For the week of October 13, 2008
Trading activity on Friday showed that at least some investors believe the markets to be near a bottom,
after one of the most volatile weeks in Wall Street history. Down 468 points at 3 p.m., the Dow jumped
790 points to +322 points just after 3:30 p.m. before a round of profit taking brought it down to close at
-128 points. For the week, the Dow lost 18.09 percent to end at 8,451.49. The S&P lost 18.14 percent to
finish the week at 899.22, and the NASDAQ dropped 15.30 percent to close the week at 1,649.51.
Source: Morningstar.com. * Past performance is no guarantee of future results. Indexes are unmanaged and
cannot be invested into directly. Three and five-year returns are annualized. The S&P, excluding “1 Week”
returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.
Let’s Go Out To Dinner – Americans spend $1.5 billion a day at restaurants and bars (Source:
National Restaurant Association, BTN Research).
Receiving Benefits – Before 1960, the Social Security Administration would not approve disability
benefits for any individual younger than age 50. The average age today of the 7.1 million disabled
American workers receiving disability benefits from Social Security is 52.4 years of age (Source: Social
Security, BTN Research).
Health Insurance Rate Hikes – The premium paid by employees for employer-provided health
insurance has increased more on an annual basis than the national rate of inflation (using the CPI as the
inflation proxy) for each of the last 10 years (1998-2007). Surprisingly, there was a four-year stretch of
time (1994-97) when the annual rate of inflation in the U.S. exceeded the annual increase for health
insurance premiums during each of the years. The consumer price index (CPI) is a measure of inflation
compiled by the U.S. Bureau of Labor Studies (Source: Department of Labor, Employee Benefit
Research Institute, BTN Research).
We Sell. China Buys – U.S. exports to China are on pace to reach $74 billion in calendar year 2008, an
increase of $9 billion over our $65 billion of exports to China during 2007. The latter amount represented
a $10 billion increase over the $55 billion we sold to Chinese buyers in 2006 (Source: Department of
Commerce, BTN Research).
RTC History – The eventual cost to taxpayers of the Resolution Trust Corporation (aka RTC, which ran
from 1989-95) was $120-140 billion, more than 70 percent less than the original $500 billion cost
estimate. The RTC was created to sell real estate assets from failed savings and loans (Source: New
York Times, Denver Post, BTN Research).
WEEKLY FOCUS – Fighting Your Impulses
In an uncertain market, you may be tempted to do one of
two things: hide under the covers and do nothing, or
make radical moves like investing in a “hot stock” you
heard about through a much-forwarded email.
Intellectually, you know that either course can have
disastrous results on your portfolio. But sometimes it’s
hard to rein in those emotions. We like to think our office
provides the reassuring hand on your shoulder in times
of financial uncertainty. However, we understand that
unrelenting itch to do something. Here we offer some
productive actions you can take to scratch that itch.
Schedule a check-up: Call us for an appointment to
review not only your investments but your big picture, including any changes in your job, family or long-
term plans. A small change, like a pebble in a pond, can have broader impact. Covering all the bases
helps ensure we don’t miss a potential problem – or opportunity.
Educate yourself: Knowledge is power – if it’s the right kind of knowledge. Call us for some
recommendations on books, magazines and web sites that present solid information on investing.
Increasing your understanding of investment concepts can help us better communicate with you about
your goals and help you better understand the basis for our recommendations.
Ignore the hype: It’s easy to get caught up in the seemingly endless universe of self-proclaimed experts
touting the next great thing. That’s exactly the kind of follow-the-leader mindset that created the dot.com
bubble. Someone somewhere does have a good idea. Determining who that might be among thousands
of contenders would be nearly impossible. And even if you found that idea, it might not apply to your
situation. Call us when you need a sounding board.
Help someone else: Does your parent or child need assistance with their finances? Have you been
avoiding family financial conversations? Market uncertainty provides a great way to start that
conversation. Call us if you need a neutral third party to assist you in talking finances with your adult
It’s easy to get caught up in the hype, so next time you get that urge to do something, call us, your
professional sounding board.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of
the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded
blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter
common stocks traded on the National Association of Securities Dealers Automated Quotation System. The
Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely
recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies
representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all
dividends. Written by Securities America. SAI# 288604
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