Many investors were faked out by the market in late February when the Dow dropped more than 400 points in one day. While equity markets around the globe were rattled, the event was just a minor blip in an ongoing bull market.

We are in the third year of a Presidential election cycle which has historically been very favorable for stocks, likely occurring because the political party in power pumps money into the economy to enhance their chance for re-election. Believe it or not, this has actually been a pretty accurate forecaster.

After a lull through the summer, Sweetwater's unique strategy fired on all cylinders, ending the year with gusto.

What's not to like - about the current stock market action that is? In July we laid out the thesis for a "new bull market" in stocks.

Near the Peak of Pessimism! Even though many investors have given up on the stock market (as evidenced by the amount of selling last quarter) our unique strategy continues to add consistent gains to our portfolios.

Things are looking up! Not only did our strategy add another quarter of solid gains, but looking back over the trailing 12 months, the returns are quite stellar!

A banner year! Our broadly diversified investment strategy continues to produce solid annual gains in an otherwise lackluster investment environment.

While it has been a brutal year for many investors, our accounts continued to post solid gains. During the third quarter, our All Seasons portfolio was up 13.44%.

The US equity markets finally eked out a 1.3% gain in the second quarter and are now essentially flat for the first half of 2005. During the same time frame, our portfolios posted substantial gains.

Super spike! That was the term the venerable Goldman Sachs & Co. used to describe their forecast of $105 per barrel oil. We don't think Goldman is predicting oil will move from $50 bbl and stabilize at $105.  

Investors had plenty to worry about in 2004, including a war, record high oil prices, interest rate increases, a falling dollar and a Presidential election. Even with all these “worries”, the S&P 500 still produced a 10.7% total return. 

Treading water. That sums up the financial markets for the first three quarters of 2004. So far, this year has been frustrating for most investors and the third quarter provided more of the same. Historically, an election year has given the equity markets a nice boost.  

A milestone has passed - June 30th that is. Two important clouds of pessimism have been lifted:   the handover in the rule of Iraq and the increase in interest rates by the Federal Reserve Bank.  

Naysayers abound! A flurry of positive economic news continues to confound the pundits. We maintain that the economy will “heat up” along with the approaching summer.