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throughout
November, as corporations tried to bolster their bottom line
by continuing to reduce their labor force.
The stock market did start to lose some of its steam right
after Harvey Pitt, the SEC Chairman, resigned on November
5th.
November finished with most major stock market indexes continuing
their eight week rally.
The bond market did not fare so well in November as much of
the fuel for the bulls in the stock market was from the selling
of bonds, yet most bond returns remained in solid positive
territory throughout November.
High yield (junk bonds) remained the big losers for November,
albeit they regained some of their losses as the stock market
rallied.
During November, the war rhetoric escalated from the Bush
administration against Iraq. A resolution was passed by the
United Nations security counsel mirroring President Bush's
demands that Iraq allow the United Nations weapons inspectors
back into Iraq immediately, and afford them unfettered access
to any and all facilities that they wanted to inspect for
weapons of mass destruction.
The stock market optimism ended in November as
most
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major
stock market indexes changed their upward momentum the first
days of December and started to decline significantly.
Nothing changed in reference to the anemic U.S. economy as
the economic statistics continued to depict a lackluster recovery
at best, along with the labor market continuing to deteriorate.
No additional news was disseminated throughout December on
the geo political front of an improving situation in the Israeli,
Palestine conflict, the Iraqi situation or the continuing
"War On Terrorism" throughout the world.
Adding more fuel to the geo political turmoil in the world
was the actions of North Korea reactivating their nuclear
power plants in violation of a treaty that they signed in
1994.
Most major stock market indexes declined significantly throughout
December. The
technology laden NASDAQ Composite Index had its worst December
in its history.
The global markets mirrored the U.S. stock market throughout
the fourth quarter of 2002, rising in October and November,
and falling in December.
December ended with most major U.S. and global stock market
indexes significantly down for 2002 for the third consecutive
year.
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The
bond markets continued their bullish trend throughout December,
ending that month, and 2002 with prices up significantly and
yields at levels not seen for more than four decades.
The corporate bond market regained some upward momentum
throughout December, albeit finishing down for 2002 as a whole.
The high yield (junk bond) market was the biggest winner in
December in the corporate bond market.
With the U.S. economy and the labor markets still very anemic,
and the geo political landscape riddled with minefields, 2003
is sure to be an unpredictable year for investors.
I remain under-weighted in stocks (specifically in the energy
and gold mining sectors) and heavily weighted in short-term
Treasury Bonds as the best mix for the portfolios that I manage
for my clients.
Once the dust settles on the impending War with Iraq, I will
consider reallocating more of the assets that I manage in
the corporate bond market to try to bolster the total
returns of the portfolios that I manage.
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