The bulls remained in charge during early October as they shunned the idea that the sub- prime meltdown would con- tinue for a long time to come.

The bears, however, did regain control of the stock market in mid October, and as such, most major stock market in- dexes continued to decline.

By the end of October, most major stock market indexes rebounded as stock investors regained their courage in an- ticipation of the regular sched- uled meeting of the Federal Reserves (Fed) on October 31st.

Investors anticipated a ½ per- centage drop in the Federal Funds rate at this important meeting. They rationalized that since the banks and financial institutions were losing bil- lions of dollars due to the mortgage market meltdown, that the Fed was sure to lower short-term interest rates by ½ a percent at this October meet- ing.

The Fed though, disappointed investors at this October meet- ing. They only lowered short- term interest rates by ¼ of a percent, fueling the bears to return, and triggering a mas- sive sell-off which lasted until the third week in November.

This stock market meltdown in November was considered a correction, or a decline of 10% or more from a previous high.

Banks and brokerage firms during October and November continued to disseminate news daily as to the billion-dollar losses they sustained from in- vesting in mortgage-backed debt, primarily sub-prime.

Home builders also touted their astronomical losses throughout the last quarter of 2007.

The financial damage from this mortgage-related melt- down was not limited to the United States.

Many foreign banks in Europe also disclosed in the last quarter

of 2007 that they were victims of the mortgage meltdown in the United States.

In contrast to the worldwide mortgage meltdown, crude oil continued to rise throughout the fourth quarter and nearly reached the one hundred dollar benchmark by the end of 2007.

The "R" word [Recession] was on the lips of many economic pundits as 2007 came to a close.

2007 ended with the bears firmly in control, as most major stock market indexes continued to de- cline well off their peaks set in early October.

I remain committed to Energy, Gold and Grain ETFs as the core holdings of the portfolios that I manage, on behalf of my clients. These ETFs gave a significant return to my clients in the fourth quarter of 2007, and should still capture upside returns as 2008 unfolds.