2004 Recap/Performance

             The year just past continued The National Investor’s unbroken string of handily beating the major market averages EVERY YEAR since we commenced publication of our monthly newsletter in 1996!

            A combination of adept timing of the U.S. dollar’s swings during the year and our careful research and selection of individual investment opportunities resulted in AVERAGE GAINS FOR OUR RECOMMENDATIONS OF 38.7% (ANNUALIZED) FOR 2004.  This was nearly triple the return of the broad Wilshire 5000 Index, and roughly FOUR TIMES that of the Standard and Poor’s 500.

            As was the case in 2003, the proper selection AND TIMING of “dollar-contrary” trades was the key to our success.  Clearly, though, we did not get as much mileage out of this strategy as we did in 2003 when according to the Hulbert Financial Digest-our average recommendation gained 85.9%.  With the U.S. dollar either steady or rallying for the first three quarters of the year, investment success during 2004 was made possible as much by avoiding many previously-hot sectors (i.e. most commodity shares) as anything.

            We invested most heavily in dollar-contrary plays from late August through early December.  This included our second recent foray into the Prudent Global Income Fund, as well as our having again loaded up on gold mining stocks in late summer.  We enjoyed healthy gains as well during this period on Bema Gold (AMEX-BGO), Kinross Gold (NYSE-KGC), Endeavour Mining (TSE-END) and Goldcorp  (NYSE-GG).  All these were sold on December 3 near their peaks, marking the SECOND YEAR IN A ROW that we correctly advocated trading out of a rally in the sector as the month of December began.

            Our recommendations were “anchored” by several solid, dividend-paying energy companies, led by Northern Border Partners, L.P. (NYSE-NBP), Enterprise Products Partners, L.P. (NYSE-EPD) and ONEOK, Inc. (NYSE-OKE).  All three remain on our recommended list as we enter 2005.

            Some stocks gave us truly explosive gains!  Canadian-based uranium giant Cameco (NYSE-CCJ) more than doubled, as did our most promising stock for 2005-the diamond explorer/developer Shore Gold (TSE-SGF).

            The biggest drag on our performance for 2004 was our recommended short positions against the broader stock market, which we continue to maintain.

            Looking ahead to 2005, we see a similar pattern on tap to last year: a strengthening U.S. dollar, and weakness just about everywhere else.  More than at anytime over the last couple years, being a TRADER will be every bit as important as identifying the right companies and sectors. It’s one in which opportunity will be available; and as always, we’ll do our utmost to make this New Year yet another successful one for our subscribers!

Chris Temple

Editor/Publisher

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