Womack Advisers Blog

Should you buy Facebook stock? My answer is NO

Fri, 18 May 2012 00:00:00 -0400

Facebook, the social networking giant, starts trading as a public company on the NASDAQ today under the symbol FB. Offering is priced at $38, but could demand a premium well above this on its initial debut. This prices the value of FB in the neighborhood of $100 BILLION dollars.

Many people are asking if I am going to be buying. My answer is NO. At least not for now. I know everybody else is all excited about FB, and they’ll probably have a great initial burst. But I’ll be standing back and watching this one for awhile before jumping in. History shows that many initial offerings tend to lose steam within a year of their debut.

Many initial public offerings (IPOs) start out with “hype” and you’ll most likely be able to scoop them up at much better prices down the road after the honeymoon is over. For example, take a look at these recent IPOs:

Groupon (GRPN), the local e-commerce offering discount services, had its initial offering in November 2011 at $31, now six months later its trading for $12.41—A 58% discount!

LinkedIn (LNKD), internet professional network site (the business version of Facebook), had their initial offering in May 2011 at $45 hitting $122 within the week. It went down in December of 2011 to $55. However, it now trades for $103.

Zynga (ZNGA), the computer software/social gaming company, went public in December 2011 for $11, traded as high as $15.91 within a few months, it now trades for $8.10.

Even General Motors (GM), automaker (aka government motors), had its encore debut in November 2010, for $33, traded as high as $39, you can now buy it for $21.50

One of the few exceptions of a successful IPO, is Visa (V), which had its initial offering in March of 2008 around $55/share, jump up within 3 months to $90; it now trades for $114. But that’s not before it traded in the low $40’s and took two years to get back above $90.

Facebook should be a boost to the markets and will most likely have a temporary jump. But valuing the company is very difficult at this juncture. It also has the “crowd” mentality associated with it. As your mom would say, “if everybody was jumping off the bridge, would you jump too?”. I’d wait and take to take the plunge. In the meantime enjoy the hype.

Follow Greg Womack on Twitter at @womackadvisers and on Facebook at Facebook.com/WomackAdvisers

Commentary: Lessons from JP Morgan

Wed, 16 May 2012 00:00:00 -0400

Even the smartest guy in the room sometimes makes mistakes.

Jamie Dimon, CEO of the huge U.S. bank JP Morgan, has been called the smartest guy in the room for his ability to effectively steer the bank through the economic crisis. And, while most of the other big U.S. banks have tarnished reputations, Dimon’s firm was the one that stood out from the crowd.

Unfortunately, that all changed last week.

In a hastily arranged conference call with investors, Dimon revealed that the bank lost $2 billion in just the past six weeks on “bets aimed at shielding the bank from the market fallout of Europe's deepening mess,” according toThe Wall Street Journal. These “bets” lost money due to “unusual movements in the relationships between various derivative indexes focused on investment-grade and junk-bond corporate debt, both in the U.S. and Europe,” according to theJournal.

This debacle points to three important investment lessons:

1.Keep it simple.Trading fancy derivatives or using complex black box trading strategies might give you an air of sophistication, but it may also lead to your downfall. As Leonardo da Vinci said, “Simplicity is the ultimate sophistication.”

2.Pick and track your investments closely.In describing the trades that blew up, Dimon said, “The new strategy was flawed, complex, poorly reviewed, poorly executed, and poorly monitored,” according to Bloomberg. Clearly, in this ever-changing world, a “set it and forget it” investment strategy won’t cut it.

3.Be humble.Even a smart guy like Dimon can trip up. One of the biggest errors in investing is self-deception – thinking and acting like you are the smartest guy in the room. It’s better to worry about what could go wrong – and plan for it – than think you’re invincible.

The investment landscape is littered with formerly sharp investors who forgot these three lessons. We plan on keeping them front and center.

Data as of 5/11/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-1.2%	7.6%	1.2%	14.2%	-1.9%	2.5%
DJ Global ex US (Foreign Stocks)	-2.9	3.5	-17.1	7.0	-6.1	4.6
10-year Treasury Note (Yield Only)	1.8	N/A	3.2	3.2	4.7	5.1
Gold (per ounce)	-3.7	0.5	5.0	20.1	18.8	17.7
DJ-UBS Commodity Index	-1.7	-4.2	-15.6	3.8	-4.9	3.0
DJ Equity All REIT TR Index	0.6	13.6	10.4	30.7	0.4	10.8

Sources: Yahoo! Finance, Barron’s,djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

DOES IT MAKE SENSEthat a painting sells for $120 million in this economic environment?

You may have seen the recent headline that Edvard Munch’s painting, “The Scream,” sold for a record-breaking $120 million. It made us wonder what the implications are of an anonymous bidder forking over that kind of cash for a pastel on canvas just three years out from a horrible economic crisis. Does this mean happy days are here again?

Placed in broad context, the high sale price for a work of art might be symptomatic of policymakers’ response to the economic crisis, according toThe Wall Street Journal. When the economy began collapsing in 2008, governments around the world responded by cutting interest rates and flooding their economies with monetary stimulus. All this money sloshing around had to end up somewhere – and some of it might have found its way into hard assets such as commodities, precious metals, collectibles, and, yes, an Edvard Munch painting.

There’s something called the law of unintended consequences, which means solving one problem might inadvertently create a new one. In this case, the massive stimulus in recent years propped up the economy in the short run, but it may have unintentionally masked the real problem and simply delayed a day of reckoning.

With the following economic and political issues in play, that day of reckoning may be nearing:

·Eleven European countries have experienced two consecutive quarters of economic contraction.

·The unemployment rate across the eurozone has matched a record high.

·Job growth in the U.S. is slowing.

·The Chinese economy is slowing.

·The political situation in Greece is chaotic.

·France has a new Socialist president.

Sources: MarketWatch,The Wall Street Journal

Now, the good news. In any economic environment, there will be winners and losers. As the steward of your financial life, we do everything we can to try and help you land on the winning side regardless of what the economy and markets throw in our way.

Market Week, May 14, 2012

Mon, 14 May 2012 00:00:00 -0400

The Markets

Once again, problems in Greece meant problems for equities. For a change, the small-cap Russell 2000 and the Nasdaq suffered the least, though both have now lost more than 6% since their late March high. Uncertainty about the future of the eurozone's financial compact helped push the yield on the 10-year U.S. Treasury note to levels last seen in January. Meanwhile, oil prices continued to sink toward $95 a barrel, while gold plunged below $1,600 an ounce.

Market/Index	2011 Close	Prior Week	As of 5/11	Week Change	YTD Change
DJIA	12217.56	13038.27	12820.60	-1.67%	4.94%
Nasdaq	2605.15	2956.34	2933.62	-.77%	12.61%
S&P 500	1257.60	1369.10	1353.39	-1.15%	7.62%
Russell 2000	740.92	791.84	790.06	-.22%	6.63%
Global Dow	1801.60	1893.39	1853.93	-2.08%	2.90%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.91%	1.84%	-7 bps	-5 bps

Equities data reflect price changes, not total return.

Last Week's Headlines

·Neither far-right nor far-left parties, who gained power in Greece's recent elections because of opposition to austerity measures imposed by the country's European partners, were able to form a coalition government. As a result, the eurozone's bailout fund held back €1 billion of an aid package due last Thursday, though it agreed to pay out €4.2 billion so Greece could meet immediate obligations. The situation increased uncertainty about Greece's future in the eurozone if no coalition government is formed or if a new government rejects budget cuts needed to meet eurozone guidelines.

·Bankia, which is one of Spain's largest banks and has suffered from bad loans made to real estate developers, will receive a bailout from the Spanish government, much as banks in the United States did during the 2008 financial crisis. The government said it will take a 45% stake in the bank as part of its efforts to overhaul the country's overall banking system.

·The Federal Reserve said use of consumer credit increased 7.75% in the first quarter of the year. Almost all of the increase came in nonrevolving debt such as loans for autos, education, boats, and mobile homes.

·Wholesale prices fell 0.2% in April, marking the seventh straight month in which price increases have slowed. The Bureau of Labor Statistics said that put the year-over-year wholesale inflation rate at 1.9%.

·Strong U.S. exports in March couldn't keep up with higher oil costs and imports of Chinese goods, according to the Bureau of Economic Analysis. As a result, the trade deficit saw a dramatic 14.1% increase in March as exports rose nearly 3% while imports were up more than 5%.

·The Treasury Department said a combination of higher tax receipts and less spending on Medicare, education, and defense led to the federal government's first monthly budget surplus since September 2008. Nevertheless, the Treasury still projects an annual deficit this fiscal year of more than $1 trillion.

·J.P. Morgan Chase announced that trading in credit derivatives that were intended to hedge the bank's investment risk had cost it roughly $2 billion in paper losses.

Eye on the Week Ahead

Greece's struggles to form a government will continue to command attention; a new election will be scheduled for June if no agreement is reached. Also on tap is a scheduled Tuesday meeting between newly elected French President François Hollande and German Chancellor Angela Merkel. European growth data is due Tuesday, while manufacturing and retail sales data throughout the week will suggest the state of the U.S. economy.

Key dates and data releases: consumer inflation, retail sales, international capital flows, business inventories, Empire State manufacturing survey (5/15); Federal Open Market Committee minutes, housing starts, industrial production (5/16); Philadelphia Fed manufacturing survey (5/17); options expiration (5/18).

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Weekly Commentary: What's with the angst in Europe?

Mon, 07 May 2012 00:00:00 -0400

The most important news last week may have actually happened this past weekend.

On Sunday, voters went to the polls in France, Greece, and Germany and the results could have a major impact on world markets. French voters sent incumbent president Nicholas Sarkozy packing and, instead, elected Socialist Party candidate Francois Hollande. Hollande “has pledged to shift the burden of economic hardship onto the rich and to resolve the protracted euro sovereign-debt crisis by softening the current prescription of austerity,” according toThe WallStreet Journal. While his strategy is debatable, it will likely cause a rift with Germany and add uncertainty to recent eurozone agreements.

Greek voters also went to the polls and “delivered a stinging rejection of the two incumbent parties, with many people casting ballots for smaller, far-left and far-right parties,” according to theThe Wall Street Journal.This, too, will likely result in more political and economic uncertainty. And in Germany, incumbent Angela Merkel’s party suffered some setbacks in state elections.

What’s leading to all the angst in Europe? Here are three things:

1.Recession fears – 11 European countries have now experienced two consecutive quarters of economic contraction.

2.Unemployment fears – the unemployment rate across the eurozone is at a record high.

3.Business confidence fears – April’s read on the manufacturing PMI for the eurozone – a measure of confidence among businesses – fell to the lowest since June 2009.

