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Another year didn't turn out like you planned? You're not alone.

On Wall Street, where conventional wisdom trades like currency and lasts half as long, 2005 made a fool of the crowd. Never mind the professional soothsayer class, which bungled calls on everything from



to oil. In 2005, even rational people were forced to sit dumbfounded as hucksters got religion, champions fell and Martha Stewart suddenly seemed boring.

Here are the top five Wall Street story lines from 2005 that took unexpected twists.

The Year of Martha

After atoning for her crimes in prison, Martha Stewart was supposed to see her star power rehabilitated in 2005. It didn't happen.

This time last year, shares of

Martha Stewart Living


reflected congealing optimism. After falling to $10 on the day of her May 2004 conviction, they bounced above $30 last December as investors looked forward to the domestic diva's release and the millions of dollars of free publicity it would receive.

Adding to the euphoria was news that reality-TV master producer Mark Burnett was in Stewart's corner. In addition to a new daytime show he intended to syndicate, Burnett announced plans to have Stewart star in her own version of

The Apprentice

, the nighttime reality show that made Donald Trump into a TV star. The stock rose to $36 in the weeks before her release from prison in March.

But the public can be fickle. While Stewart still has a loyal fan following, she's not the force she used to be. Her version of

The Apprentice

was so badly received that NBC decided not to order any new shows after the current series ends in December.

A new book published by Stewart in October,

The Martha Rules: 10 Essentials for Achieving Success as You Start, Grow, or Manage a Business, hasn't been a blockbuster. By contrast, Rachael Ray, the Food Network's younger alternative to Stewart, had two bestsellers this year, according to Barnes & Noble.

Shares of Martha Stewart Living reflect the new reality, recently trading around $18, down 52% from the year's high. Stewart may not be 2005's biggest loser. But she certainly isn't a winner.

The End of Corporate Scandal

When the year began, many people believed the era of big corporate scandal was over. It didn't take long for their faith to unravel.

In February, news came that

American International Group


, the world's biggest insurer, was being investigated for alleged accounting irregularities by the

Securities and Exchange Commission

and New York Attorney General Eliot Spitzer's office. A month later, the probe claimed CEO Maurice "Hank" Greenberg's scalp, as even his longtime friends on the insurer's board forced him out. Soon after, Spitzer filed civil charges against AIG and Greenberg, setting the stage for Greenberg's anti-Spitzer campaign.

The investigation quickly spread as other big insurers --

Berkshire Hathaway's

( BRKA) General Re,

Renaissance Re





-- were accused of using so-called "finite insurance contracts'' to either burnish their corporate books or help other companies accomplish the same.

The bite of scandal was also felt by CEOs at several smaller companies.

Emanuel Friedman resigned as chairman and CEO of

Friedman Billings Ramsey


over an investigation into inappropriate trading in a private stock sale. And Robert McCormick's refusal to pay a $241,000 bill at a New York strip joint cost him his job as CEO of


( SVVS), a St. Louis-based telecom.

The biggest corporate scandal of the year was



, the once-dominant commodities and derivatives brokerage that sold itself to the public for $583 million this August.

Three months after the IPO, Refco was operating under bankruptcy protection. Prosecutors alleged that its former CEO, Phillip Bennett, was cooking the firm's books for years. Bennett, meanwhile, was arrested and charged with securities fraud.

What makes the fraud at Refco so shocking is that it allegedly went undetected by so many savvy investors, investment banks, auditors and fancy lawyers. Indeed, Thomas H. Lee Partners, the Boston buyout firm that sank $507 million into Refco in June 2004, claims it paid $10 million to a raft a firms to make sure there was no hanky-panky at Refco before entering into the deal last year.

The events at Refco speak volumes about the value of due diligence on Wall Street.

Eliot the Conquerer

Coming into 2005, Eliot Spitzer seemed invincible.

The New York attorney general was winning kudos for his aggressive attack on Wall Street chicanery. Best of all, the praise was coming as the New York Democrat made official what everyone had known for months: that he was running for governor of New York in 2006.

In short, Spitzer could do no wrong, and the only questions he faced concerned which industry he would next bring to its knees. He seemed like a shoo-in for the governor's office. But a funny thing happened on the way to the coronation. Spitzer stumbled.

