The New Year

2009 ended up being a very good year for the US stock market. And yesterday’s gains provided an optimistic beginning to the New Year. While we welcome the positive stock market, we recognize the potential risks and remember very acutely just how quickly such gains can be derailed. However, we believe we are in the middle stage of a bull market run where the economy shows signs of improvement and catches up to the stock market. Evidence of this can be seen in the manufacturing indexes (such as the ISM Manufacturing Index & the Chicago PMI) which are clearly showing signs of improvement.

With that said, there are some areas that are getting extra attention in our analysis including the impact of congressional policies on the economy (particularly cap & trade, healthcare, and financial reform), the withdrawal and/or spending of various stimulus programs (the vast majority of last year’s stimulus plan will be spent in this election year), the impact of the FOMC’s interest rate decisions, and extraordinary events such as sovereign debt default and terrorism.

Recognizing the numerous economic obstacles that still need to be maneuvered around, there may soon be a time for us to take a slightly more conservative stance within your portfolio to not only insulate against such events, but take some of the profits we have made over the last year “off the table”. We are watching a number of indicators and will not hesitate to adjust your portfolio if need be.

On a side note…

While the threat of terrorism once again dominated the front pages on Christmas Day for the nation, we offer our prayers and peace to all of those it affects for the upcoming year.

Sincerely,

Your THOR Team