Sources: MarketWatch,The Guardian

The bottom line is citizens are voting for change, but “political realities will complicate even more what is an already delicate economic and financial outlook for Europe, the world’s largest economic area,” according to Mohamed El-Arian, CEO and Co-CIO of PIMCO, as reported by CNBC.

These elections show that the economic crisis that began in 2008 is still rippling throughout the world.

Data as of 5/4/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-2.4%	8.9%	2.2%	14.7%	-1.9%	2.7%
DJ Global ex US (Foreign Stocks)	-2.1	6.7	-15.7	9.6	-5.6	4.8
10-year Treasury Note (Yield Only)	1.9	N/A	3.2	3.2	4.6	5.1
Gold (per ounce)	-1.2	4.4	6.7	21.8	19.0	18.1
DJ-UBS Commodity Index	-2.5	-2.5	-18.8	5.8	-4.7	3.5
DJ Equity All REIT TR Index	-0.6	12.9	9.7	28.8	0.4	10.5

Sources: Yahoo! Finance, Barron’s,djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

WHAT DO DOTS HAVE TO DO WITH BEING A BETTER INVESTOR?In his fascinating new book,Imagine: How Creativity Works, author Jonah Lehrer describes the creative process and what steps we can all take to be a little more creative. One of those steps is to talk to more people and expose yourself to new situations. By “colliding” more often with people who are not like you and throwing yourself into new environments (like a foreign country), your mind will come up with more new ideas than you could have thought of on your own.

And, while business owners may not like this, Lehrer’s research suggests, “The most important place in every office is not the boardroom, or the lab, or the library. It’s the coffee machine.” It’s those casual conversations with colleagues that generate new interactions and spark ideas.

This leads to an important point about investing.

Brian Uzzi, a professor at the Kellog School of Management, studied the instant messages (IM) sent by traders at a large hedge fund over an eighteen-month period. As reported in Lehrer’s book, these traders sent more than two million messages over that period and the average trader was involved in 16 different IM conversations simultaneously – talk about multitasking! Essentially, these traders were rapidly communicating with each other and trying to make sense of the latest news so they could profitably trade on it.

As summarized by Lehrer, Uzzi concluded, “The best traders were the most connected, and people who carried on more IM conversations and sent more messages also made more money.” Further, Uzzi said, “The act of investing is like solving a difficult puzzle. These traders are trying to connect the dots. Because the traders are listening to their network, they manage to accomplish what they could never have done by themselves.”

In essence, successful investing partly relies on “connecting the dots” of information that bombard us. While we’re not day traders like the people Uzzi studied at the hedge fund, the concept of connecting the dots still applies – albeit on a much longer timeframe. And, to connect the dots, we have a large network of colleagues who can help us separate the daily noise from what’s truly meaningful.

Weekly Focus – Think About It

“Everyone who's ever taken a shower has had an idea. It's the person who gets out of the shower, dries off, and does something about it who makes a difference.”

--Nolan Bushnell, founder of Atari, Inc. and Chuck E. Cheese’s Pizza-Time Theaters

Market Week, May 7, 2012

Mon, 07 May 2012 00:00:00 -0400

The Dow hit its highest point in more than four years on Tuesday, but it was basically downhill for equities after that as investors decided to take some of their year-to-date profits off the table in advance of key European elections over the weekend. The S&P 500, Nasdaq, Russell 2000, and Global Dow all had their worst week of 2012, and the Dow's 168-point loss on Friday gave the industrials their second worst week of the year. The selling helped the 10-year Treasury yield hit its lowest level since early February as prices rose. Meanwhile, oil prices slid below $100 a barrel, while gold reversed the previous week's gains, falling almost $30 back to $1,634.

Market/Index	2011 Close	Prior Week	As of 5/4	Week Change	YTD Change
DJIA	12217.56	13228.31	13038.27	-1.44%	6.72%
Nasdaq	2605.15	3069.20	2956.34	-3.68%	13.48%
S&P 500	1257.60	1403.36	1369.10	-2.44%	8.87%
Russell 2000	740.92	825.47	791.84	-4.07%	6.87%
Global Dow	1801.60	1946.39	1893.39	-2.72%	5.09%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.96%	1.91%	-5 bps	2 bps

Equities data reflect price changes, not total return.

Last Week's Headlines

·Unemployment fell to 8.1% in April, according to the Bureau of Labor Statistics. However, that was not necessarily good news, as the drop was largely the result of people leaving the work force. The economy created only 115,000 new jobs; that's substantially lower than the 154,000 jobs added in March or the 252,000 monthly average between December and February.

·Off with his head: The frustration about Europe's finances that has previously brought down heads of state in Greece, Spain, and Italy took its toll on French President Nicolas Sarkozy. The election of François Hollande, who campaigned against the fiscal austerity and budgetary discipline measures supported by "Merkozy" (German Chancellor Angela Merkel and Sarkozy), creates uncertainty about the future of those measures.

·The political parties that comprise Greece's ruling coalition suffered losses in the country's parliamentary elections, raising questions about whether a reorganized government would support the austerity program required for future bailout assistance.

·Spain's gross domestic product contracted for the second quarter in a row. That officially put the financially troubled country into recession; coupled with Spain's struggle to implement austerity measures, a recession could make it more difficult for the eurozone's fourth largest economy to reduce its budget deficit and meet sovereign debt guidelines. The country also received a second piece of bad news when Standard & Poor's downgraded the credit ratings of 11 Spanish banks. Meanwhile, the European Central Bank kept its key interest rate unchanged at 1%.

·The Bureau of Economic Analysis said consumer spending rose 0.3% in March and incomes grew 0.4%, helping to nudge the savings rate up slightly to 3.8% of disposable income.

·The U.S. services sector grew in April, but the 53.5% reading by the Institute for Supply Management was 2.5% lower than the one in March. However, the ISM's manufacturing index was up 1.4% from March for a reading of 54.8% and a 33rd consecutive month of expansion.

·U.S. construction spending rose 0.1% in March despite a 1.1% decline in spending on public construction such as state and local highways and schools. According to the Department of Commerce, private construction was up 0.7% from the previous month, roughly evenly divided between residential and nonresidential projects.

·Fixed-rate mortgages have hit record lows once again, according to Freddie Mac. The 3.84% average rate for a 30-year fixed-rate mortgage was almost a percentage point lower than the 4.71% of a year ago, and 15-year mortgages were at 3.07% compared to 3.89% last year at this time.

Eye on the Week Ahead

In a week that's light on economic data, investors will attempt to gauge the impact of French and Greek elections on the eurozone's willingness and ability to enforce austerity measures and debt guidelines.

Key dates and data releases: international trade, import/export prices, U.S. Treasury budget (5/10); wholesale inflation (5/11).

Weekly Commentary: Apple shines, housing has the blues

Tue, 01 May 2012 00:00:00 -0400

What is the costliest fruit?

How about an apple, as in Apple, Inc.? With more than $500 billion in market capitalization, Apple is the world’s most valuable company, according to Reuters. Last week, the company reported quarterly earnings that easily trumped analyst forecasts and this helped propel the S&P 500 to a 1.8 percent weekly gain. But it’s not just Apple that’s doing well. According to FactSet, a robust 78 percent of the S&P 500 companies that have reported earnings so far this quarter have beaten analysts’ forecasts.

Last week’s gains came despite some disappointing economic news which included the following:

·A weaker than expected reading on U.S. gross domestic product (GDP), the broadest measure of all goods and services produced in our country.

·A downgrade of Spain’s government debt—perhaps not surprising since the country now has a debilitating unemployment rate of 24.4 percent.

·A second consecutive quarter of negative economic growth in the U.K., indicating they have slid back into recession.

Sources:The Wall Street Journal, Yahoo! Finance, Bloomberg

Overall, the economy continues to chug along at a modest pace. Not quite fast enough to signal “all clear” and not quite slow enough to signal “recession ahead.”

Data as of 4/27/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	1.8%	11.6%	2.9%	17.9%	-1.3%	2.8%
DJ Global ex US (Foreign Stocks)	0.5	8.9	-14.0	12.4	-5.0	5.1
10-year Treasury Note (Yield Only)	1.9	N/A	3.4	2.9	4.7	5.1
Gold (per ounce)	1.3	5.7	10.1	22.4	19.7	18.3
DJ-UBS Commodity Index	1.8	0.0	-18.8	9.0	-4.1	3.6
DJ Equity All REIT TR Index	1.7	12.9	8.9	33.0	0.0	10.7

Sources: Yahoo! Finance, Barron’s,djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

THE HOUSING MARKET STILL HAS THE BLUES,according to a widely followed barometer of home prices in the U.S. The S&P/Case-Shiller Index is designed to show how home prices are performing in the twenty largest cities and last week’s report showed the index is at its lowest point since October 2002.

Since the peak of the index in 2007 through February of this year, home prices have lost one-third of their value—and that’s even with record low interest rates on mortgages. Unfortunately, tough employment conditions have kept many potential homeowners on the sidelines. Adding to that, obtaining a loan from a bank remains difficult without very good credit.

Even though home prices continue to decline, a silver lining might be emerging. According to the National Association of Realtors, an index that measures the number of agreements signed to buy previously owned homes rose in March to its highest level in two years.

The increase in interested home buyers is coming at a time when supply is declining. Inventory levels in many markets are at their lowest level in years. For example, according toThe Wall Street Journal, at the current pace of sales, it would take only 1.5 months to sell all the homes in Sacramento, CA. Considering pickings are pretty slim, home builders have also benefitted. New home sales in the U.S. are up 16 percent so far this year.

Unfortunately, this recent decline in available homes for sale may prove to be temporary because Fannie Mae, Freddie Mac and other banks have been slow to list for sale hundreds of thousands of foreclosed homes. In fact, banks and other investors are believed to hold 450,000 foreclosed homes while an additional 2 million are currently in the process of being foreclosed.

Ultimately, the solution to the housing blues may be strong economic growth. And as last week’s GDP numbers show, that strong growth hasn’t started yet.

Weekly Focus – Think About It

“In order to get a loan you must first prove you don't need it.”

--Murphy's Law

Market Week, April 30, 2012

Tue, 01 May 2012 00:00:00 -0400

Solid corporate earnings from some key tech and consumer companies encouraged investors to ignore dicey economic reports and push the S&P 500 back above 1,400. Despite a late-week downgrade to Spanish sovereign debt and a less-than-encouraging U.S. gross domestic product report, even the Global Dow was in positive territory, while a stand-pat stance by the Fed allowed bonds to remain relatively stable.

