For the week of November 3, 2008
The Dow had its best week in 34 years last week, gaining 11.31 percent. On Tuesday, the Dow recorded
its second highest daily gain on record, jumping 889 points in anticipation of the Federal Reserve rate
cut. Wednesday the Fed came through with half a percentage point cut, lowering to 1 percent the rate
that banks charge on overnight loans. The Dow ended the week at 9,325.01, and the S&P gained 10.53
percent to close the week at 968.75. The NASDAQ rose 10.88 percent to finish the week at 1,720.95.
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.
More Planes, Autos – U.S. orders for big-ticket manufactured items experienced its largest gain in
three months during September on demand for airplanes and cars. Orders had fallen by 5.5 percent in
August, the largest decline in two years. The September gain was 0.8 percent.
Millions to Billions – Trading volume on the New York Stock Exchange first exceeded 10 million shares
in a single day during the 1929 crash. Trading volume on the exchange on Friday, Oct. 10, 2008, was
11.2 billion shares or more than a 1,000 times increase from the 1929 level (Source: NYSE, BTN
Jobless – The unemployment rate in the U.S. during the Great Depression reached 25 percent. Even as
the decade of the 1930s was ending, the nation’s unemployment rate was still close to 15 percent. The
unemployment rate in the U.S. is 6.1 percent today (Source: Wall Street Journal, Newsweek, Department
of Labor, BTN Research).
How Long Will It Last – Of the eight bear markets for the S&P 500 since 1960 (i.e., a peak to trough
drop of at least 20 percent), the average length of time from the index’s bull market closing high to its
bear market closing low has been 13½ months. The index’s most recent bull market closing high (set on
Oct. 9, 2007) occurred 12½ months ago (Source: BTN Research).
College Climbing – College costs have had little relief from the economic downturn, posting a 6.4
percent jump at state universities this fall and a 5.9 percent increase at private colleges, according to the
Fewer Turkey Flights – U.S. airlines will provide nearly 3,000 fewer daily domestic flights during the
Thanksgiving season, meaning fewer choices, fuller planes and higher fares for travelers. The 11 percent
drop in flights means 2.6 million fewer seats between Nov. 20 and Nov. 30, according to the Official
Airline Guide (OAG). High fuel prices led to many of the cuts.
WEEKLY FOCUS – Tax Season Preparations
The past several years have given us record increases in
the major stock markets, extending one of the longest bull
markets in our nation’s history. This year, we experienced
the inevitable – a market correction that has left many of
us frustrated and concerned. We understand that, faced
with portfolio declines, it may be difficult to see any
positives. The silver lining, however, may be in your
2008 tax return.
As the end of the year approaches, you and your tax
advisor will be looking at your earned income, capital
gains and losses (realized and unrealized) and other
financial information as you begin to prepare your
2008 return. A simultaneous review of your investment
portfolio may reveal strategies you can use to reduce your tax liability. Some of these strategies may
have a direct impact this year, while others may be implemented over the next several years, depending
on Internal Revenue Service rules.
We can work with you and your tax advisor to conduct a thorough review of your options. While in a
declining market we do not recommend any extreme changes to your investments, some small
adjustments may be advisable. Gains from selling certain positions to rebalance your portfolio may be
offset by losses you’ve experienced elsewhere.
Let’s get together with your tax advisor to explore strategies and possibilities to strengthen your portfolio
in the current market. Please contact us at your earliest convenience to schedule an appointment. With
the press of activities as we enter the holiday season, we will want to allow plenty of time to implement
any changes you choose to make.
* 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#289443
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