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The market can post a gain in 2007; Gains for Stocks by Party of the President and Majority Party in Congress

December 08, 2006

The Democrats have taken control of both houses of Congress, where does that leave us as investors? Should we be worried? The short answer is no. History shows that irrespective of which party controls the White House, the stock market fares better when Congress is controlled by the other party.

At the risk of sounding like a broken record, we remain constructive on the outlook for the U.S. equity market for the balance of this year and in 2007. We believe the market can make modest upward progress through the end of 2006 and post a gain in 2007. On a very short-term basis, we think the market could be vulnerable to a pullback because it is overbought on a technical basis, and the deep mood of pessimism evident this summer has been replaced by an improved sense of optimism among the investing public.

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