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First day of trading and the market makes a bold foray. Too much cash, chasing too few worthwhile assets? There seem to be plenty of pundits banking on a rise this year but the doomsayers are still making plain that bull markets have finite existence and this one has maybe gone far enough and lasted longer than many.

Last year the Dow fell, weighed down by General Motors one of the largest companies in the world. Down 52 %, GM is still under a mighty cloud of junk debt and many investors or institutions will have taken huge losses. Knock on effects might also be severe and drawn out so keep some cash under the bed, or buy gold.

By contrast with the Dow, the FTSE 100 made excellent progress and all indices in the UK helped both the club and individuals to make a bit of money but the warnings still remain. Houses have also been volatile with December seeing some increased buying interest while retailers may or may not have had the Christmas they wished themselves. Overbearing debt seems to be the most significant factor overhanging the economy and the Bank may be forced to reduce rates early in the year to stave off serious problems, which would spell doom in the fight against inflation. After that, Hmmm.

What will 2006 actually hold? Well M & A activity is expected to continue to buoy the market while cheap money is available in Europe. However this is where inflation may play it’s part. Any suggestion of an increase will make a rise in Euroland rates a probability and loans will become less attractive.

While we are still in the middle of winter, energy prices are likely to remain high especially if the big Russian bear continues to play politics with gas supplies. UK is rather too dependent on foreign supplies for it’s own good so the sooner we get a few new nuclear power stations planned the better although that will not please everyone. High energy prices can only damage our competitiveness and our general economic health. Good job the government gives me a few bob each year to cover my winter fuel cost.

Individual sectors had tremendous rises through 2005. Mining up 63%, Aerospace & Defence +54% and General Industries + 43%. The only two sectors in the red were Household Goods & Textiles minus 15% and Telecoms Services minus 1.0%.

The club has had a fair year and we have been beneficiaries of the sector movements. Particularly mining, with Merrill Lynch World Mining Trust and BHP having a sparkling rise. Synergy and Hamworthy on the AIM board have also been very good to us. Long may they continue. Retail Decisions also looks promising just now, making steady, if unspectacular progress.

I have some less exciting news about C&W which has now gone back to ‘sell’ status from my advisor, so I must take that on board with regard to my own holding. Even though it is up slightly in this post -Christmas euphoria.

As mentioned above, serious comment has centred on the health of the stock markets for the future. Personally I am usually fully invested but at present I do not feel comfortable with that stance and may well reduce. Sadly ISA’s cannot be held in cash for long periods otherwise one gets a rap on the knuckles from the broker. Consequently one needs to be in something a little safer than normal. One sector showing some improvement currently is Banking. It seems that a soft landing in Bank finances is thought to be the most likely scenario for 2006.

Many of you will have dipped into the financial press over the year end with all the endless prognosticating. Much more from me and you will probably throw up. However just a few thoughts on two or three of the shares I have a particular interest in. Ashtead was the 5th highest riser on the FTSE250 at 139%. Persimmon had a stellar time through 2005 but is looking expensive now. Standard Chartered Bank is also well up and primed for further gains with it’s heavy leaning towards Asian markets.

Lloyds TSB is still not near it’s high for 2005 but should get there in the New Year and what a dividend yield. Well worth having.

My other club has done well in many shares which is not difficult in a bull market but our move into Morrisons is looking fairly promising now. A vote to accumulate at the last meeting narrowly lost out which is a pity since the rise for the supermarket chain has been largely achieved in December, while over the year it was down 6%.

Where will the FTSE100 go in 2006. Well if it goes above 6000 going forward then I believe it may come back below that mark before the end of the year. Happy New Year to you all and successful investing all round. ML January 3rd 2006 Acknowledgements to Daily Telegraph and FT.