Ironically, it wasn't some lion of Wall Street like



Sandy Weill who humbled Spitzer. It was Ted Sihpol, a small-time

Bank of America


broker whose biggest client was Edward Stern's Canary Capital hedge fund, a central player in the mutual fund trading scandal.

In June, a New York jury acquitted Sihpol on 29 felony counts of larceny, falsifying business records and other offenses related to mutual fund trading. The jury said it didn't believe that Sihpol should have been singled out for prosecution. They also didn't think much of Stern, the prosecution's star witness, who paid a $40 million civil penalty and was allowed to walk away from the scandal.

The acquittal was a big blow for Spitzer, and it led him to backpedal in several other pending criminal cases. In August, he let two other people charged in the mutual fund investigation plead guilty to felony charges in return for probationary sentences. Paul Flynn, the lone investment banker arrested and charged in the scandal, got a better deal. Spitzer's office dropped all charges against the former

Canadian Imperial Bank of Commerce


banker in November.

Quick on the heels of the Flynn dismissal, Spitzer let it be known that he had no intention of criminally prosecuting AIG's Greenberg.

Spitzer's decision not to criminally charge Greenberg no doubt emboldened the insurance industry patriarch and led to his vow to support Spitzer's political opponents.

In his seven years as New York attorney general, Spitzer has done a lot of good. But along the way, critics say, he's also trampled on due process rights and occasionally shown himself to be a bully. In 2005, the bully tasted humility.

Scrushy in Chains

Back in January, if you had to name someone who looked destined to spend Christmas 2005 in jail, Richard Scrushy was your man.

After years of suspicion, federal prosecutors had finally unmasked a swindler so adept at image manipulation that he got Wall Street to value


( HLSH) at more than $5 billion just weeks before it collapsed in one of 2003's most celebrated accounting frauds. With guilty pleas in hand from more than a dozen alleged accomplices, government lawyers just had to show up at the courthouse to put Scrushy away, right?

Not quite. In a courtroom shocker, Scrushy walked when a federal jury in Birmingham, Ala., acquitted him after 21 days of deliberation.

Said Andrew Stoltmann, an adjunct professor at Northwestern University School of Law, on

: "This verdict is the equivalent of O.J. Simpson, only it's for Wall Street."

How did Scrushy beat the odds? Simple: image manipulation. Prosecutors goofed by trying the case in Scrushy's backyard of Birmingham, Ala., where Scrushy is a well-known, charismatic figure who never lost his image as a local boy made good. The born-again Christian was able to make much of his religious conversion both before and during trial and became a frequent worshipper and preacher in Birmingham's African-American churches.

The strategy appears to have become a blueprint for former


chairman Ken Lay, who is preparing for his own criminal trial. Recently, Lay gave a speech defending his actions at Enron, and he dropped in a number of references to God throughout. Legal watchers doubt Lay's efforts will play with the jury pool in Houston, where Lay is still reviled. Then again, they said the same thing about Scrushy.

Death of the Consumer

For four years, experts have been predicting the American consumer was going to close his wallet. Guess what? They've been wrong.

In 2005, it was rising interest rates that were going to put the kibosh on consumer spending. When that didn't happen, it was the collapse of the mortgage refinancing market. Then it was higher gasoline prices. Then it was swollen credit accounts.

Sure, each of these has taken a toll. But in the big picture, experts keep overlooking a key fact: Americans like to shop. And they still have money left over from their home refis to keep the addiction alive. The

Federal Reserve

estimates that in 2004, consumers pulled out nearly $600 million in equity from their homes through a combination of cash-out refinancings and home equity loans.

While it has become more costly now for consumers to turn their homes into ATMs, they still have a lot of cash sloshing around from earlier refinancings. Wall Street analysts say there's a considerable lag between the time a consumer takes equity out of his home and puts that extra money to work.

So, consumers should have extra cash to burn well into next year. And when the runs out, there are always those credit cards to turn to again. The truth is, consumers will keep spending until they fear there won't be any money coming in to pay the bills. Even then it will probably take some prodding.

The American consumer has easily outlasted the wisdom that says he's doomed. In 2005, it was wisdom itself that lacked stamina.

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