At least the market ended the year on a positive note. The S&P 500 was up a measly 1.06% in December, but this not-so-sharp turnaround means the S&P 500 fell a ‘mere’ 37% in 2008. The Dow fared better for the year, with a 31.93% drop, but managed to retreat 0.39% in December. The Nasdaq was down just over 40% for the year and up 2.7% for the month, while the Russell 2000 small cap index did manage to get hot with a 5.80% return for the month, keeping the total loss for the year down to 33.79%. Foreign indexes were down over 40% in ’08.All of our model portfolios beat the S&P 500 in December and for the year.

Compared to October, November was a gangbuster month for stocks. The S&P fell only 7.18%, the Nasdaq and Russell 2000 dropped by double-digits, and the Dow posted a 4.86% loss. Government bonds were the only true winner. The Lehman Brothers US Government Long Bond Index gained a blistering 11.78% as interest rates on government bonds plunged to record lows caused by investors panic buying the safest investment around. Too bad Lehman didn’t own more government bonds - they might still be in business. What did Lehman load up on near the end? Commercial real estate – REITs were about the worst performing area last month with a roughly 25% drop.

It's Not an Honor Just to be Nominated.

Not exactly a rare breed even in the best of times, the Fund Turkey multiplies exponentially when the market turns south.

A bear market is a high-powered headlight bar across the top of your fund research pickup truck, shining a spotlight on bull market excess. Tis the season to hunt Fund Turkeys (squawking all the way about investing abroad or in commodities), and thin this breed.

So without further ado, it's high time for our 8th annual Fund Turkey Awards!

The "Audacity of Hope" Award
Winner: Bear Stearns

At the top of the list of suckers for the real estate bubble is was Bear Stearns, the century-old Wall Street investment bank that collapsed well before the other leveraged "Masters of the Universe” suffered similar fates. What started innocuously enough with leveraged mortgage debt hedge funds didn’t end until the entire firm lay in ruins.

But failure's no reason to give up! You have to give Bear props for launching the first actively managed ETF, Bear Stearns Current Yield ETF (YYY). So what did this innovative new fund invest in? Mortgage securities. Naturally.

Bear's final hurrah didn’t last long. In September , the fund's Board of Trustees unanimously approved its liquidation "in the best interests of the Fund and its shareholders.”