......Gosh, is it that time already? It's almost too late to wish you a Happy New Year then - but best wishes for 2008 anyway. Where to start this first WICS of the year? There's just too much choice and my poor wee brain is overheating. All these scams, crooked deals and plain oldfashioned incompetence to discuss - talk about being spoilt for choice!

The first thing to have a look at is HECToR methinks - a "guid Scots name" if ever there was one. Who the heck is HECToR with that funny way of spelling his name? He's a computer, allegedly hidden in the depths of the Scottish countryside and owned by Edinburgh University. It's more than likely that any Edinburgh undergraduate could reveal its precise location, whatever the authorities might like to believe, but that's another story. Anyway, HECToR is seemingly incredibly quick on his feet, albeit he remains true to his Scottish roots in not being quite world class as an athlete - nearly 'up there' but in fact only seventeenth fastest on the planet it seems. The plan seemingly is that he will be used to conduct climate modelling, fluid dynamics research and the like - all highly laudable projects and certainly requiring massive computing power. So why is HECToR getting a mention in these ramblings? Because (true to form!) some academic reckons that he will use the big guy to "Find the safest and most profitable investment strategies for pension funds, based on uncertain information about the future of the world economy." (His words, seemingly, as quoted by a newspaper - and if I have misquoted him, then I apologise profusely.) Now please excuse my cynicism, but several facts need to be considered here. First of all, computer modelling of stockmarket conditions has been done to death - and don't think that a computer faster than HECToR hasn't already had a go - several 'goes' in fact. Secondly, the last time "serious academics" (Nobel prizewinners no less!) got involved in financial markets, the USA Federal Reserve ended up having to conduct the biggest bailout in history. (after the collapse of Long Term Capital Management.) The thing is - if you think about this - markets can only work if they're imperfect. If you could create a computer programme that was able to factor in "everything" then markets, per se, would cease to exist. They simply would no longer be needed as an environment in which to establish "value". Have no fear folks - that ain't gonna happen! Why not? And why am I so cynical about computer modelling in market environments? Simple! Markets are driven by only ONE thing - human emotion! Call it 'psychology' or 'feeling' or 'belief' - whatever - it is the ONLY thing that underpins what goes on. Remember in the manual? (If of course you have read it - and shame on you if you haven't!) I mentioned kids swapping football cards - Owen for Beckham if I recall. What is driving that particular market? Surely it is only that single thing - a BELIEF that Owen is 'worth' more than Beckham, or vice versa. What drives up a particular price? The BELIEF someone has, that right now it's "too cheap" - it's "a bargain". Similarly, the seller BELIEVES it is "high enough" - otherwise he or she would hang on in the hope of getting even more for it. Then you bring in the other emotions - FEAR and GREED. You have read it all before of course - but that doesn't make it all old hat. And to conclude this wee diatribe against Edinburgh's potential waste of HECToR's extremely valuable time, if anyone ever comes up with a market - predicting computer programme that can account for human emotion in any meaningful way, in regard to the above mention of "old hat" I'll mince my favourite old fishing hat and eat it in front of witnesses.

Moving along then - under the heading of "scam" (type that into the WICS search engine if you're ever at a loose end - along with "toxic waste" if you really have a lot of time on your hands) I note that I'm no longer a voice in the wilderness with regard to biofuels. The Smithsonian Institute appears to have come to the same conclusion - quite gratifying really. The next massive scam of course is this recent thing about UK government ministers being obliged by Gordon to "assess the climate costs" of any economic decisions. Brilliant really - every new project (except for the Heathrow runway of course.....) will simply become "too costly to the climate" and will be cancelled - oops - "put on hold". Nothing to do with the fact that the UK is heading straight for recession of course - and is still pouring money into the Olympics black hole. Perish the thought that Gordon actually got things horribly wrong as chancellor - the UK is a "dangerously unbalanced economy" according to the highly respected folks at Capital Economics. You might be really cruel and also suggest that the UK is run by "dangerously unbalanced politicians" but that's not really on the Williams beat so I won't say it.

