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If your stock group analysis was flawless, a 1982 gain of 85% was possible, even beating Phil Hempleman. If it was hopeless, a loss of 41% was possible. This annual feature had some weird twists this time.

A critical review of this publication’s 1981-1982 work…..the good and the bad, significant and insignificant.

The most significant development since the last issue has been the renewed massive downside pressure on the oil stocks. Is it time to finally start bottom fishing in oils?

Some very preliminary signs inflation deceleration may be slowing, and CPI is now probably understating current levels of inflation. In 1983 two versions of CPI will be reported with CPI-U substituting rental factor for mortgage rates and home prices. However, COLAs and Social Security will remain tied to the old version.

The screens employed in one of our conceptual equity screens seem to have outlived their usefulness. Modifications have been made and a new list of undervalued growth stocks produced.

Steve Leuthold’s December 7th speech at a joint seminar sponsored by the New York Society of Security Analysts and the Market Technicians Association. Who says oil and water don’t mix?

The market is again exploding on the upside, about to make a new high. Twenty-three years of on-line market experience provides no operational guidelines for a market like this, even though the amplitude of the move and the volume relative to shares listed is not unprecedented.

“The Analyst Looks at Baseball” - Several analytical approaches are applied, combining team payrolls, runs scored, games won and attendance in an effort to determine who are the best and worst baseball teams.….”Don’t Always Underestimate the Banks” - Soon banks will be offering their own money market funds. Existing money market funds say they are not worried about the competition. They should be.

The move has been massive and a lot of “smart” money checked out early, awaiting the correction that to date has not developed. Clearly this market is something different, but in the past, it has been wise to heed the message of the Early Warning Index. Maybe this time will be different, but I suspect that even a mega bull must take a rest sometime.

A new nationally distributed newspaper has been born, USA Today. This big gamble might just pay off for Gannett. It is refreshing indeed to see a corporation make a big bet on a high-risk long-term investment, especially in this age of corporate timidity and financial mechanics. Also, Irving Kristol’s remarks at the Western Pension Conference.

In September the stock market moved sideways, and just as it seemed the underpinnings would finally crack, just as it seemed our expected correction was about to begin, an explosion occurred, on the up side, not the down side.

Many consumer stocks are no longer especially cheap, even when 1983 earnings are considered. Nor has the increase in consumer demand most were expecting materialized. While consumer stocks rallied strongly with the strong August market and did not flounder in the September consolidation, they are certainly no longer the mighty market leaders they were earlier in the year. These factors combine, creating a vague uneasiness concerning consumer stocks.

Did the individual investor buy more stock in the August up blast than most think? Based on a close monthly examination of the equity oriented mutual fund statistics, it looks like it.

Once a quarter, sometimes more, a variety of stock selection screens are run. Some of these screens are important factors in the current equity portfolio structure. Here are some highlights from three of these screens.

Reagan’s change of economic course, leaving the hard-core supply-siders behind, was constructive, and from our standpoint, expected. Predictions for the next two years include significant social security reform, implementation of a somewhat watered down, but still very meaningful flat tax. Federal deficits in 1983 and 1984 will probably turn out to be less than now expected. And in November 1982, the Republicans will lose some seats, but the Old Cowboy will still be able to get his way with Congress when it is important.

Merrill Lynch was first but the rush is on, stripping existing T-Bonds of their coupons, repackaging and selling coupons and principal separately. While perhaps priced too high for sharp pencil pushers, to us they look like a very good investment. Corporate “zeros” should, however, be viewed very cautiously.

Dedicated portfolios, TIGR types, long-term bond buy and holders and bond traders soaking up the government financing like so many sponges. For long-term T-Bonds at least, the demand may be greater than the supply for a while, creating a premium situation. It’s hard to believe a T-Bond could become an investment rarity, but these are strange times.

The S&P 500 futures hedge discussed last month remains because even though chances are the summer lows will stand as the bear market bottom, a correcting decline of 80-100 DJIA points down from the Aug-Sept peaks is expected. This may happen very soon. The recent action of gold is ominous and one or two 120 million+ downside days would not surprise.

In recent weeks, this writer has again been poking around rural middle America, updating work presented in past issues of this publication for a Barron’s article. Here are some new things I have learned, also a few revised observations, some perhaps not quite appropriate for the Barron’s article. Also, no matter what Janet Norwood and her crew at the Bureau of Labor Statistics say, real estate prices in the real world are coming down.

As of July 30, the Major Trend Index was marginally Positive, but the Early Warning work deteriorated to a Neutral status. And currently the stock market is very seriously threatening to trigger the Fail/Safe mechanism.