Stock Market Commentary
For the week of December 14, 2009
The Commerce Department reported Friday that retail sales increased 1.2 percent in November, triple what analysts had expected, according to the Associated Press. Consumer sentiment echoed those results, with an early December reading of 73.4, higher than the 68.5 reading anticipated by economists polled by Reuters. Wholesale inventories unexpectedly rose by 0.3 percent in October, breaking a record 13 consecutive declines. For the week, the Dow gained 0.89 percent to close at 10,471.50. The S&P rose 0.09 percent to finish at 1,106.41, while the NASDAQ fell 0.18 percent to end the week at 2,190.31.
Drawdown Mode – A study by Hearts & Wallets found that 48 percent of all financial assets held by households over age 65 falls into the category of retirement income “drawdown.” Of the $9 trillion held by these households, $4.3 trillion is being used to draw 4 percent or more of income. In 2006, only 20 percent of retirement income was in “drawdown” mode (Source: Financial Planning).
For Retirement – Just over one-quarter of American workers age 55 and up (26 percent) have savings and investments worth at least $250,000 not counting the value of any defined benefit pension plan or the value of the worker’s primary residence (Source: Employee Benefit Research Institute, BTN Research).
Blame The Internet – In the current 2010 fiscal year (i.e., the 12 months from Oct. 1, 2009, to Sept. 30, 2010), the U.S. Postal Service expects to lose $7.8 billion. Total mail volume in the 2010 fiscal year is projected to be 166 billion pieces of mail, down nearly 37 billion pieces since fiscal year 2008 (Source: Postal Service, BTN Research).
Optimistic – Nearly half of Americans (46 percent) that were surveyed in October 2009 anticipate that they will be better off financially in 2010 than they were in 2009 (Source: Money, BTN Research).
WEEKLY FOCUS – Rebalancing Your Retirement Accounts
The combination of the defined contribution plan, payroll deduction and automatic enrollment makes it easy for workers to put their retirement planning on cruise control.The changing speeds of investment earnings and the life changes that take you in and out of the fast lane, however, mean you need to adjust that cruising speed once in awhile.
The asset allocation for your retirement account came from assessment of your personal situation – your age, marital status, retirement goals – and strategies designed to protect you from the fluctuations of the market. Being what they are, fluctuations don’t usually balance out – which means you may have to periodically rebalance your investments to get them back to the asset allocation that fits your investment strategy.
Sometimes that means tough decisions – like selling part of a position that has become too large a portion of your portfolio, even though it has performed well. Emotional investing decisions can be as detrimental as the out of sight, out of mind approach. We can help you review your 401(k) or other defined contribution account and evaluate strategies to bring it back to an appropriate asset allocation.
Rebalancing is a core component of the value we bring to our clients. We can also help you with accounts held away from our firm. All portfolios benefit from regular review to determine if rebalancing or other changes should be made based on investment performance or your personal situation.
So stay in the driver’s seat! Feel free to call our office any time to discuss your portfolios, and cruise into 2010 with a fresh perspective on your finances.
Asset allocation, diversification and rebalancing do not guarantee a profit or protect against a loss.
* 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. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America. SAI# 302049