembled comments on Saddam’s execution from leaders from around the world — most of whom had a bigger problem with the Death Penalty as opposed to Saddam. In Iraq, the response was a mixture of Fear, indifference, jubilation over death; CNN also noted Iraqis react with joy, anger to Hussein death sentence; Iran rejoiced, Saddam’s supporters were bitter. The Voice of America’s report was here; The NYT’s obit is here: The Defiant Despot Oppressed Iraq for More Than 30 Years; The Washington Post’s is here Saddam Hussein Is Put to Death;
• Even with Saddam gone, Iraq remains an unfortunate quagmire. Josh Marshall’s Talking Points Memo gives a bleak view of what it means.
• Interesting connections between Presidents Gerald Ford and George W. Bush: Ford Aides Shape Bush Tenure
• For the first time, more troops disapprove of the president’s handling of the war than approve of it.(Barely 1/3 of service members approve) Poll: More troops unhappy with Bush’s course in Iraq
• Wired Magazine: The Bush Era Draws to a Close
Technology & Science
• Debate: Is ‘Web 2.0’ Another Bubble?
• This one goes straight into the WTF file: HOW OLD IS THE GRAND CANYON? PARK SERVICE WON’T SAY — Orders to Cater to Creationists Makes National Park Agnostic on Geology.
• That didn’t take long: Security Flaws Are Detected in Microsoft’s Vista
• Business 2.0: How to Succeed in 2007
• Founder of Wikipedia plans search engine to rival Google
• Ever wonder why you can’t get iPods at a discount?
• Via kottke comes this list of free addictive little web games (WARNING: these are giant time sucks)
Music Books Movies TV Fun!
• RIP James Brown, Godfather of Soul: Some of his more important recordings are discussed here; My friend Rob tells the story of how JB saved his bacon in grade school in Reflections on James Brown (very amusing!)
• Oh Holy Night New Orleans Style Fabulous version from NBC’s Studio 60
• The extended weekend will give me time to get to Ken Fisher’s The Only Three Questions That Count: Investing by Knowing What Others Don’t
• If you plan on having a drink (or 3) on New Year’s Eve, consider these suggestions:
• Take a Quiz: A Year to Remember (pop up)
• The NYPost, in their inimitable way, note that the DVD-ISASTERFORMAT HAS PEAKED – THAT’S BAD NEWS FOR STUDIOS
• Performers who Take the Stage at Midnight: Some of history’s landmark live performances took place on past Dec. 31sts, but midnight can also be a letdown.
• Pitchfork: Top 50 Albums of 2006
That’s all from what remains a very temperate weekend in
the NorthEast, where no white Christmas, New Years, or President’s Day appears to be in the forercast!
Have a safe and happy New Year’s Eve, and a prosperous and healthy New Year’s !