Sluggish December, Volatile Events

The month of December has been a quiet month for the stock market. The market hasn’t moved much since the November updates. There is a saying, “The stock market moves up or down 20% of the time, it does nothing for the rest of the 80%.” I guess this is one of the 80% period. The much anticipated Santa rally didn’t materialized. This is probably attributed to the jitters of the various “bumps” along the way.

Here is a breakdown of the events of the past month:

•  I was saying in the last update that the market will not be derailed as long as N Korea doesn’t nuke everybody else. And well, they threatened to nuke everybody recently if S Korea continues their military drills and provocations. Good thing I was only half correct...There are reports that N Korea may be preparing for another nuclear test again, did not help the stock market. However, N Korea recently decided to get back into talk and let in UN Nuclear inspectors. Whether that will materialize or not will depend on the whim of N Korea.

• Ireland has thrown in the towel and the government passed the bailout for the nation. The bailout of Ireland created much fear that Spain, will be the next to come and overwhelm the EU emergency bailout funds. The world market hiccups a couple of days due to the EU Fear.

• Key economic indices in US continues to improve, further supporting the view that recovery is strongly in place. Some analysts even predicted that the US stock market will hit pre financial crisis high by year 2011.

• The China government did not raise interest rate in the recent economic review despite inflation still remains high. The China market heaved a sign of relief as investors believed that the Chinese government is not tightening the economy as hard as they thought.

The month of December has their highs and lows. There are positive news from US and China and negative news from Europe and Korea. This pretty much balance out the positive and negative news and the world stock markets remain range bound. Resource did slightly better with gold and oil hitting the higher end of the range but is still limited in their movements. The worse performer for the month is Indonesia. I believe that the poor performance for Indonesia is a temporary blip and it will not stay at the bottom of the chart for too long. Most of the funds are nearly flat at 0% return, with the exception of metals and resource.

In short, there is nothing much to report despite lots of events happening around the world. The market seems to have gone into hibernation. The economic year ended in a whimper. Let us see if the last few days of the month can inject some excitement into the market!

I will be doing a written report of year 2010 as requested by many of you. It will be our January Investment report. Stay tuned!

Wishing you a Merry Xmas and Happy New Year!

Attached is the fund performance for the month of Dec