Traderbill's Financial Markets Weblog

…the year may be over but it won’t be forgotten. It will go down as the year of CEO failure that made them rich while the shareholders and lenders picked up the pieces (it’s good to be king!). But heck, what are tens of millions compared to 10’s of billions?…they weren’t asking for much compensation for their failures…and besides their employees who never get the credit for the success of the economy will be outted (including those who entered into those failed contracts who will get their severances too…or they made all those bonuses from profits that were wiped out in that bogus paper with bogus assumptions.

It will go down as a year when we found out our credit card companies, mortgage companies and even our banker let their greed get the best of them. When a CEO of a big bank who did not get fired said that he had no subprime mortgage exposure…omitting the fact that he had huge subprime home equity (sic) exposure…and then failed basic banking by saying that those were safer than the the first mortgages…talk about rewriting the basic tenets of banking.

A year when the CEO of a major brokerage firm played bridge while his firms market cap evaporated and another engaged in a round of golf…did he really ’smoke’ that day?…and if so did he inhale?…or the highest compensated of the ousted CEO’s received $161 million despite his arrogance and contempt of both his board of directors and the shareholders…then went on to head up another company…because he was so good.

A year when SUV, SIV, CDS, all became interchangeable…meaning bad for your financial health, yet the pros said that consumption wouldn’t slow…after all it hasn’t over the past two decades or more so why should it now?

Aha! Crude did not top $100 this year…it will likely end around $96 and only hit a high of $98.12. Inflation is under control too…so long as you don’t have to eat or use energy…conserve it…especially your own.

The Dow that was widely anticipated to break 15,000 didn’t, settling instead for 14,198 while the S&P 500 had to settle for 1578 and looks to close 100 or so below that…but so what? Both have an up year as do as do the two Nasdaq indices (+10% on the Composite and +20% on the Nasdaq 100)…but did you get the right stock picks to make that happen? Four stocks produced well over 25% of that gain (Google, RIMM, Apple…you pick the fourth). The Russell 2000 small cap is the worst performer and will end the year in negative territory…haven’t seen that for a while…especially underperforming.

A great year for commodities and a good year for bonds: the constant 2 yr maturity treasury note returned 7.4%, the 5 yr 10.1% and the 10 and 30 yr got you 9% plus…who wudda thunk?

Who wudda thunk also that after watching returns evaporate in the second half of the year we would still be crowing about the returns on stocks without looking ahead…or hanging the future on a Fed easing when we have a financial crisis not an economic one…at least not yet. When capital starved banks and investment bankers had to draw in capital by giving away stock…at least at prices well below market kind of like retailers had to do…and the market liked it…oh to be an overpaid equity analyst!

OK, you get the picture, it was a not so good year but already we are excited about the prospects for next year since it is a presidential election year…it seems like this one was too with all the campaigning.

So TB will end with a prediction: cash will be king in the first half of the year (more or less), the stock market will get ugly but those who have the patience will reap nice rewards later on…especially in financial stocks…and since the big guys have to anticipate this, this will be the year of the little guy: when he can sit patiently and bide his time then pick up some real bargains. Don’t jump the gun!

Hope the new year is a successful one for you…even if you are a CEO…well…heck just trying to say something nice for everyone. How about we replace the SEC and Sarbanes/Oxley with the Mafia as a regulator?…TB can tell you one thing…Tony Soprano wouldn’t let those ousted CEO’s take the money with them…and would probably put a halt to this…at least by attrition.

Use your head next year, not your ears…nobody ever got rich listening to investment advice on CNBC.