I love movies to a fault. I have watched thousands and some of the greatest movies ever made are those in which even the savviest of viewers are thrown off by the ending. There is just something special in the sensation one feels when the plot concludes, tying up all lose ends and leaves the audience saying "Why didn't I see that coming?".

When did you figure out The Sixth Sense? Did you have any idea how The Usual Suspects would end? How about the conclusion to Shawshank Redemption? Of course I knew how Rocky I-VI would end, but I sure didn't see the surprises coming.

Typically, prior to watching a movie with an ending 'twist' we know something different is coming. Whether we have been pitched by producers or informed by friends, rarely do we sit down to watch a piece and not know a unique conclusion is coming. What do we do when know something unique is coming?

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Well, our human nature kicks in sending our senses into overdrive and we start searching and searching for any hints of the conclusion before it happens. Rarely do we sit back and let the conclusion come to us. Sometimes, we can figure out 'who done it' ahead of time or make an educated guess at how it will all wrap up, but if the movie is done correctly we will truly have that 'a ha' moment and feel as though we definitely got our money's worth.

There are some great parallels between suspense movies and watching the financial markets unfold, but we can rest assured that rarely will we be able to truly 'figure' it out ahead of time and you can be certain that even if a few can, the vast majority will not.

While I have not been participating in the financial markets as long as many, I can cite numerous examples where the masses were predecting one thing while something completely different was preparing to take place. I recall the common emotional theme in 2000 followed by the emotional erosion that took place over the next two years, concluding with absolute despair in 2002. I recall just as early as mid-2006 that the correction was embraced by so many as the end of the advance. Each and every time individuals searched and searched for what would happen, and more often than not got it wrong.

The interesting thing about the financial markets is there is always a unique plot unfolding and our job is not to predict what will happen, it is simply to identify what is happening and position ourselves accordingly. 2007 was extremely unique and a year in which plots were as diverse as I have ever seen them before. Financial stocks like Citigroup (C), Bank of America (BAC) and Merrill Lynch (MER) lost 30 – 40% of their value, while a bull market in alternative energy started with stocks like First Solar (FSLR), Evergreen Solar (ESLR), SunTech (STP) and SunPower (SPWR) added triple digit returns. One conclusion that was solidified was the rotation to a global theme rather than one of a domestic theme as international markets crushed domestic returns and companies with international exposure significantly outperformed those confined within the U.S. borders.

As we kick off 2008 pundits are already out in force telling us just how the plot will conclude. So too is our natural instinct to dig and dig, attempting to draw our own conclusion of how things will unfold. The exercise is fine and should help us in seeing what is really taking place, but drawing a solid conclusion before it happens is dangerous as it tends to limit us in our flexibility.

It doesn't mean we shouldn't stop looking, as that is half of the fun, but we must also remember that Mr. Market is much savvier than any Hollywood producer and odds are he has a plot in store for us that we will never see coming. Keep an open mind and stay on your toes: Sit back and enjoy the show.

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