Content-type: text/plain

The Street seemed to cope with the NYC transit strike.  Volume was down
only -6% below average, but that's very much in keeping with the fact
that prices were flat all day, i.e. less than a 6pt range, and closing
less than a half-point down.  It's Christmas week, and there's only a
handful of sessions left for tax loss selling.  So this action is just
what we'd expect.

Never let your politics influence your investing!  Regardless whether of
not you agree with yesterday's commentary, economic effects will be
coming.

The "conundrum" in Greenspan's recent testimony was why long term
interest rates haven't been rising more yet.  That is confirmation that
increased Federal borrowing competes for money--and it's the 800 pound
gorilla.  What's been happening is foreign money, that stuff we send
abroad to buy all these cheap imports, is coming back to the stability
of our "full faith and credit" Treasury debt.  It's the old
"Supply &
Demand" thing again--there's been a ready supply of (foreign) money.

How long that may continue is anyone's guess, but the smart money will
be betting that long term interest rates will rise, not fall.  That will
have impacts on us.

As interest rates rise, the principal value of existing bonds & bond
funds will fall.  If we've got those, we'll be affected.

As interest rates rise, variable-rate loans will be adjusted upward.
That will affect housing and credit card borrowing, perhaps even, now
harder to get, bankruptcy filings.  Higher debt servicing costs will be
a drag on almost everything else in the consumer economy.  That will
affect us one way or another.

As interest rates rise, new bonds and fixed-term investments will become
more attractive.  At some point a low risk Treasury will attract money
away from investments in risky stocks, causing a weaker stock market.
If we're holding stocks or stock mutual funds, we'll be affected.

As interest rates rise, business will also have to pay more for its debt
servicing.  If they can't raise prices, and the direct effect in the
consumer economy make that an issue.  What's a poor CEO to do?  He'll
try to compensate by reducing other costs, e.g. R&D, employment,
benefits, etc.  That's going to come off the bottom line, one way or
another, eventually.

As investors we can see at least potential, yet very real problems
ahead.  We need to take steps now to protect ourselves.  Education
first!  If there's anything we don't understand about dealing with these
new factors, we need to begin preparing ourselves NOW.  Then we need to
have plans in place to monitor and detect what's going on, and more
plans for dealing with it.  Basically, we need to be prepared with
investments that will "hedge" our other investments by increasing in
value in a higher interest rate environment.  That's NOT political!

 Price    Vola-    Momen-   Volume   Oscil-   Summ.
 Change   tility   tum               lator    Index
 -__+     -__+     -__+     -__+     -__+     -__+

 __>_     __     12/14
 _>__          12/15
 _|__          12/16
 __     12/19
 _<__     <___     __|_     _|__     _<__     __|_     12/20

Timing Signals:  I don't use or recommend timing signals, but they're
fun to watch.  If I did though, well, I might use something like this.
(Be warned!!  It tends to whipsaw around signal points!)

Last Signal: BUY        Date:  10/31/05 S&P:    1207
Winner or Loser:  tbd                   By:     tbd

See my market tracking charts for '03-'04 and my investment strategy
study at my website(s):
http://www.xprt.net/~pgrogers/Pers.html
http://www.geocities.com/paulgrogers/Pers.html




Paul Rogers, paulgrogers{at}yahoo.com                       -o)
http://www.angelfire.com/or/paulrogers                   /\\
Rogers' Second Law: Everything you do communicates.     _\_V

... I have to stop now.  My fingers are getting hoarse!
___ MultiMail/MS-DOS v0.35

---