Next, it's interesting to note that the Scots, famed for their parsimonius nature and ability to budget (unless their name happens to be Gordon of course) are making just a wee bit of a mess of their sums with regard to the third Forth Bridge - there's scope for a bit of wordplay there if you have nothing better to do - last June the expected cost was £1.6bn. Now it's £4.2bn. Is that inflation or what? It's interesting too that the Edinburgh parliament appears to have no idea whence the funding will come - nothing new there then. It's also interesting to note that the Danes are managing to build an 11 mile long bridge with 100 miles of new rail links, for a measly £3.9bn - the Forth effort will be about a mile and a half with no rail links. Hmm.

Moving along, a recent headline shouted "New Crisis to hit Banks in 2008!" Nah - it's just the same old one that surfaced in 2007. It's going to be amusing to see how this new banking rule ("Basel Two" if you're interested) that says banks must have capital reserves based on the "amount of risks they run" will be fudged to try to hide the awful truth as the year progresses.

Another headline: "Whitehall Wastes £2bn in Abandoned IT Projects" took my fancy. That's two thousand million Pounds Sterling - £2bn makes it sound like peanuts really - and in the context of overall government waste, it probably IS peanuts. But it's still an awful lot. Apparently however it might be even more because according to a civil service source "Nobody keeps accurate records". Maybe the computer for doing that is broken too. Such waste should be reported as a crime.....oops - can't do that because the crime reporting thingie doesn't work either. Ho Hum.

Back to banks for a moment and it seems Goldman Sachs is the only merchant bank reporting a profit for 2007. Well done guys - shame you did it by shorting mortgage - backed securities that you had sold to your own customers! That is going to bounce back at you big time, of that there is no doubt at all, once the "blame game" really gets under way. It seems Barclays are (is?) about to sue Bear Stearns for "fraud and deception" over hedge fund losses. Imagine that eh? A bank taking out a lawsuit against another bank! And for fraud and deception no less. Talk about pots and kettles....

And it looks like "Tata" to Jaguar then, as mentioned in these ramblings a month or two ago. Poor Tata - but they have only themselves to blame of course.

Oh yes - before I forget - what about the UK government's moving its Tote (betting) operation to Alderney so as to avoid their own strict UK rules regarding advertising of gambling, not to mention taxation? That's a good one! If Joe Public tried that kind of thing he would be locked up....

....and there's more - but that's probably plenty for today.

But before looking at a chart or two, here's an interesting email from one of you (thanks John!) and my response thereto:

"Dear Ian,

This is a small, rather nit-picking point, that I would be grateful if you would clarify. You have stressed the importance of not over-trading. This includes the advice, "Do not have more than two trades in related sectors." Recently you have drawn attention to several trades in the Travel & Leisure sector, particularly Punch Taverns plc and Enterprise Inns plc. Would a more accurate statement be, "Do not have more than two trades, in the same direction, in related sectors." In the Travel & Leisure sector, both Punch Taverns plc and Enterprise Inns plc have been falling, since May 2006, whereas Stagecoach Group plc has continued to rise, over the period May to December 2006. Would it have been wise to have had simultaneous trades or orders in these three shares, between May 2006 and the present? Could this be done without over-trading?"

My reply was:

"Good point, John. It shows that being too closely involved can often blindside people, myself included. I'll mention this in WICS I think. 'Travel & Leisure' is way too broad a 'sector' to merit being treated as such, in my view - certainly I have never seen Stagecoach, National Express etc as being in any way related to Punch, Wetherspoon et al. I would treat them as being in different sectors anent my 'never have more than 2 trades' etc comments.Happy New Year - and thanks for pointing this out".

Okay, on that note, let's take a look at some charts, and I'll speak to you again next weekend as usual.

Ian.

PS - a very big welcome to you "new" guys and gals - please don't be afraid to email me if you're not sure about anything to do with these (or any) charts.

PPS - when you have time, especially if you're new to all this, please use the WICS search engine - it works pretty well. Without the inverted commas, try "support", "resistance", "dynamic support" etc. Also (anent today's charts) try "windfall" or the plural thereof.

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'.