As one of my regular readers you know I have been a stock market bear for the past 2 years and have encouraged everyone to put their money into a money market account or a short-term no-load bond fund and for the more adventurous what is called a bear mutual fund that goes up when the market goes down. Just being in cash as outlined in my book would have saved 40% or more of your money.

It looks like the bull has returned - at least for a while. The low that was hit on October 8 was a serious one. As the market has gone up there have been more and more who believe we are in a recovery mode so they are committing funds again. This is true not only for the average investor who has been seriously hurt with the invalid Buy and Hold philosophy, but also the pension and retirement plans of both large and small corporations. Many pension plans (hopefully not yours) have had losses of 30% to 50%.

I hate to tell you this, but those fund managers, as expert as they pretend to be, have no more idea how to protect that fund than you do. Am I being pessimistic? Maybe, but then why did 90% of all stock mutual funds lose money so far this year? The only stocks and mutual funds showing a profit have been bonds, gold and bear funds. You can be sure your financial manager was not smart enough to own any of these.

Well, anyway, back to this new bull market. Many pension plans and funds have been making a small recovery and the investor is again opening his mail from his 401K. It has been too painful to see those losses.

Will this bull last? The current underlying fundamentals say 'NO', but the outlook by market analysts is that next year we will see the return of good corporate profits and better exports to foreign countries. So far it has been the American consumer who has held the market up with purchases of cars and houses. If this can continue we will see some corporate expansion and employment rise again.

The market has been rising on anticipation of that scenario. Unless we can see corporations making decent profits so they can expand their business this shadow bull will disappear in a flash of light. Whoever you work for must make a good profit or you won't have a job. It isn't his fault or yours. He can't afford to keep you unless there are profits.

Let's hope this shadow bull has more substance to it.

(c) 2005

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.