HOLIDAY CHEER turns into WAR FEAR

back to where we started after the second best yearly start for stocks EVER. it seemed like things were on there way to getting better. with the worst holiday selling season in 30 years and the completion of a three-peat for the stock market behind us, the bets were placed for a change of the pattern and a new outlook. the president unveiled a tax cut package for the rich and the poor, the war plans seemed to be panning out nicely, historical comparisons looked favorable and startegists put there portfolio managers at ease to put there capital to work for the new year. unfortunately, reality bit into the picture and now we are facing some risks that seem to hard to ignore.

aside from the war fears that are obvious and ominous, most companies that have reported there 2002 year-end reports have either not given guidance or have made vague statements that they were 'cautiously optimistic' about their business prospects for 2003. in addition to not being able to give guidance, almost every company has stated that the potential for war with iraq has left them with forecasts that would need to be changed if the war were to be anything like a 'real' war. add to that the uncertain effects of the longterm bear market on assets values, investment enthusiasm, business outlooks, and consumer spending and you have an incredibly dangerous mix of risk that has yet to play out.

we now face a weekend to rest and relax with our families and friends and to contemplate what will happen next week when the UN inspectors give their update and the president gives his second state of the union address. with this weeks rhetoric from the administration at a fever pitch, there is not much doubt that mr. bush will officially declare war on iraq and send in US troops over the next few days or weeks. it will be a sad time for our country and probably be fairly negative for the rest of the world.

whatever the outcome, and i am confident we will be victorious, at least militarily, the consequences for our country's actions will be profound and longlasting. the world is constantly changing and for the most part, that is a good thing. yet for the near and intermediate term, the uncertainties will be overwhelming. this will be looked back on in the history books as a dawn of a new era as well as a new world order. we are a part of that history and i hope it reads well.

have a grateful day!
larry