Mid-Cap and Growth Pull Ahead in Mid-Year Review

    by Wayne A. Thorp

    Investors who hoped for a continuation of the late-year run-up in the markets that closed 2004 have no doubt been disappointed thus far with 2005.

    After John Kerry conceded defeat to President George W. Bush in the presidential election on November 3, 2004, the S&P 500 gained 6.0% to end the year. However, the fabled January effect turned into a 2.5% loss for the first month of 2005, as the New Year gave way to realizations of continued violence in Iraq and Afghanistan, rising oil price and interest rates, and erratic economic growth. Its lowest close for the year was on April 20, when the S&P 500 was down 6.0% for the year.

    There are some encouraging signs for the second half of 2005, as the S&P has gained 5.3% since its April low. However, as we go to press, oil has reached new all-time highs, and only time will tell its impact on the market.

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