STOCK MARKET COMMENTARY 12 24 2007

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STOCK MARKET COMMENTARY
For the week of Dec. 24, 2007

THE MARKET
Corporate news spurred the markets higher late last week, with the Dow gaining more than 200 points on Friday alone. For the week, the Dow finished at 13,450.65, up 0.90 percent. The S&P ended at 1,484.46, up 1.17 percent, and the NASDAQ gained 2.13 percent to close the week at 2,691.99.

The markets will close Monday, Dec. 24, at 1:00 p.m. Eastern Standard Time and be closed all day Tuesday, Dec. 25. Normal trading hours resume on Wednesday, Dec. 26.

STOCK MARKET COMMENTARY 12 24 2007
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.

Deficit Drop – The U.S. current account trade deficit dropped 5.5 percent in the third quarter to $178.5 billion. The current account measures investment flows between companies in addition to products and services, making it the most comprehensive trade measure. The decline was better than analysts expected and the lowest deficit since third quarter 2005 when it stood at $173.4 billion.

Driving For Work – The standard mileage rate used by taxpayers to calculate deductions for business travel will rise to 50½ cents per mile in 2008, an increase of 2 cents per mile from the 2007 rate. The higher level is designed to reflect the impact of higher gas prices. Ten years earlier (1998), the rate was 32½ cents per mile (source: IRS, BTN Research).

Working Hard – The productivity of the average American worker (defined as output per hour of work) increased 6.3 percent in the third quarter 2007 (quarter-over-quarter change stated as an annualized result). No calendar year has produced a growth rate that high since 1950 (source: Department of Labor, BTN Research).

Higher Rate, Lower Distribution – Beginning in 2008, employers will determine the value of a retiring employee’s lump-sum distribution from a pre-tax retirement plan by using a higher interest rate in the present-value calculation, thus lowering the actual amount of the lump-sum distribution. The use of a corporate bond rate (instead of the current 30-year Treasury bond rate) will be phased in over the five years from 2008-12 (source: House of Representatives, Pension Protection Act of 2006, BTN Research).

Pros And Cons – It is estimated that Americans save $1 trillion a year as a result of our nation’s free trade policy. E.g., the United States allows many foreign countries to sell their goods within our borders without restrictions or tariffs. The savings to U.S. consumers from the less expensive foreign products are 19 times larger than the estimated 225,000 jobs — and $54 billion in lost lifetime wages — eliminated annually as a result of our free trade policy (source: Peterson Institute, BTN Research).

WEEKLY FOCUS – Five Tips For Keeping Your Financial Resolutions

Financial resolutions can be especially difficult to stick with because, like eating and exercising, our spending, saving and investing habits tend to be tied to our emotions more than our logic. Here are Five Tips for Keeping Your Financial Resolutions:

1. Form new habits by tying them to current behavior. If you have a regular system for paying bills, make a “bill” from your retirement plan and pay it (by making a contribution to your IRA) with the others.

2. Put them on autopilot. One of the easiest ways to keep saving and investing goals is to set up automatic deposits or investments. A payroll deduction for 401(k) contributions is a great example – you never have possession of the cash, so you don’t feel the pain of taking it out of your spending money. Contact your company’s human resources department now about starting or increasing the amount of your contributions.

3. Make your resolutions achievable and realistic. Many people make resolutions without much planning or forethought – and fail the same way. If you are serious about your financial resolutions, do some homework, crunch some numbers and put your plan in writing.

4. Break them down into small steps. Trying to keep too many resolutions at once will leave you feeling overwhelmed. Instead of making resolutions for the whole year now, break them down and add one or two each quarter.

5. Work with an accountability partner or coach. Anyone who has tried to implement a weight loss or exercise plan knows that a buddy system increases the odds of success. If you need help sticking to your financial resolutions, we can work with you to create a plan for keeping your resolutions, whether they include college planning for your child or funding your retirement.

Call our office for an appointment to discuss your financial resolutions and how we can work together to make 2008 a happy and prosperous new year!

* 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 that are representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. SAI# 264373