Market/Index	2011 Close	Prior Week	As of 4/27	Week Change	YTD Change
DJIA	12217.56	13029.26	13228.31	1.52%	8.27%
Nasdaq	2605.15	3000.45	3069.20	2.29%	17.81%
S&P 500	1257.60	1378.53	1403.36	1.80%	11.59%
Russell 2000	740.92	804.05	825.47	2.66%	11.41%
Global Dow	1801.60	1926.87	1946.39	1.01%	8.04%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.99%	1.96%	-3 bps	7 bps

Equities data reflect price changes, not total return.

Last Week's Headlines

· U.S. economic growth slowed in the first quarter. The Commerce Department's initial estimate of gross domestic product was 2.2%, substantially lower than the previous quarter's 3%. Consumer spending picked up 2.9%, higher than the 2.1% of Q4 2011, but business spending was off. Another indicator of a slowing economy was durable goods orders, which plummeted 4.2% in March.

· Standard & Poor's downgraded Spanish sovereign debt by two notches to BBB+; the rating downgrade could increase the country's already steep borrowing costs in the future. S&P cited a lack of progress in reducing the country's budget deficit and the likelihood that financial assistance will be needed at some point. It also imposed a negative outlook, meaning further downgrades are likely. New unemployment statistics delivered a second blow by putting the country's unemployment rate at more than 24%.

· Another one bites the dust: Holland's prime minister and cabinet resigned after the coalition government failed to achieve budget cuts needed to reduce the country's deficit and comply with eurozone debt guidelines. Holland has supported the German-led campaign for tougher fiscal responsibility measures and financial assistance.

· Though it saw some hints of softening in the U.S. economy, the Federal Reserve's Open Market Committee essentially stayed the course, giving little indication of any potential post-QE2 actions and leaving interest rates intact.

· New home sales fell 7.1% in March, according to the Commerce Department. However, unseasonably warm weather may have accelerated some sales that would otherwise have occurred in the spring, since an earlier increase in February sales was revised upward.

·U.S. home prices hit their lowest level in almost a decade in February. The S&P/Case-Shiller index was down 0.8% for the month and 3.5% year over year, with Atlanta's 17.3% decline over the past 12 months leading the way. Seventeen of the index's 20 cities reported lower prices. However, Phoenix saw a 3.3% annual gain and its fifth consecutive monthly increase.
Eye on the Week Ahead

Unemployment data on Friday will be closely watched, especially in the wake of recent softer economic data. Additional earnings reports will vie for attention with consumer spending data and the Institute for Supply Management's manufacturing and services reports. Finally, Thursday will bring an announcement from the European Central Bank's meeting.

Key dates and data releases: personal income/spending (4/30); construction spending, U.S. manufacturing, auto sales (5/1); factory orders (5/2); business productivity/costs, U.S. services sector (5/3); unemployment/payrolls (5/4).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

Market Week, April 23, 2012

Tue, 24 Apr 2012 00:00:00 -0400

The Markets

The Dow managed to top 13,000 once again, but the Nasdaq suffered from a hit to Apple's stock price. Less-than-disastrous Spanish debt auctions helped the Global Dow gain a bit.

Market/Index	2011 Close	Prior Week	As of 4/20	Week Change	YTD Change
DJIA	12217.56	12849.59	13029.26	1.40%	6.64%
Nasdaq	2605.15	3011.33	3000.45	-.36%	15.17%
S&P 500	1257.60	1370.27	1378.53	.60%	9.62%
Russell 2000	740.92	796.30	804.05	.97%	8.52%
Global Dow	1801.60	1909.67	1926.87	.90%	6.95%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.02%	1.99%	-3 bps	10 bps

Equities data reflect price changes, not total return.

Last Week's Headlines

·Manufacturers in the New York area reported substantial weakening this month. Though any number above zero is considered positive, the Federal Reserve's Empire State survey fell to 6.56 compared to 20.21 in March, hurt by disappointing numbers for shipments and unfilled orders. The Philadelphia Fed manufacturing survey also declined for the first time in five months, to 8.5 from 12.5 in March.

·March retail sales were up 0.8%, according to the Commerce Department. That put them 6.5% higher than the previous March. Building and garden equipment and supplies were up more than 14%, while nonstore sales rose more than 9% during the month.

·Housing starts slid 5.8% in March but were 10.3% higher than a year ago, according to the Commerce Department. However, building permits, an indicator of future activity, rose 4.5% during the month and were 30% higher than last year, though March single-family permits were down 3.5%.

·The Federal Reserve said industrial production remained flat for a second month in March, but was up 5.4% during the first quarter. And though manufacturing output declined 0.2% in March, it was up 10.4% for the quarter, driven in part by an almost 40% increase in cars and car parts. The percentage of the nation's manufacturing capacity utilized slipped slightly to 78.6% in March, 2.1% higher than last March but still below its long-term average.

·Demand at auctions of both short-term and 10-year Spanish debt could have been worse; the 10-year yield fell slightly to 5.74%. Meanwhile, the International Monetary Fund said it has received pledges of $430 billion in additional financial support for its loan fund to combat the European debt crisis. However, in the first round of French elections, President Nicolas Sarkozy, a key player in the eurozone's debt crisis battle plan, came in a close second to Socialist Party candidate Francois Hollande, whose support for the strategy is less certain. The two men face a runoff May 6.

·Buffetted all week: Legendary Berkshire Hathaway CEO Warren Buffett was not only diagnosed with prostate cancer, but legislation based on the so-called "Buffett Rule" failed to receive the necessary 60 votes for further consideration in the U.S. Senate. The legislation, which would have established a minimum 30% federal income tax rate for individuals earning at least $1 million annually, and its rejection will provide both parties with plenty of ammunition for the upcoming electoral shooting match.

Eye on the Week Ahead

Global investors will assess the French election's potential implications for the financial markets, and several U.S. tech and consumer bellwether companies will report earnings. The Federal Open Market Committee's Wednesday announcement is its next to last before Operation Twist is scheduled to expire. The first report on Q1 economic growth will suggest how well the first-quarter equities rally reflects the economy as a whole.

Key dates and data releases: new home sales, home prices (4/24); Federal Open Market Committee announcement/forecasts, durable goods orders (4/25); weekly new unemployment claims (4/26); Q1 initial gross domestic product estimate (4/27).

Corporate earning grab attention from European mess

Tue, 24 Apr 2012 00:00:00 -0400

Move over European debt headlines, corporate earnings have something to say.

Even though troubles are brewing again across the pond in Europe, corporate earnings season in the U.S. is stealing the spotlight. Why? According to CNBC, more than 100 companies in the S&P 500 have reported earnings and 8 out of 10 have delivered better than expected results – and that’s grabbed investors’ attention.

Each quarter, publically traded companies update investors on how their businesses fared over the previous three months. And, according to the updates we’re seeing, business is still looking okay. The news helped push the S&P 500 higher by 0.6 percent on the week.

Now, like all statistics, there’s more than one way to interpret the earnings numbers. While 8 out of 10 companies have beaten expectations, the “expectation” was pretty low. In fact, earnings increased only 3.7 percent from the year ago quarter, according to Zacks. For the remaining S&P 500 companies that are set to report, Zacks expects those companies to report slightlynegativeearnings growth compared to the year ago quarter.

Over in Europe, Spain and Italy saw the borrowing rate increase on their government debt, which suggests their debt problem is far from over. And, the International Monetary Fund released a report that stated the obvious – if the European debt crisis can’t be contained, it would negatively impact global economic growth in a severe way.

At the moment, the U.S. markets seem fixated on corporate earnings and have put the European problem on the back burner. But, in this interconnected world, problems overseas may eventually find their way to our shores.

Data as of 4/20/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.6%	9.6%	3.1%	18.3%	-1.5%	2.2%
DJ Global ex US (Foreign Stocks)	0.9	8.4	-13.6	13.2	-5.2	4.9
10-year Treasury Note (Yield Only)	2.0	N/A	3.4	2.8	4.7	5.2
Gold (per ounce)	-1.5	4.3	9.4	23.2	18.9	18.4
DJ-UBS Commodity Index	-0.9	-1.8	-20.0	8.0	-4.3	3.4
DJ Equity All REIT TR Index	2.8	11.1	10.3	36.0	-0.3	10.4

WHEN $1 TRILLION ISN’T ENOUGH…Earlier this year the European Central Bank (ECB), Europe’s equivalent of our U.S. Federal Reserve, responded to the fear surrounding the European debt crisis by offering unlimited three-year loans with a 1.0 percent interest rate to European banks. According toThe Wall Street Journal, at least 800 banks across Europe responded to this offer by borrowing over $1.3 trillion. As planned, the banks then took a good portion of that money and bought government securities that paid a higher interest rate. It sounds like a great deal to the banks – borrow money at a 1.0 percent rate then turn around and buy government securities that pay a much higher rate and pocket the difference.

The primary objective of this emergency lending was to indirectly allocate money to European governments who are heavily indebted. The ECB thought that making cheap money available would help lower interest rates in these troubled countries and “buy” them more time to work out their economic problems.

How’s it working?

Initially, interest rates in troubled countries dropped dramatically as banks bought the high-yielding government securities and fears of a collapse eased. Unfortunately,The Wall Street Journalsays many of the banks who borrowed money from ECB may have already exhausted most of those funds – leaving little money left to keep pushing interest rates down. As a result of this fear, interest rates are rising again, particularly in Spain and Italy, and, like a leak in a dike, it’s hard to stop a rise once it gets going.

Will the ECB step in again and help European banks and governments avoid a Greek-style default? It’s too early to tell, but either way, we’ll be closely watching this tug-o-war between positive corporate earnings in the U.S. and negative headlines out of Europe.

Stay tuned…

Weekly Focus – Think About It

“There are no shortcuts to any place worth going.”

--Beverly Sills

Womack commentary: Learning about volatility and the "Shove It" indicator

Mon, 16 Apr 2012 00:00:00 -0400

It’s back. Volatility, that is.

Like a yo-yo, the market bounced around and the S&P 500 index ultimately ended down 2.0 percent for the week and 3.4 percent from this year’s closing high, according to Reuters. Despite the drop, the market is still showing a solid 9.0 percent gain for the year.

Once again, debt issues in Europe made headlines as Spain became the latest problem country. That, along with some disappointing economic growth data from China, helped spark the volatile week. Because of its massive size, any slowdown in China is closely watched by market participants.

As a sign of the big swings this week, the Dow Jones Industrial closed the day up or down by at least 100 points on four out of the five days last week, according to Barron’s.

Highlights from the week included:

·China’s economy expanded at the weakest pace in over three years last quarter, missing consensus economic forecasts.

·Yields on debt in Spain jumped due to a weak debt auction, renewing fears that the European debt crisis could start affecting the global markets again.

