Dow Jones 9753.79 +6.00 11:17 am PST, November 25, 2003  NASDAQ 1947.68 +0.54 For info, visit access.smallcapnetwork.com S & P 500 1053.75 +1.68 To be removed, please click here Russell 2000 542.29 +2.78 VOLUME 03: ISSUE 76  Feature: Should Investors give thanks for 2004 now? Thanksgiving looms, Thursday, beginning the giddy slide to the holidays. Investors have lots to be grateful for (especially SmallCap Digest readers-- seen our Track Record?).  Will the bon temps continue into 2004? Think we're too early to ask? Better too early than too late. Besides, I'm already reading the usual solicitous articles--they appear at the same time each year-- informing me that 2004 will be a stock picker's market--when isn't it a stock picker's market?.  I thought the time was ripe to pre-empt these turkeys (pun intended). Train continues to pull out of the station At SmallCap, we like the prospects for 2004. The light at the end of the tunnel that we saw in 2003--as we surmised, then-- did not turn out to be a train. Our reasons to anticipate a decent 2004 include: The fourth year of a Presidential cycle has been positive for stocks 85 percent of the time for over a century. Interest rates, while they may rise slightly, should stay muted so as not to rattle the Bush chances for re-election or throw the on-again, off-again economic recovery off again. Short-term, tax selling in December will be less of a concern as there are fewer losers to sell. War and general worry will continue to impact the market; "Wall of Worry". Continued improvement in capital spending will buoy revenues and earnings into 2004. The pundits should be out soon, wasting bandwidth and talking down the market for next year as did last year at roughly about this time. Year to date S&P is up 20 percent and the NASDAQ is up over 40 percent. So much for pundits. As we said in January 2003: ...the first two years of a president's term are lousy for markets while the last two are the best of the lot. In essence--so the theory goes-- every presidential term, the market bottom is hit in the first two years, the top in the last two. Or, at the very least, better returns are achieved as the incumbent party gears up for re-election. ...The second half of 2003 should be better than the first half as long as the conflicts with Iraq and the saber rattling in North Korea are resolved quickly. What that means is that investors should look for strategic situations, which have the fundamentals to prosper once the clouds part. Small Cap Digest intends to be helpful in this endeavor. Repeat after me; Volatility is my friend. So, statistically, 2004 looks good for investors. The only caveat may be that since 2003 was so good, 2004 returns may be somewhat muted in comparison. Volatility will remain--does it ever go away?  Geopolitical events will continue to simmer in the background, keeping the markets, investors and the country on their collective toes. Speaking of volatility, another caveat is the Market Volatility Index (VIX), quoted here frequently. In January 2003, the index was in the low to mid 30's, denoting market weakness. The subsequent slide to its current level of 17.5 tracked the rise in the market nicely. With that index now at the opposite end of the spectrum, investors want to see the VIX either grind around this level or go lower, both of which are entirely possible. A quick pop or rise in the VIX wouldn't be good. We will--and y'all should too--keep a weather on this indicator. I have yet to find an indicator as good as the VIX. While not definitive--what is?--it's an excellent snapshot of where the market is now and where it may well decide to go in the future. In January 2003, we felt the market, for the year, would be better in the second half than the first. We were correct. For 2004, we believe the first half will be better than the second. Why? Mostly due to historical precedent. Whether the next administration is Republican or Democrat, there will likely be some foreshadowing in the market mid-year with some economic pain as interest rate rises announced earlier in the year begin to kick in later in 2004-2005. Measures will also likely be taken to address the debt and some of the other excesses that have plagued us for the past few years.  Which Administration? Does it matter? The first two years of any 'new' administration usually heralds weaker markets. In that case, I guess 2004 will be a stock picker's market. Again. At SmallCap Digest, we intend, in 2004, to do our best to bring you another string of winners, as we did in 2003, with the goal of handily beat the indices.  Where do you see the market going in 2004? Any picks you'd care to share? Let's see some email traffic. We'll print a selection and make pithy comments before year-end. Send 'em in here: Editor@smallcapnetwork.com   MARKET NOTE: WEDC Update White Electronics (NASDAQ: WEDC) delayed-from-November-12th- earnings announcement is slated for release after the close, Tuesday. The shares were up 40 cents to $9.05 in mid-day Tuesday trade as investors decide what will be included in these numbers. My guess would be the strength will continue after the announcement as the drubbing to $8 and change from $11-$12 a few weeks ago appears overdone given current fundamentals. If you want to take a punt pre-release, make it a small one. While there is likely nothing nefarious at work here, caution is always prudent. Faites vos jeux....   Need another reason to Sign up for your FREE Preferred Membership? Over the past year, we've brought you 13 Trading Alerts. If you had invested $1000 in each one, your $13,000 investment would have grown to $23070, if you had sold, say, Friday November 7th, to pick a day. That's a 78 percent return in a less than a year. The best? Obviously, Cel-Sci. The worst? ThinkPath. If we strip those two out--the highest and lowest returns--the return on your $11,000 investment would have been a very respectable 51 percent. Not too shabby. By comparison, the S&P index has returned about 20 percent over the last year. The NASDAQ--to which we also alerted you at the low in March 2003--has returned around 40 percent in the same period. The NASDAQ Tracker (NASDAQ: QQQ) did slightly better than its benchmark having risen 45 percent. Oh yes, we told you about that one, too at $24 in February 2003. Now it's $35. And we're only looking at Trading Alerts. I suspect if we included all of our Company Profiles (check our Track Record), the numbers would likely have been even better. The best is yet to come. Sign up NOW! 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