Agonies, Ecstasies in Stocks for 2006

On July 12, I turned back to Africa for one of my favorite stories of the year: a recommendation to consider gold miners with big stakes in the Democratic Republic of Congo. The big idea was that the country's first free presidential elections would bring stability and allow foreign miners to exploit the former Belgian colony's fantastic mineral wealth for the benefit of its people and shareholders. My top idea, Banro (BAA Quote), is up 34% since, while American miner Phelps Dodge (PD Quote) and Canadian operators Anvil Mining, Equinox Minerals and Moto Goldmines were all up around 45% even though gold bullion futures are down 3%. Stick with all of them.

On July 26, I provided one of my best contrarian ideas of the year. Guessing that pessimism over the residential construction and technology market had gone too far, I recommended that readers take advantage of the Federal Reserve's likely decision to halt its campaign to lift interest rates and buy shares of homebuilders. My "Christmas Comes Early" portfolio containing builders such as Avatar (AVTR Quote) and KB Home (KBH Quote) and banks such as Citigroup (C Quote) and JPMorgan Chase (JPM Quote) went on to do very well, with Avatar alone up 50% since. It just went to show that sometimes you've just got to throw yourself into some risk.

I followed that up with the suggestion to buy defense contractors such as Lockheed Martin (LMT Quote) on Aug. 2 as a safe haven in times of turbulence, and a column on Aug. 16 that argued against the likelihood of a recession, proposing that there would only be a "pause" in economic growth over the next year that would refresh and invigorate investors' appetite for stocks. My recommendations to buy economically sensitive companies such as Pactiv (PTV Quote), Vulcan Materials (VMC Quote) and Paccar (PCAR Quote) turned out well, with gains of between 17% and 40% since.

I could go on, but columns since September are too new to judge. All in all, this was a year when risk-taking was rewarded. How else can you explain the fact that the top stock in the Dow Jones Industrial Average was the much-hated General Motors (GM Quote), up 60%? Now we need to do it all over again, so tune in next week, when I provide my first shot at scoping out the big themes of 2007.