·Several U.S. banks reported earnings that underwhelmed investors, resulting in weakness in financial stocks.

·U.S. inflation remained under control which may leave open the possibility for further Federal Reserve intervention should economic data deteriorate.

Sources:The Wall Street Journal, Yahoo! Finance

he quarterly corporate earnings season is now underway so we wouldn’t be surprised to see more market volatility as investors digest the latest read on the health of corporate America.

Data as of 4/13/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-2.0%	9.0%	3.8%	16.9%	-1.2%	2.1%
DJ Global ex US (Foreign Stocks)	-1.0	7.4	-13.8	12.5	-5.1	5.1
10-year Treasury Note (Yield Only)	2.0	N/A	3.5	2.9	4.8	5.1
Gold (per ounce)	2.2	5.8	14.3	23.4	19.6	18.7
DJ-UBS Commodity Index	-1.6	-0.9	-17.7	7.2	-4.4	3.8
DJ Equity All REIT TR Index	-1.2	8.0	11.2	31.7	-0.7	9.5

Sources: Yahoo! Finance, Barron’s,djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

THE “SHOVE IT” INDICATORas highlighted by CNBC made a noteworthy gain in February suggesting consumer confidence may be increasing. You’re probably wondering, “What in the world is the ‘shove it’ indicator?” Well, every month the government conducts a Job Openings and Labor Turnover Survey, or “JOLTS” for short. One of the data points in the JOLTS report is the number of workers who quit their job as opposed to being laid off. And, in February, for the first time since September 2008, the quitters were in the majority.

What does this mean? Generally speaking, people who quit their job are typically more confident that there is another job waiting for them when they voluntarily leave a position. Nicholas Colas, chief market strategist at ConvergEx Group says, “Quits go hand-in-hand with consumer confidence.”

This positive JOLTS data point follows a disappointing government jobs report for the month of March where only 120,000 new jobs were created. Also, the preliminary March reading of the University of Michigan’s consumer confidence survey showed a decline from the previous month. Analysts had expected confidence to stay flat, according to International Business Times.

This conflicting economic data gave the bulls and the bears ample ammunition to bolster their respective case. And, conflicting data like this may lead to a continuation of the yo-yo as investors try to predict which direction the economy is headed.

Weekly Focus – Think About It

“Expectation is the root of all heartache.”

--William Shakespeare

Market Week, April 16, 2012

Mon, 16 Apr 2012 00:00:00 -0400

The Markets

Spanish bullfight: Continued concern about surging bond yields in Spain sent equities down both here and abroad. The Dow followed last week's downdraft with three days of triple-digit losses; its fourth straight losing week was a sad distinction shared by the Global Dow. Of the four domestic indices, only the small-cap Russell 2000 escaped having its worst week so far this year, though the S&P 500 and the Nasdaq managed to remain above 1,300 and 3,000 respectively. Despite high gas prices, oil slid closer to $100 a barrel, while the 10-year Treasury yield hovered around 2%

Market/Index	2011 Close	Prior Week	As of 4/13	Week Change	YTD Change
DJIA	12217.56	13059.39	12849.59	-1.61%	5.17%
Nasdaq	2605.15	3080.50	3011.33	-2.25%	15.59%
S&P 500	1257.60	1397.99	1370.27	-1.98%	8.96%
Russell 2000	740.92	818.18	796.30	-2.67%	7.47%
Global Dow	1801.60	1950.61	1909.67	-2.10%	6.00%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.07%	2.02%	-5 bps	13 bps

Equities data reflect price changes, not total return.

Last Week's Headlines

·Consumer inflation rose 0.3% in March, according to the Bureau of Labor Statistics. That put the annual inflation rate at 2.7%, slightly lower than the previous month's 2.9%. Meanwhile, a decline in energy costs helped keep wholesale prices relatively static in March despite a 0.2% increase in wholesale food prices. So-called core inflation, which excludes food and energy, was up 0.3% at the wholesale level.

·The pain in Spain: Spanish bond yields continued to rise, hitting 5.93% after the Bank of Spain reported that Spanish banks nearly doubled their borrowing from the European Central Bank last month. The Italian 10-year yield wasn't far behind at 5.52%, raising concerns yet again about the adequacy of European rescue funds.

·The U.S. trade deficit fell 12.4% in February, to $46 billion. Exports were up by $0.2 billion, while an 18% drop in imports from China left imports overall down $6.3 billion.

·China's economy grew at an annual rate of 8.1% during the first quarter; that's substantially lower than the previous quarter's 8.9%. Meanwhile, food prices helped push China's consumer inflation rate up 0.4% to an annual rate of 3.6%--still within the government's 4% target range--while wholesale prices were down 0.3% from a year ago.

·Winning megamillions: Just over a dozen employees of Instagram, creators of a photo-sharing app for mobile devices, will split the $1 billion that Facebook agreed to pay for the two-year-old company.

·The Federal Reserve's "beige book" report said the economy continued to expand at a "modest to moderate" pace, but noted concerns about higher oil prices. Though hiring was said to be steady or slightly up in many districts, employers also reported difficulty in finding qualified, high-skilled workers.

Eye on the Week Ahead

With earnings season under way and several key banks reporting this week, forward guidance about coming quarters could be even more influential than the earnings themselves. Manufacturing, housing, and retail data will suggest the state of the recovery.

Key dates and data releases: retail sales, Empire State manufacturing survey, business inventory levels, international capital flows (4/16); housing starts, industrial production (4/17); weekly new unemployment claims, home resales, Philly Fed manufacturing survey (4/19).

Market Week, April 9, 2012

Mon, 09 Apr 2012 00:00:00 -0400

The Markets

Short but hardly sweet: A disappointing bond auction in Spain and lowered expectations for new Federal Reserve easing gave investors a reason to take some equity gains off the table and return to intermediate- and long-term Treasuries during last week's holiday-shortened trading. The Nasdaq's recent string of successes was punctuated by Wednesday's 45-point drop--its worst day this year--though it managed to remain above 3,000. The Dow had 2012's second triple-digit daily loss, while the small-cap Russell 2000 struggled nearly as much as the Global Dow, which was hit by anxiety over the Spanish auction. Commodities, which had benefitted from economic optimism and the Fed's bond-buying, also were hit. Oil dipped to just over $101 a barrel, though it recovered some of those losses by week's end, while gold plummeted 2.4% to end the week down roughly $40 an ounce.

Market/Index	2011 Close	Prior Week	As of 4/5*	Week Change	YTD Change
DJIA	12217.56	13212.04	13059.39	-1.16%	6.89%
Nasdaq	2605.15	3091.57	3080.50	-.36%	18.25%
S&P 500	1257.60	1408.47	1397.99	-.74%	11.16%
Russell 2000	740.92	830.30	818.18	-1.46%	10.43%
Global Dow	1801.60	1998.88	1950.61	-2.43%	8.27%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.23%	2.07%	-16 bps	18 bps

Equities data reflect price changes, not total return. *Global Dow and Treasury yield as of 4/6.

Last Week's Headlines

·U.S. payrolls rose in March at their slowest pace since October. According to the Bureau of Labor Statistics, the 120,000 new jobs reduced the unemployment rate only to 8.2%, though it was the 11th straight month of either stable or falling unemployment. Losses in the retail sector partly offset gains in manufacturing, leisure/hospitality, health care, and business and professional services.

·Minutes of the most recent Federal Reserve Open Market Committee meeting suggested little interest in an additional round of quantitative easing. However, most members felt recent improvements in economic data still weren't strong enough to warrant upgrading the Fed's outlook through late 2014, and some suggested that those improvements could weaken later in the year.

·Growth in the U.S. services sector slowed a bit in March as the Institute for Supply Management's index fell to 56%. (Even so, it was the 27th consecutive month above the 50% mark that is the threshold for expansion.) New orders and production accounted for most of the month's drop.

·U.S. manufacturing expansion accelerated in March. According to the Institute for Supply Management, the nation's purchasing managers reported a 1% increase from the previous month, though the growth of new orders slowed a bit. It was the 32nd straight month of expansion. Meanwhile, the Commerce Department's February figures for factory orders rose 1.3% for the month.

·New construction fell 1.1% in February, although it was still 5.8% higher than a year earlier. According to the Commerce Department, a 1.7% decline in public construction was primarily responsible, though private construction also fell 0.8%. Residential construction remained unchanged.

·Despite Spain's announcement of budget cuts and tax increases designed to cut its budget deficit to 5.3% of GDP from 8.5% last year, disappointing demand for intermediate-term Spanish bonds helped push the yield on the 10-year above 5.5%. Similar bonds yielded less than 5% only a month ago.

·President Obama signed two market-related pieces of legislation. The JOBS (Jumpstart Our Business Startups) Act exempts businesses defined as "emerging growth companies" (less than $1 billion in annual gross revenues) from certain securities regulations in an attempt to make it less costly for them to go public. The act also reduces the amount of auditing and reporting required, and authorizes "crowdfunding" of startups. The STOCK (for Stop Trading On Congressional Knowledge) Act makes it a criminal offense for public officials such as members of Congress, the president, and many federal employees to trade securities based on nonpublic knowledge obtained through their jobs. It also requires that transactions over $1,000 by such individuals be made public online no later than 45 days after a transaction.

Eye on the Week Ahead

Alcoa's announcement Tuesday marks the unofficial kickoff of the Q1 corporate earnings season, and U.S. equities investors will have their first chance to react to Friday's unemployment figures. Inflation numbers also will be of interest, as will China's gross domestic product release. Long-term U.S. Treasury auctions are scheduled, and European markets will reopen Tuesday after their Easter holiday.

Key dates and data releases: Fed "beige book" report, import/export prices (4/11); wholesale inflation, balance of trade, weekly new unemployment claims (4/12); consumer inflation, consumer sentiment (4/13).

Weekly Commentary: Blame the weather for jobs?

Mon, 09 Apr 2012 00:00:00 -0400

When in doubt, blame it on the weather.

It’s human nature to want to ascribe a reason to everything that happens in the world. Rather than feeling like it’s all random, we always want to know why the market went up or why bats hang upside down or why white is the most popular car color.

And, last week’s employment report is no different. The government said the economy added 120,000 new jobs in March, however, that were well below the 210,000 increase expected by economists surveyed by MarketWatch. So, to what did some economists attribute the smaller than expected increase? You guessed it, the weather!

Unseasonably warm winter weather in many parts of the country may have disrupted the normal winter hiring pattern. According to MarketWatch, “Companies kept workers on or hired people in January and February who otherwise would have been added in March or April.”

