Market Commentary
For the week of December 29, 2008

The Market
The major markets showed further signs of stability last week, despite finishing the week with losses.
According to the Associated Press, analysts believe much of the recent poor economic news has
already been factored into stock prices. That includes weak holiday spending, down 5.5 percent to 8
percent compared to last year, according to SpendingPulse. This week’s economic data includes the
Conference Board’s December consumer confidence survey, which will be released Tuesday, and the
Institute for Supply Management’s December report on the manufacturing sector, to be released Friday.
For the week, the Dow lost 0.68 percent to finish at 8.515.55. The S&P declined 1.62 percent to end the
week at 872.80, and the NASDAQ fell 2.18 percent to close the week at 1,530.24.

Source: * 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.

GDP Unchanged – The Commerce Department reported Tuesday that third-quarter gross domestic
product (
GDP) fell at an annualized rate of 0.5 percent. The reading was in line with analysts’
expectations and the government’s estimate a month ago.

Tax Stat – The top 1 percent of U.S. taxpayers is responsible for the payment of 40 percent of all federal
income tax. Ten years ago (1998), the top 1 percent of taxpayers paid 35 percent of all
federal income
tax. Twenty years ago (1988), the top 1 percent of taxpayers paid 28 percent of all federal income tax
(Source: Tax Foundation, IRS, BTN Research).  

The Range – In the one year following the low point from each of the nine bear markets that have
occurred since 1957 (not counting the current 10th bear market) the S&P 500 stock index has
experienced a double-digit return. The best of the nine produced a 58.3 percent return. The worst of the
nine was up 23.2 percent (Source: BTN Research).    

Benefit of Free Trade – The purchase of lower-cost Chinese goods by U.S. consumers has saved
Americans $600 billion during the past decade compared to prices we would have had to pay for
alternative higher-cost products (Source: Wall Street Journal, BTN Research).

WEEKLY FOCUS – Next Year, Give the Gift of Education

If your holiday shopping included finding gifts for
pre-teens, teens and young adults, your selection may
have received a lukewarm response. Most of us have
difficulty choosing gifts for this age group, and we
resort to including the gift receipt so the item can be

With the nation’s new-found focus on frugality, 2009 may
be the perfect year to rethink what you’re giving your
children or grandchildren for birthdays, holidays and
graduations. Rather than agonize over a present that
meets their approval, opt for the gift of education with
a contribution to their college fund.

A Hartford Financial Services Group study published this fall found 65 percent of grandparents surveyed
intend to contribute financially to their grandchildren’s education. Yet less than a third have discussed a
plan with their children. Rules for certain types of college funding vehicles, such as
529 plans and
Coverdell Savings Plans, require family members coordinate their contributions to stay within plan limits.

College costs have been increasing for many years, often at a rate higher than
inflation. The College
Board, which each year releases college cost figures for the academic year, found that for 2008/2009,
public college tuition and fees increased an average of 6.4 percent for in-state students, and private
colleges saw a 5.9 percent increase.

Call our office to discuss ways you can start a 2009 plan to help your child or grandchild save for college.
We are happy to include multiple family generations in those discussions. And sure, your teen-ager may
be less than enthusiastic about a contribution to a college fund for his birthday – but chances are he will
see the value of your gift in the years ahead.

* 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# 291653
Copyright © 2010 The Money All rights reserved.
Returns through 12/26/08
1 Week  
Dow Jones Industrials  
NASDAQ Composite
S&P 500  
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