This paper reviews our forecasts for 2006 and presents our hopes and fears for 2007. Please note the date above. We have had to move forward the date of this to accommodate our statement mailing protocol.For another year, our forecasting success has been a mixed bag, but with more good calls than bad. We thought the economy would grow slower than the consensus economist forecast of 3.4%. We said the Federal Funds Target Rate (FFTR) would go to at least 4.75% and we “wouldn’t be surprised to see… 5.00%.” We thought the dollar would decline against major foreign currencies. Regarding bonds, we said that we would see the “peak in long-term interest rates in 2006.” We thought stocks would have a better second half than a first half and would produce a total return of 6.60%. We continued to emphasize the energy and materials sectors, and we expected healthcare stocks to perform well. We advised staying away from consumer exposure.