In addition to hiring, weather was also a key driver behind recent strong retail sales. Bloomberg reported that, “Retailers are benefiting from warm weather that boosted demand for spring products…”

Over time, the effects from weather will likely even out so there’s no need for us to add a meteorologist to the team. But, just so you know, it’s not always dollars and cents behind changes in the markets. Sometimes you just have to stand outside and check out the weather.

Data as of 4/5/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-0.7%	11.2%	4.8%	18.7%	-0.6%	2.2%
DJ Global ex US (Foreign Stocks)	-2.3	8.4	-12.7	13.6	-4.7	5.1
10-year Treasury Note (Yield Only)	2.2	N/A	3.5	2.9	4.7	5.2
Gold (per ounce)	-1.9	3.6	13.8	23.3	19.4	18.4
DJ-UBS Commodity Index	-0.2	0.7	-17.3	8.2	-4.0	3.7
DJ Equity All REIT TR Index	-1.1	9.2	9.9	35.1	-0.6	10.1

Sources: Yahoo! Finance, Barron’s,djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

DON’T WORRY, BE HAPPYis apparently more than just a cliché. Research over the past 10 years shows there is a direct link between happiness and business outcomes. Author and researcher Shawn Achor says “happiness” raises sales by 37 percent, productivity by 31 percent, and accuracy on tasks by 19 percent. He goes on to say, “The single greatest advantage in the modern economy is a happy and engaged workforce.”

So, how do you become happy at work?

Achor says you have to train yourself and start developing new, positive habits. For example, he challenges his clients to implement one of the following positive exercises everyday for 21 days.

·Write down three new things you are grateful for each day.

·Write for two minutes a day describing one positive experience you had over the past 24 hours.

·Exercise for 10 minutes a day.

·Meditate for two minutes, focusing on your breath going in and out.

·Write one quick e-mail first thing in the morning thanking or praising someone in your social support network (family member, friend, old teacher).

By following one of these exercises, Achor says your happiness will rise and so will your business success.

The tiny Himalayan country of Bhutan has taken this idea of happiness even further. Four years ago, the country launched a “gross national happiness” measure to guide public policy. According toThe Guardian, Bhutan’s “constitution mandates that at least 60% of the country remains under forest cover in perpetuity and its stated policy is to be 100% organic in its agricultural production.”

Now, Bhutan’s definition of happiness is a little different than our typical Western definition. The Bhutan government says, “it refers to the deep, abiding happiness that comes from living life in full harmony with the natural world, with our communities and fellow beings, and with our culture and spiritual heritage, in short, from feeling totally connected with our world.”

Well, no matter how you define it, it looks like it “pays” to be “happy.”

Weekly Focus – Think About It

“Rules for Happiness:

something to do,

someone to love,

something to hope for.”

--Immanuel Kant, German philosopher

Weekly Commentary: Year off to a strong start

Tue, 03 Apr 2012 00:00:00 -0400

The Markets

Last week marked the end of a very strong first quarter for the stock market.

For the quarter, the S&P 500 index rose 12.0 percent, its strongest start to a year since 1998. In fact, the index ended the quarter 3.4 percent above the average year-end projection of strategists surveyed by Bloomberg. In other words, the market gained more in the first quarter than analysts thought it would gain for the whole year.

Looking back on the strong start, analysts pointed to an easing of Europe’s debt woes, a strengthening global economy (at least in some areas), rising consumer sentiment in the U.S., and supportive Federal Reserve policy, according to Bloomberg and CNNMoney.

Speaking toThe Wall Street Journal,Bob Doll, chief equity strategist at BlackRock, summarized the quarterly nicely when he said, “This year has been all about people coming away from the abyss that the world might end, and putting risk back on.”

Some analysts suspect this year’s strong start may be déjà vu all over again (hat tip to Yogi Berra). Stocks roared out of the gate in 2010 and 2011 only to drop later in the year, “as the U.S. economy faltered and Europe's crisis worsened,” according to The Wall Street Journal.

Potential spoilers for the market over the next few months include:

• Renewed European debt woes, particularly in Portugal and Spain.
• Renewed weakness in the U.S. economy, possibly due to unseasonably warm weather in some parts of the country that may have “pulled forward” some shopping and construction activity.
• High gasoline prices, which could take a big bite out of consumers’ pocketbooks.
• Slower corporate earnings growth and profit margins that may down from near record levels.
• An economic slowdown in China that exceeds expectations.
Sources:The Wall Street Journal, Financial Times

So far this year, investors have shrugged off the worries and plowed higher. With supportive Federal Reserve policy underpinning the market, that old adage seems to apply – “Don’t fight the Fed.”

Data as of 3/30/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.8%	12.0%	5.7%	21.4%	-0.2%	2.1%
DJ Global ex US (Foreign Stocks)	-0.2	11.0	-9.6	17.6	-3.9	5.3
10-year Treasury Note (Yield Only)	2.2	N/A	3.5	2.7	4.7	5.4
Gold (per ounce)	-0.1	5.6	16.6	21.5	20.2	18.6
DJ-UBS Commodity Index	-1.5	0.9	-14.8	9.8	-3.8	3.4
DJ Equity All REIT TR Index	1.8	10.5	12.2	45.5	-0.1	10.3

WHILE GASOLINE PRICES ARE HITTING RECORD HIGHSfor this time of year and oil has shot past $100 per barrel, natural gas prices are plumbing 10-year lows, according to The Wall Street Journal. What are the implications of this large price disparity for America’s long-term energy security?

As indicated below, gasoline, oil, and natural gas are critical to the U.S. energy picture as they account for a large percentage of our energy use.

Energy Demand by Fuel Source in the U.S. in 2010
• 37 percent petroleum products (includes oil and gasoline)
• 25 percent natural gas
• 21 percent coal
• 9 percent nuclear
• 8 percent renewable
Source: U.S. Energy Information Administration

Oil, in particular, is deeply entwined in our economy as 10 of the past 11 recessions were preceded by an oil price shock, according to Moody’s Analytics. Even the 2008 economic crisis, which on the surface was triggered by the subprime mortgage crisis, was accompanied by a massive spike in U.S. oil prices to a record high of about $145 per barrel in July 2008, according to Reuters. As oil prices rise, gasoline prices are likely to rise, too, because gasoline is a by-product of oil refining. In fact, a 42-gallon barrel of oil yields about 19 gallons of gasoline, according to the U.S. Department of Energy.

So, where does natural gas fit in the U.S. energy story?

Interestingly, new technology including horizontal drilling and hydraulic fracturing (“fracking”) has led to a substantial increase in the supply of natural gas. The Department of Energy has even said we have more than a 90-year supply of natural gas at current consumption rates. This massive supply is one reason why natural gas prices are so low right now.

One plus for natural gas versus oil is that almost all of the natural gas we consume is produced domestically while 45 percent of the oil we consume is imported, according to Financial Times. With natural gas prices low and supply abundant, we’re starting to see more emphasis on using natural gas instead of oil.

As the U.S. continues to regain its economic footing, it’s critical that we have the right mix of energy sources available at a reasonable price. Historically, that’s not always happened and, consequently, it’s an important factor that we monitor on a regular basis.

Weekly Focus – Think About It

“Worry does not empty tomorrow of its sorrow, it empties today of its strength.”
--Corrie ten Boom, author, Holocaust survivor

First quarter marches toward recovery

Tue, 03 Apr 2012 00:00:00 -0400

The Markets

As the U.S. economy continued its slow march toward recovery and Europe managed to fight off the threat of a Greek default on key bond payments, even higher gas prices couldn't stop equities from powering upward. The S&P 500 registered its best first-quarter performance since 1998, the Nasdaq managed to surpass its October 2007 high, and the Russell 2000 was only 15 points from accomplishing the same thing. Even the Global Dow managed to beat the Dow industrials, despite the Dow's gaining more in a single quarter than it did in all of 2011.

As investors grew increasingly comfortable with equities again, reduced demand for bonds sent yields back above 2%. Tensions with Iran pushed oil prices as high as $108 per barrel, pushing both gas prices and inflation higher despite concerns about slowing economies abroad. Gold regained some of the ground lost last year but then gave back almost half of those gains to end at roughly $1,670 an ounce. And after a strong move during 2011's final quarter, the dollar stabilized a bit.

Market/Index	2011 Close	As of 3/30	Quarterly Change	YTD Change
DJIA	12217.56	13212.04	8.14%	8.14%
NASDAQ	2605.15	3091.57	18.67%	18.67%
S&P 500	1257.60	1408.47	12.00%	12.00%
Russell 2000	740.92	830.30	12.06%	12.06%
Global Dow	1801.60	1998.88	10.95%	10.95%
Fed. Funds	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.23%	34 bps	34 bps

Quarterly Economic Perspective

·The U.S. economy continued to recover. The Bureau of Economic Analysis said gross domestic product for 2011's final quarter rose 3%; that's sharply higher than the previous quarter's 1.8% increase. However, China and Europe both showed signs that their economies might be faltering; China lowered its 2012 growth target to 7.5%, both the eurozone and the larger European Union saw a 0.3% contraction in their economies, and Germany and France reported weakness in their manufacturing sectors.

·Unemployment continued to fall, ending the quarter at 8.3%, its lowest level in three years. Meanwhile, the number of new jobs added to the economy exceeded 220,000 for three straight months.

·In the largest sovereign restructuring on record, 85% of Greek bondholders agreed to swap their holdings for bonds worth almost 54% less. The arrangement allowed Greece to impose the same terms on most of its remaining creditors, qualify for a second round of financial assistance, and make key bond payments. The restructuring meant that financial institutions had to pay off on roughly $3 billion worth of credit default swaps on Greek debt.

·The leaders of all but two European Union countries signed a treaty designed to impose greater fiscal discipline in the EU, and European banks refinanced almost €530 billion with the European Central Bank to help maintain the financial system's stability.

·The Federal Reserve Open Market Committee said it plans to keep interest rates at "exceptionally low levels" through at least late 2014.

·Despite dips in sales of both new and existing homes in February, both continued to be higher than the previous year (up 11.4% and 8.8% respectively). However, that didn't translate into higher home prices; according to the S&P/Case-Shiller national index, home prices were at their lowest level since mid-2006. Housing starts also were down slightly in February, but both housing starts and building permits were up more than 34% from a year earlier.

·Spiking gas prices translated into higher consumer inflation; a 6% jump in gas prices in February alone helped boost the inflation rate for the last 12 months to 2.9%. Retail sales also were up 6.3% from the previous year, though gas prices accounted for part of that increase as well. Meanwhile, wholesale inflation was up 3.3% (the smallest yearly increase since August 2010).

