Wednesday, January 2, 2008

1/2/08

Economics

Politics

A look at the election process in Iowa:

http://www.opinionjournal.com/diary/

Domestic

International War Against Radical Islam

The Market

Technical

Fundamental

The Averages ended the year pretty close to my forecast: the DJIA closed at 13265 versus a 13250 estimate and the S&P ended at 1468 versus a 1525 prediction--once again the weighting of the financial stocks in the S&P being the key reason for its lower than expected finish.

For 2008, my forecast for Year End Fair Value is 14050 for the DJIA and 1615 for the S&P. Excluding exogenous events (like another terrorists attack on the US; war with Iran), my best guess is that were these estimates to prove wide of the mark, it would most likely be the result of (1) the Fed staying tight too long, pushing the economy into a recession and/or (2) a Democratic sweep of both the executive and legislative branches in the November elections. I have talked enough about both scenarios that you know the reasoning; but remember these are the risks to our forecast not the forecast itself.

News on Stocks in Our Portfolios

More Cash in Investors’ Hands

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