THE ECLECTICA FUND – DECEMBER 2006

December was a caricature of the year. A second lapsed offer for our holding in EMI, lunacy in Thailand and second thoughts regarding the immediacy of American interest rate reductions all stymied the fund’s performance. We huffed and we puffed but to no avail. But let me put last year into perspective. We thought the stock market would fall in the second half. This failed to happen and as a result we had too much costly protection. Consequently we recorded a modest loss for the year. Disappointing though it is, I see no need for any root and branch reform: our stock selection was good but we were too bearish. The New Year is as good a time as any to consider how we might improve.