·Fifteen large banks passed the Federal Reserve's stress tests designed to gauge their ability to withstand a financial crisis, but four others must resubmit plans that show they have sufficient capital.

Data source: All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflects price changes, not total return.

Market Week, April 2, 2012

Tue, 03 Apr 2012 00:00:00 -0400

The Markets

Domestic equities ended a relatively uneventful week by marking the best first quarter for the S&P 500 since 1998. Despite some downdrafts early in the week, the Dow and the S&P managed to stay above 13,000 and 1,400 respectively, and the Nasdaq continued to lead the pack for the year.

Market/Index	2011 Close	Prior Week	As of 3/30	Week Change	YTD Change*
DJIA	12217.56	13080.73	13212.04	1.00%	8.14%
Nasdaq	2605.15	3067.92	3091.57	.77%	18.67%
S&P 500	1257.60	1397.11	1408.47	.81%	12.00%
Russell 2000	740.92	830.03	830.30	.03%	12.06%
Global Dow	1801.60	2001.48	1998.88	-.13%	10.95%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.25%	2.23%	-2 bps	34 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·Home prices in the 20 cities tracked by the S&P/Case-Shiller index hit their lowest level since 2003 after falling for the fifth month in a row. The 0.8% three-month average decline for November through January means that prices have fallen 3.8% over the last year.

·Orders for durable goods--those intended to last three years or more--saw their fourth increase in the last five months. The Commerce Department said orders were up 2.2% in February, with the single largest increase being the 3.9% growth in the value of transportation equipment. Inventories of durable goods hit their highest level since 1992.

·Final figures for the nation's gross domestic product (GDP) confirmed that the U.S. economy grew at an annual rate of 3% in 2011's final quarter. That was substantially better than Q3's 1.8%. The Bureau of Economic Analysis also said corporate profits rose during the quarter, both pretax (+0.9%) and after-tax (+1.1%), though both increases were less than in the previous quarter.

·Consumer spending was up 0.8% in February, but the increase helped cut the saving rate to 3.7% (the monthly average for the previous year was 4.7%). Higher gas prices accounted for part of the increase, but consumers also spent 0.5% more on other goods and services. Meanwhile, incomes rose only 0.2% for the month.

Eye on the Week Ahead

As a new quarter kicks off, unemployment data will be released Friday, though markets will be closed for the long holiday weekend and won't be able to react until the following week. The Federal Open Market Committee minutes will be watched for the group's thinking about any potential actions after Operation Twist expires. The European Central Bank will review interest rates Thursday, and manufacturing-related data will round out the week.

Key dates and data releases: U.S. manufacturing, construction spending (4/2); Federal Open Market Committee minutes, factory orders, auto sales (4/3); U.S. services sector (4/4); weekly new unemployment claims (4/5); unemployment/payrolls (4/6).

Weekly Commentary: The quantitative easing quandry

Mon, 26 Mar 2012 00:00:00 -0400

A trillion here, a trillion there and, pretty soon, you have a nice market rally.

Through a program called quantitative easing, central banks around the world have flooded the world economy with the equivalent of trillions of U.S. dollars. Quantitative easing involves central banks making large-scale purchases of debt – usually government or mortgage debt – and paying for that debt by creating money out of thin air, according to The New York Times. The hope (and remember, hope is not an investment strategy) is that with more money sloshing around the global economy, interest rates will drop and that will stimulate demand and increase economic growth.

If all goes according to plan, the economy will recover and then the central banks will sell the bonds they purchased and “destroy” the money they received for selling the bonds. When the whole cycle is completed, the net effect is no new money is created, according to the BBC. Optimists say this is an appropriate activity for central banks when the economy faces major hurdles. Pessimists say the central banks are unlikely to turn off the spigot and we could end up with runaway inflation.

And, yes, it’s a big spigot. Just between the U.S. and the United Kingdom, more than 2.5 trillion dollars of new money has been created since 2008, according to Reuters and the BBC.

On top of that, the European Central Bank made more than 1 trillion euro available to banks in the form of cheap three-year loans in just the past few months. The hope (there’s that word again) is that banks will use this money to lend and invest, and, thereby, boost the economy, according to Bloomberg.

All this “easy money” has helped fuel a strong start to many of the world’s stock markets this year. The big question is, will this easy money be the bridge that gets the world economy back on a self-sustaining growth path or is it simply keeping the patient addicted to an unsustainable monetary policy?

Effectively answering questions like this keeps our job very interesting!

Data as of 3/23/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-0.5%	11.1%	6.3%	19.3%	-0.5%	2.1%
DJ Global ex US (Foreign Stocks)	-1.6	11.2	-7.9	16.1	-3.9	5.4
10-year Treasury Note (Yield Only)	2.2	N/A	3.4	2.7	4.6	5.4
Gold (per ounce)	0.4	5.7	15.6	20.6	20.5	18.8
DJ-UBS Commodity Index	-1.5	2.4	-13.6	8.0	-3.1	3.9
DJ Equity All REIT TR Index	-0.4	8.6	13.5	37.3	-0.9	10.3

QUANTITATIVE EASING HAS LED TO A STEALTH “TAX” ON SAVERSin what’s been called “financial repression,” according to Bloomberg. As mentioned above, one goal of quantitative easing is to lower interest rates. On that score, it’s succeeded since interest rates are super low all along the yield curve. Unfortunately, there’s a problem with that – interest rates on many bonds and savings accounts are lower than the rate of inflation. This means savers are losing purchasing power (the stealth tax) while debtors are able to pay back their debts in inflated (i.e., “cheaper”) dollars. Savers are effectively being “financially repressed.”

The public debt of the U.S. is more than $15 trillion, according to the Treasury Department. The annual interest expense on that mountain of debt is more than $400 billion. Not surprisingly, the government wants to keep interest rates low because that will keep their interest payments low. Also, by tolerating some inflation, that debt pile can be paid back in inflated dollars. So, who loses in this deal? It’s the diligent American saver who lives below their means and has to endure very little interest on their savings.

Government policy makers are well aware that their actions are, to some extent, helping debtors at the expense of savers. They also know that in this complicated, global economy, there’s no easy way to make everybody happy and still get us out of the fiscal hole we’re in. Knowing that, we’ll keep doing our best to help you prosper.

Weekly Focus – Just for Fun

If you could spend one year traveling around the U.S. and Canada, how many different bird species do you think you could see? Well, there’s actually an informal competition that does just that and it’s called a Big Year. Last year, a movie starring Steve Martin, Jack Black, and Owen Wilson chronicled the Big Year exploits of three men who tried to set a new Big Year record in 1998. Sure enough, one of the men set a new record of seeing 748 bird species that year. Check out the movie and you’ll never look at birding quite the same.

Market Week, March 26, 2012

Mon, 26 Mar 2012 00:00:00 -0400

The Markets

Reports of weaker manufacturing data from China and Europe helped take the edge off the prior week's strong equities gains. The S&P slipped back below 1,400, but the Dow remained above 13,000 despite being outgunned by its domestic peers, while the Nasdaq continued to lead the pack. Ten-year Treasury yields slipped a bit as investors seemed to have second thoughts about the previous week's flight from quality.

Market/Index	2011 Close	Prior Week	As of 3/23	Week Change	YTD Change*
DJIA	12217.56	13232.62	13080.73	-1.15%	7.06%
Nasdaq	2605.15	3055.26	3067.92	.41%	17.76%
S&P 500	1257.60	1404.17	1397.11	-.50%	11.09%
Russell 2000	740.92	830.18	830.03	.00%	12.03%
Global Dow	1801.60	2033.09	2001.48	-1.55%	11.09%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.31%	2.25%	-6 bps	36 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·Housing starts fell 1.1% in February, and the Commerce Department said most of the decline came in single-family construction, which was down 9.9%. However, housing starts were still 34.7% higher than the previous February. Also, building permits--an indicator of future construction--were up 5.1% for the month and 34.3% from a year ago.

·Purchasing managers in both China and key European countries reported contraction in their manufacturing sectors, raising concerns about what that might mean for the global economy.

·A piece of Apple's pie: The tech giant finally broke down and announced it would start distributing some of its cash stockpile to investors in the form of $2.65 quarterly dividends beginning with the July-September 2012 quarter. It also will launch a three-year stock buyback program in FY 2013.

·Sales of existing homes were 0.9% lower in February than the month before, but still 8.8% higher than a year earlier, according to the National Association of Realtors®. New home sales also dipped in February, though the Commerce Department said the 1.6% decline still left sales 11.4% higher than the previous February. The median new-home sales price rose more than 8% during the month, to $233,700.

·Saudi Arabia suggested it is prepared to try to help offset any negative global economic impact of higher oil prices. Coupled with concerns about slower Chinese economic growth, the announcement helped oil prices ease slightly.

·The Federal Reserve earned slightly less in 2011 than it did the year before. However, the $77.4 billion, mostly from interest on bonds bought as part of its quantitative easing efforts, was still the second-highest amount on record. Roughly $75 billion will be turned over to the U.S. Treasury.

Eye on the Week Ahead

As the U.S. Supreme Court listens to three days of arguments on 2010's health-care reform legislation, data on personal spending and durable goods orders will help flesh out the portrait of the U.S. economy, along with the final gross domestic product numbers for 2011's last quarter. Institutional investors also will be using the week to try to protect or improve their first-quarter results.

Key dates and data releases: home prices (3/27); durable goods orders (3/28); final Q4 GDP (3/29); personal income/spending (3/30).

Watch out for tax changes

Tue, 20 Mar 2012 00:00:00 -0400

A number of significant federal income tax provisions expired at the end of 2011, a fact that might be easily overlooked with so much attention being focused on the "Bush tax cuts" that are still in effect, but scheduled to expire at the end of 2012. And new Medicare-related taxes, effective in 2013, have received surprisingly little coverage. Of course, new legislation could always extend some or all of these provisions, but here's a quick summary of how things stand.

Already expired

· Alternative minimum tax (AMT)-- A series of temporary legislative "patches" over the last several years has prevented a dramatic increase in the number of individuals subject to the AMT--essentially a parallel federal income tax system with its own rates and rules. The last such patch expired at the end of 2011. Unless new legislation is passed, your odds of being caught in the AMT net greatly increase in 2012, because AMT exemption amounts will be significantly lower, and you won't be able to offset the AMT with most nonrefundable personal tax credits.

· Qualified charitable distributions-- This popular provision allowing individuals age 70½ or older to make qualified charitable distributions of up to $100,000 from an IRA directly to a qualified charity expired at the end of 2011. These charitable distributions were excluded from income and counted toward satisfying any required minimum distributions that you would have had to take from your IRA for the year.

