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Last year's panel was too conservative

The stock market brought many happy returns for investors this year, far better than most of our panel of investment advisers were expecting.

After being too optimistic in 2004 and 2005, our panel didn't expect the bull market to come charging back with such strength this year, but they did foresee that tech stocks would be a rather mediocre investment this year.

While the eight advisers we queried last year expected rather average gains of 9 percent for the Dow Jones industrial average and the Nasdaq Composite Index. They were right on target with the Nasdaq -- with a week still to go in 2006 -- but their forecasts fell far short of the Dow's strong returns.

Heading into the final week of trading, the Dow has shot up 15.2 percent for the year, while the Nasdaq has gained 9 percent.

The bragging rights for the best Dow forecast go to Thomas S. Quealy Jr., the president of Amherst money manager Nottingham Advisors, who threw caution to the wind -- at least by our panel's conservative standards -- with his prediction that the Dow would close the year at 12,250.

Quealy was the most optimistic member of our panel last year, but even that wasn't upbeat enough, falling 93 points short of the Dow's near-record high of 12,343 heading into the final week of trading. His Nasdaq prediction of 2,550, however, was way too high for an index that finished the week at 2,401.

By far the best forecast in years was Gerald T. Cole's prediction for the Nasdaq, which was just one point too low heading into the last week, even if his Dow target for 2006 was 343 points too low.

Rosemary A. Ligotti, senior vice president at Cantella & Co., can lay claim to the prize for offering the best package of five stocks. Her stock picks gained an average of 17 percent, making her the only local adviser to beat the major indexes.

But her Dow forecast of 11,450 and her Nasdaq prediction of 2,300 missed the mark by the widest margin of anyone on the panel, proving again the old adage that it is a market of stocks, not a stock market.

Ligotti's picks got a spark from surging metal prices, which helped push copper producer Phelps Dodge's stock up by 63 percent so far this year. She also got outsized gains from the 24 percent jump in investment firm Berkshire Hathaway's Class A shares. Those gains towered over the modest increases in the shares of consumer products maker Fortune Brands and payroll services firm Paychex. Her only loss came from the 13 percent drop by biotech firm Genentech.

Overall, the local advisers' picks produced rather lackluster results, rising by an average of just 5.6 percent, which was only a little more than a third of the gain in the Dow and a little less than two-thirds of the increase in the Nasdaq.

"A five-stock sample is extremely risky," said Anthony J. Ogorek, who runs Ogorek Wealth Management in Amherst. "One guy can really take you down."

Here's a look back at the other advisers' predictions for the Dow and the Nasdaq:

*Ogorek: Dow: 11,592; Nasdaq: 2,388.

*Francis G. Leonard, former president, Courier Capital Corp.: Dow: 11,484; Nasdaq: 2,411.

*Arthur A. Glick, senior vice president, RBC Dain Rauscher, Dow: 12,134; Nasdaq: 2,433.

*Diane Bishop, research director, Robshaw & Julian Associates: Dow: 11,800; Nasdaq: 2,500.

*Joseph Curatolo: Dow: 11,900; Nasdaq: 2,500.


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