The final day of the year saw no economic reports being released and little major corporate news being reported. In addition, the bond market (which often gives direction to the stock market) also closed early today. In the absence of these drivers, it was not surprising to see uneventful, lackluster trading, with the exception of the sudden selling action seen in the last half hour of trading.

The financial press reviewed the (trading) year just closed out, and pointed out how well the market has faired given many uncertainties. We have discussed many of these issues in our ongoing market commentaries. They include steadily rising (and now falling) oil prices, the weakness of the U.S. dollar, the election, and others.

The press also reviewed some of the market calls made last year by noted Wall Street analysts. One interesting forecast that analysts and money managers now have to correct is last year’s prediction that growth equities would do better than value equities, and that stocks of large companies would deliver better returns than those of small caps.

Instead, the opposite has happened over the last 12 months: the returns of value stocks have far exceeded those of growth stocks. Analysts conceded that their bet on a shift to large-caps did not pay off in 2004, but many are convinced that it will now be the case in 2005, saying that their forecasts were not really incorrect - but rather “premature”. The performance of large-caps has been lagging behind for almost two years now.

© HGH Associated Press

News Archive (from 9/30/2004 until 12/31/2004)