· Bonus depreciation and IRC Section 179 expense limits -- If you're a small business owner or self-employed individual, you were allowed a first-year depreciation deduction of 100% of the cost of qualifying property acquired and placed in service during 2011; this "bonus" depreciation drops to 50% for property acquired and placed in service during 2012, and disappears altogether in 2013. For 2011, the maximum amount that you could expense under IRC Section 179 was $500,000; in 2012, the maximum is $139,000; and in 2013, the maximum will be $25,000.

· State and local sales tax-- If you itemize your deductions, 2011 was the last tax year for which you could elect to deduct state and local general sales tax in lieu of state and local income tax.

· Education deductions-- The above-the-line deduction (maximum $4,000 deduction) for qualified higher education expenses and the above-the-line deduction for up to $250 of out-of-pocket classroom expenses paid by education professionals both expired at the end of 2011.

Expiring at the end of 2012

· Federal income tax rates-- After December 31, 2012, we're scheduled to go from six federal tax brackets (10%, 15%, 25%, 28%, 33%, and 35%) to five (15%, 28%, 31%, 36%, and 39.6%).

· Long-term capital gains rate-- Currently, long-term capital gain is generally taxed at a maximum rate of 15%. And, if you're in the 10% or 15% marginal income tax bracket, a special 0% rate generally applies. Starting in 2013, however, the maximum rate on long-term capital gains will generally increase to 20%, with a 10% rate applying to those in the lowest (15%) tax bracket (though slightly lower rates might apply to qualifying property held for five or more years). And while the current lower long-term capital gain rates now apply to qualifying dividends, starting in 2013, dividends will be taxed at ordinary income tax rates.

· 2% payroll tax reduction-- The recently extended 2% reduction in the Social Security portion of the Federal Insurance Contributions Act (FICA) payroll tax expires at the end of 2012.

· Itemized deductions and personal exemptions-- Beginning in 2013, itemized deductions and personal and dependency exemptions will once again be phased out for individuals with high adjusted gross incomes (AGIs).

· Tax credits and deductions-- The earned income tax credit, the child tax credit, and the American Opportunity (Hope) tax credit revert to old, lower limits and (less generous) rules of application. Also gone in 2013 is the ability to deduct interest on student loans after the first 60 months of repayment.

· Marriage penalty relief-- Tax changes that were originally made to address a perceived "marriage penalty" expire at the end of 2012. If you're married and file a joint return with your spouse, you'll see the effect in the form of a reduced 2013 standard deduction amount, as well as in lower 2013 tax bracket thresholds in the tax rate tables (i.e., couples move into higher rate brackets at lower levels of income).

New taxes effective in 2013

Two new Medicare-related taxes created by the health-care reform legislation passed in 2010 take effect in 2013:

· Additional Medicare payroll tax-- The hospital insurance (HI) portion of the payroll tax--commonly referred to as the Medicare portion--increases by 0.9% (from 1.45% to 2.35%) for those with wages exceeding $200,000 ($250,000 for married couples filing jointly, and $125,000 for married individuals filing separately). The rate for self-employed individuals increases from 2.9% to 3.8% on any self-employment income that exceeds the dollar thresholds above.

· Medicare contribution tax on unearned income-- A new 3.8% Medicare contribution tax is imposed on the unearned income of high-income individuals. The tax generally applies to the net investment income of individuals with modified adjusted gross income that exceeds $200,000 ($250,000 for married couples filing jointly, and $125,000 for married individuals filing separately).

Market Week: March 19, 2012

Mon, 19 Mar 2012 00:00:00 -0400

The Markets

Between the relative calm over Greece, the Fed's stand-pat stance, and a tiny bit of easing on the oil front, investors felt comfortable fleeing the low yields of U.S. Treasuries. That sent yields soaring, particularly at the shorter end of the spectrum; as bond prices fell, the benchmark 10-year yield hit a level not seen since last August. Equities benefitted across the board. The S&P 500 had its best week of the year and closed above 1,400 for the first time since May 2008, while the Dow recaptured 13,000 and tied its 2012 weekly record.

Market/Index	2011 Close	Prior Week	As of 3/16	Week Change	YTD Change*
DJIA	12217.56	12922.32	13232.62	2.40%	8.31%
Nasdaq	2605.15	2988.34	3055.26	2.24%	17.28%
S&P 500	1257.60	1370.87	1404.17	2.43%	11.65%
Russell 2000	740.92	817.00	830.18	1.61%	12.05%
Global Dow	1801.60	1979.18	2033.09	2.72%	12.85%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.04%	2.31%	27 bps	42 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

· No news is good news: The Federal Reserve continued to stay the course on both interest rates and its Operation Twist bond purchases. The statement said the Fed expects higher gas prices to boost inflation temporarily but not long term, and that global financial markets have eased but continue to pose significant downside risks.

· Spiking gas prices translated into spiking consumer inflation in February. According to the Bureau of Labor Statistics, most of the 0.4% increase was the result of a 6% jump in gas prices during the month; excluding food and energy, costs were up only 0.1%. Meanwhile, wholesale prices were up 0.4%, with energy once again accounting for the bulk of the increase. However, the 3.3% wholesale increase since February 2011 was the smallest yearly figure since August 2010.

· Dramatically reduced exports helped create China's largest monthly trade deficit in two decades. According to China's General Administration of Customs, a 40% increase in imports helped push February's trade deficit to $31.5 billion, though China's lunar New Year holiday in January also may have affected the monthly figures.

· The Federal Reserve's March surveys of manufacturing in the Philadelphia and New York regions showed continued expansion at a moderate pace. Meanwhile, the Commerce Department said a manufacturing slowdown and lower natural gas extraction kept U.S. industrial production relatively unchanged.

· Fifteen large banks passed the Federal Reserve's stress tests and will be able to increase dividends or institute stock buy-backs, which some have announced plans to do. However, four others--Ally Financial, SunTrust Banks, MetLife, and Citigroup--must resubmit plans that show they have sufficient capital reserves to handle a financial crisis.

· February's retail sales were up 1.1% from the previous month and 6.3% higher than February 2011, according to the Commerce Department. Not surprisingly, gas prices were up the most, but car dealers, clothing and department stores, and building/garden supplies dealers also saw 1%+ increases; building/garden materials and equipment were up 13.8% from the same time last year.

Eye on the Week Ahead

With conditions in place for Greece to make its bond payments on Tuesday, domestic housing data could suggest whether the relatively benign housing statistics of recent months were produced by mild weather or the beginning of a genuine recovery.

Key dates and data releases: housing starts, Greek bond payments due (3/20); home resales (3/21); new home sales, weekly new jobless claims (3/23).

A milestone week on Wall Street

Mon, 19 Mar 2012 00:00:00 -0400

The Markets

It was a busy week on Wall Street with numerous big moves and key milestones hit. Here are a few of the highlights:

• The S&P 500 index and the Dow Jones Industrial Average had their biggest weekly gains since last December.
• The S&P 500 closed at its highest level in nearly four years and the NASDAQ index closed at its highest level in more than 10 years.
• Yields on U.S. government bonds rose substantially on the back of “steady albeit moderate economic expansion,” according to Barron’s.
• Gasoline prices continued to rise and are now up 18 percent since December and pump prices topped $4 a gallon in many parts of the country.
• Employment is looking better as initial claims for U.S. unemployment benefits matched a four-year low.
Sources: Barron’s, The Wall Street Journal, MarketWatch

In addition, the Federal Reserve released a policy statement last week that was well-received by the markets. MarketWatch wrote, “The central bank seems keen on stressing that it will do everything it can to keep rates low and allow the economy time to heal.” Economist Ian Shepherdson commented that the Fed, “is clearly shifting its stance away from blanket gloom to something more realistic.”

And, to add even more bubbly to last week’s rosy news, Apple stock briefly pierced an all-time high of $600 per share on enthusiasm for the new iPad. This isn’t a buy or sell recommendation for the stock, but merely an indication of the market’s recent bullish enthusiasm.

While the market may be in a giving mood now, it can take it away quickly and without ringing a bell. Either way, we remain diligent in doing the best we can on your behalf.

Data as of 3/16/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	2.4%	11.7%	9.8%	23.0%	0.2%	1.9%
DJ Global ex US (Foreign Stocks)	1.5	12.9	-2.2	19.6	-2.8	5.4
10-year Treasury Note (Yield Only)	2.3	N/A	3.2	3.0	4.6	5.3
Gold (per ounce)	-1.8	5.3	18.3	21.7	20.5	19.0
DJ-UBS Commodity Index	0.6	3.9	-7.3	10.8	-2.6	4.0
DJ Equity All REIT TR Index	2.8	9.0	15.3	43.9	-0.3	10.4

WHY IS MONGOLIA ONE OF THE WORLD’S FASTEST GROWING ECONOMIES and is there a lesson to be learned from them? While the U.S. economy languished at a 1.7 percent growth rate in 2011, Mongolia – a landlocked country sandwiched between China and Russia – grew a staggering 17.3 percent, according to The Wall Street Journal.

Blessed with an abundance of natural resources such as copper, gold, and coal, Mongolia’s growth has been turbocharged by foreign investors seeking to exploit its still largely untapped commodities.

Now, here’s where it gets interesting. The Organization for Economic Co-operation and Development (OECD), just released a study that shows there is, “a significant negative relationship between the money countries extract from national resources and the knowledge and skills of their school population.” Another way of saying this is countries with very few natural resources (think Japan or Hong Kong) tend to have highly educated students.

The OECD said countries with few natural resources tend to realize that “the country must live by its knowledge and skills and that these depend on the quality of education.” By contrast, resource rich countries (with some exceptions), tend to take the path of least resistance and generate wealth through digging up their resources. Often, they then fail to convert this wealth “into the human capital that can generate the economic and social outcomes to sustain their future.”

It remains to be seen if Mongolia will learn from history and turn its resource riches into long-term educational dividends.

The U.S. is fortunate because we have do have abundant natural resources. However, there’s always room for improvement in taking the spoils of these resources and converting them into positive economic and social outcomes that can propel us well into the future.

As the OECD wrote, “Knowledge and skills have become the global currency of 21st century economies. But, there is no central bank that prints this currency, you cannot inherit this currency, and you cannot produce it through speculation, you can only develop it through sustained effort and investment by people and for people.”

Weekly Focus – Think About It

“We do not inherit the earth from our ancestors, we borrow it from our children.”

--Native American proverb

Market Week, March 12, 2012

Mon, 12 Mar 2012 00:00:00 -0400

The Markets

After a rough Tuesday, domestic equities nevertheless mostly managed to struggle back to even. Hurt by the year's first triple-digit one-day downdraft, the Dow was left behind as the other three domestic indices managed gains (though the S&P 500's single point barely qualifies). By Friday--the third anniversary of the bull market that began on March 9, 2009--the small-cap Russell 2000 had recaptured just over half of last week's losses.

