STOCKS &BOND

What's hot? What's not? The movies of 2006 exemplify core economic principles, writes Donald Clarke

AS A person who sometimes takes on the persona of a financial advisor while assembling a facetious, potentially insecure metaphor to flesh out an end-of-year movie review, I am often asked what genre stocks look like sound investments for the upcoming 12 months. After clarifying that the facetious, already dangerously unsound metaphor equates financial value with cinematic quality, rather than box- office takings, I tend to warn my clients away from certain stocks that once seemed copper-bottomed.

For example, French Film Industries, for years a certified winner with its nouvelle vague line, continued its undistinguished run in 2006. Issues such as Hidden and L'Enfant were impressive, yes, but, on inspection, proved to depend heavily on the contributions of Austrian and Belgian strategists. The slump seems set to continue.

Horror Incorporated, though favoured by this analyst, remains in a state of flux. A swathe of truly atrocious products aimed at the younger buyer - Stay Alive, The Covenant, The Fog - failed to set more mature hearts aflutter in 2006. Meanwhile, the undeniable excellence of Pan's Labyrinth and The Host did not do as much to impress portfolio managers as might have been expected. Those products relied too strongly on the involvement of Art Film Consultancies and Strange Uncategorisable Korean Lunacy to re-establish Horror as a blue-chip option. Take care, investors.

More often than not, my imaginary clients want to know what's to become of the once great Romantic Comedy PLC. Sad to relate, 2006 saw this ancient firm, creator of excellent merchandise throughout the 1940s and 1950s, follow a downward path parallel to that of spats manufacturers and snuff importers. Trust the Man, The Holiday, The Last Kiss and The Break Up were rarely romantic and almost never properly comic. The company will have to return to old-fashioned standards established by earlier craftsman if it is to regain the confidence of investors.

Such upturns are possible even with more modern tech stocks. Just ask any canny punter who bought Digital Animation Technologies when, responding to the relative disappointment that was Pixar's Cars and the more gruesome phalanx comprising Ice Age 2, Barnyard, The Ant Bully and Open Season, that firm's shares slumped to an all time low. The release of Flushed Away and Happy Feet, neither classics but both amusing, saw wise investors' portfolios recovering very nicely indeed.

The most singular resurgence of 2006 was, however, that experienced by the long dormant Great Western Incorporated. The company's products have, it is true, been modernised to such an extent they would barely be recognised by founders such as Mr John Ford. Brokeback Mountain featured less gunplay and more same-sex rumpy-pumpy than you would find in, say, My Darling Clementine. Tommy Lee Jones's superb The Three Burials of Melquiades Estrada had more existential angst to it than even The Searchers. The Proposition was, well, Australian.

These successes noted, investors should be aware that Great Western has showed signs of recovery many times since its decline in the 1950s. Sadly, the green shoots have never successfully swollen into verdant crops. The failure of Down in the Valley, another reinvention of the cowboy film, should stand as a sombre warning.

So, is there any stock opportunity that seems immune to shifts in the critical market? Not Comic Book Diversified. Superman Returns was interesting enough, but the third X-Men was dreadful. Punters could be forgiven for looking towards 2007, noting the imminence of Nicolas Cage in Ghost Rider and a second Fantastic Four and placing their money elsewhere. The promising Spider-Man 3 may not do enough to support the firm as a whole.

No. There seems to be only one investment product that maintains a steady - if only intermittently spectacular - performance on the cinematic share floor. Now back to its highest level since its initial flotation in the 1960s, this option has occasionally disappointed but never experienced a serious collapse.

Yes indeed. The careful investor should, perhaps, place his savings in the solidly reliable Bond bond.

FILMS OF THE YEAR

1. PAN'S LABYRINTHMoving between a grim fantasy world and the still bleaker realities of the Spanish Civil War's violent aftermath, Guillermo del Toro creates fresh legends for future ages. A masterpiece.

2. BROKEBACK MOUNTAINAlready part of the canon, Ang Lee's unforgivingly sad gay-shepherd drama seems to have been around forever. It was, in fact, released here in January.

3. THE PROPOSITIONFlies. Murder. Flies. Rape. Flies. Torture. More flies. This magnificently austere Antipodean western, directed by John Hillcoat from a script by Nick Cave, was not made in conjunction with the Australian tourist board.

4. THE SQUID AND THE WHALEIt surely would require a genius to generate interest in the travails of a family of self-important Brooklyn intellectuals in the 1980s. Thankfully young director Noah Baumbach was up to the task. Witty and sad.

5. CAPOTEThe fulsome praise for Philip Seymour Hoffman's superb performance as Truman Capote distracted attention from the subtlety of Bennett Miller's direction.

6. HIDDEN/CACHÉA rare example of a film which - by encouraging the viewer to examine Michael Haneke's puzzling images as closely as the characters scrutinise their own equally bewildering surveillance tapes - actually becomes even more fascinating on DVD. The director's best yet.

7. CHILDREN OF MENWhy are British landscapes so suited to the frayed, post-apocalyptic thriller? Who knows, but Alfonso Cuarón delivers the best such film in decades.

8. THE DEPARTEDAfter observing audiences straining desperately to enjoy The Aviator and Gangs of New York, it is a pleasure to see Martin Scorsese deliver a genuine popular success. Give him a bloody Oscar.

9. THE HOSTA giant tadpole-like thing, created by the release of toxins into the Han River, threatens to consume Seoul in Bong Joon-ho's singular combination of horror and political commentary.

10. BORAT: CULTURAL LEARNINGS OF AMERICA FOR MAKE BENEFIT GLORIOUS NATION OF KAZAKHSTANYes, it's sophomoric and borderline racist. True, it has barely enough structure to qualify as a proper film. But, boy, is it funny. The DVD will sit beside This Is Spinal Tap on students' shelves forever.

THE FIVE WORST

1. THE DA VINCI CODENo event movie since The Phantom Menace has proved to be quite so unrelentingly terrible. Worse even than the book (if that is possible).

2. RENT"We are bohemians in 1980s New York", they sing. "La! La! La! The world owes us and all our stupid performance- artist friends a living." The real lyrics are grislier still.

3. TRUST THE MANA light romantic comedy set in downtown Manhattan can't really be all that horrible, can it? Wrong. A film packed to the portholes with people who deserve to contract scabies.

4. TERKEL IN TROUBLEHorrendous animated Danish comedy that fails to extract humour from rape, murder and child abuse. Is to South Park as nitric acid is to Moët & Chandon.

5. THE SANTA CLAUSE 3/ DECK THE HALLS/GROUNDED(tied) Tis the season to fill the cinemas with the foulest effluent Hollywood's sewers can generate. Don't worry. The Great Escape's still on telly.