Market/Index	2011 Close	Prior Week	As of 3/9	Week Change	YTD Change*
DJIA	12217.56	12977.57	12922.32	-.43%	5.77%
Nasdaq	2605.15	2976.19	2988.34	.41%	14.71%
S&P 500	1257.60	1369.63	1370.87	.00%	9.01%
Russell 2000	740.92	802.42	817.00	1.82%	10.27%
Global Dow	1801.60	1999.88	1979.18	-1.04%	9.86%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.99%	2.04%	5 bps	15 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·In the largest sovereign restructuring on record, 85% of private Greek bondholders agreed to "voluntarily" swap their holdings, which allows Greece to invoke collective action clauses that impose the same terms on most of the remaining creditors. The arrangement will cut the country's roughly €200 billion of debt by more than half and facilitate release of bailout funds that will permit Greece to make bond payments due next week. However, the International Swaps and Derivatives Association said the restructuring qualified as a "credit event." That means that financial institutions who sold credit default swaps on bonds will have to pay off on roughly $3 billion worth of contracts with bondholders forced by the collective action clauses to accept the deal.

·The U.S. economy added 227,000 new jobs in February, according to the Bureau of Labor Statistics. It was the third straight month in which job growth has exceeded 200,000; the BLS also said the numbers for the previous two months were higher than previously thought. However, improved employment prospects also prompted more people to try to reenter the workforce, which helped keep the unemployment rate at 8.3%.

·Economic growth declined by 0.3% in both the eurozone and the larger European Union during 2011's last quarter, according to the EU's official statistics agency, though both grew roughly 1.5% last year. European Central Bank President Mario Draghi said the ECB expects the eurozone economy to contract by 0.1% this year, followed by 1.1% growth in 2013. Both the ECB and the Bank of England left their key interest rates unchanged.

·China cut its growth rate target for the first time in eight years, lowering it to 7.5% from 8%; Chinese growth has helped fuel commodities demand in recent years.

·The U.S. services sector saw its 26th consecutive month of expansion in February. According to the Institute for Supply Management, higher inventories and prices as well as increased production were the biggest contributors to the accelerated growth.

·Orders for all manufactured goods fell in January for the first time in three months; according to the Commerce Department, orders were down 1%, with transportation accounting for most of the decline. Meanwhile, labor productivity--a measure of output per hour worked--rose 0.9% in the last quarter of 2011, putting the annual gain at 0.3%.

·The Commerce Department said that more imported cars, capital goods, and food helped push the U.S. trade deficit up 4.3% in January to $52.6 billion.

·The Treasury Department sold an additional $6 billion worth of shares in American International Group as it continues to unwind the investments made by the Troubled Asset Relief Program (TARP); roughly half the amount was purchased by AIG itself.

·Harrisburg, Pennsylvania, which was placed in receivership after attempting to file for bankruptcy last year, said it will miss $5.27 million in municipal bond payments due Thursday.

Eye on the Week Ahead

The Fed's Tuesday announcement will be watched for any discussion of so-called "sterilized" bond purchases in the future that could help keep long-term interest rates low after Operation Twist expires in June. Manufacturing, retail, and inflation data also will give a snapshot of the U.S. economy.

Key dates and data releases: retail sales, Federal Open Market Committee announcement (3/13); import/export prices (3/14); wholesale inflation, international capital flows, Philadelphia Fed/Empire State manufacturing surveys (3/15); consumer inflation, industrial production, quadruple witching options expiration (3/16).

Jobs are starting to help the market

Mon, 12 Mar 2012 00:00:00 -0400

An important key to support the stock market is starting to fall into place.

You may have guessed that key is JOBS. Last week, the Labor Department reported an increase of 227,000 new jobs in February. Over the past six months, 1.2 million new jobs have been created – the highest six-month total since 2006. More jobs could lead to more spending which could boost corporate sales, earnings, and, possibly, stock prices.

While the recent employment numbers look pretty good, leave it to Fed Chairman Ben Bernanke to rain on the parade. In testimony to Congress on February 29, he said, “Notwithstanding the better recent data, the job market remains far from normal: The unemployment rate remains elevated, long-term unemployment is still near record levels, and the number of persons working part-time for economic reasons is very high.”

On a different note, last week marked the three-year anniversary of the March 9, 2009 stock market low. Since the low:

• The S&P 500 index has risen just over 100 percent
• Corporate operating earnings per share have risen just under 100 percent
• Corporate revenue per share has risen a meager 1 percent
Source: Barron’s

So, how can corporate earnings nearly double while corporate revenue barely budges? The answer… cost cutting – and a big chunk of the cost cutting came from whacking jobs. Even though we’ve added over a million jobs in the past six months, we’re still down about six million jobs from the peak, according to Barron’s.

The good news is the recent spurt in job growth may suggest that corporations have about reached the limit of cutting jobs and now have to add staff to support even small gains in revenue growth.

Data as of 3/9/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.1%	9.0%	5.1%	26.5%	-0.5%	1.6%
DJ Global ex US (Foreign Stocks)	-1.2	11.2	-9.7	23.0	-3.3	5.2
10-year Treasury Note (Yield Only)	2.0	N/A	3.5	2.9	4.6	5.3
Gold (per ounce)	-1.1	7.2	17.9	22.2	20.9	19.2
DJ-UBS Commodity Index	-1.6	3.3	-12.8	11.5	-2.8	4.1
DJ Equity All REIT TR Index	0.2	6.0	8.3	46.8	-1.1	10.2

THE AGGREGATE NET WORTH OF U.S. HOUSEHOLDS WAS $58.5 TRILLIONat the end of last year, according to data from the Federal Reserve Flow of Funds report. To put that number in context, household net worth peaked at $66.8 trillion in the third quarter of 2007. It hit a five-year low of $50.5 trillion in the first quarter of 2009 – the same quarter as the bear market low, according to Bloomberg.

The aggregate net worth of U.S. households is still $8.3 trillion below the all-time high set back in 2007.

Net worth is the difference between total assets and total liabilities. Investment holdings and real estate typically account for the bulk of households’ assets so any change in the financial or real estate markets can cause big swings in net worth.

Parsing the data a bit further shows these two interesting numbers:

1.Household debt as a percent of disposable income fell to 113 percent at the end of last year.This ratio peaked at 130 percent in 2007 and has been steadily declining. It’s good to see this number drop because it means households are deleveraging and have more income to support their debt level, according to The Wall Street Journal.

2.Debt payments as a percent of households' after-tax income (the debt-service ratio), fell to a 17-year low of 11.1 percent.Again, a lower number is better because this means consumers are allocating less of their monthly income to pay off debts. With more money left over, they can spend it on things that could propel the economy.

Some of the decline in these debt ratios may be due to the debts being written off as opposed to consumers actually having the money to pay them off. Either way, household balance sheets seem to be improving.

We don’t want to get too caught up in numbers here because that can distract from the key point which is this – consumers are deleveraging, they’re spending less of their income paying off debts, and that may bode well for the economy.

Weekly Focus – How to Innovate

Some of the most innovative new ideas are developed by simply connecting an existing idea to something new says author Jonah Lehrer. For example, the Wright Brothers were bicycle manufacturers whose first plane was akin to a bicycle with wings. Johannes Gutenberg used his knowledge of wine presses to create the printing press. And, more recently, the founders of Google took the existing idea of ranking the importance of academic articles by the number of citations and applied it to their search engine algorithm. The result – web pages that have lots of other web pages linking to it tend to score high in a Google search.

The next time you need to come up with a creative solution to a problem, try taking an idea from an unrelated field and apply it to your situation. Who knows, it might become the next billion-dollar idea!

Financial advisor Greg Womack receives national health care recognition

Fri, 09 Mar 2012 00:00:00 -0500

According to the Bureau of Labor Statistics, there are approximately 700,000 physiciansin the United States who work in excess of 60 hours per week. While their earning potential is the highest among anyprofession in the US, a blizzard of government regulations and a host of clinical and economic issues leave little time for adoctor to manage their professional and personal lives.

In response, an elite group of professionals is emerging as specialists to the medical community. In recognition ofhis work with health care executives and physicians, Greg Womack, with Womack Investment Advisers, has beennamed an MD Preferred Financial Advisor. Each year, US Medical Specialties, Inc., a national medical consulting firm,recognizes excellence in service to the medical community in a number of disciplines including real estate, mortgagelending, insurance, accounting, banking, financial and legal services. The goals of the MD Preferred Program for financialadvisors include identifying, acknowledging and promoting professionals who provide service excellence to the medicalcommunity.

The program provides physicians with an online resource center where they can find profiles of “doctor friendly”professionals who are committed to providing a quality service experience. “Doctors are very busy professionals,”observed Michael O’Malley, Project Manager of MD Preferred Services. “When it comes to finding a service professionalthat specializes in serving physicians, they appreciate an organization that has done the research for them and has pulleda team together to make their lives easier.”

“We are proud of the recognition we have received. In an environment of critical physician shortage, we understandthat most physicians considering a career in our community will make their decision based primarily on life style issues,”Mr. Womack observed. We are always ready to meet with area physician groups to demonstrate how a comprehensivefinancial plan can help physicians chart a course through today’s complex tax landscape, provide for their children’seducation and assure a comfortable and secure retirement.”

There's Still Time to Contribute to an IRA for 2011

Wed, 07 Mar 2012 00:00:00 -0500

There's still time to make a regular IRA contribution for 2011! You have until your tax return due date (not including extensions) to contribute up to $5,000 for 2011 ($6,000 if you were age 50 by December 31, 2011). For most taxpayers, the contribution deadline for 2011 is April 17, 2011. Normally, your tax return must be filed by April 15. However, the IRS has extended the deadline to April 17 this year because April 15 is a Sunday, and April 16 is a holiday in Washington D.C. (Emancipation Day).

You can contribute to a traditional IRA, a Roth IRA, or both, as long as your total contributions don't exceed the annual limit. You may also be able to contribute to an IRA for your spouse for 2011, even if your spouse didn't have any 2011 income.

Traditional IRA

You can contribute to a traditional IRA for 2011 if you had taxable compensation and you were not age 70½ by December 31, 2011. However, if you or your spouse was covered by an employer-sponsored retirement plan in 2011, then your ability to deduct your contributions depends on your filing status and whether your modified adjusted gross income (MAGI) is within prescribed limits (see chart below). Even if you can't deduct your traditional IRA contribution, you can always make nondeductible (after-tax) contributions to a traditional IRA, regardless of your income level. However, in most cases, if you're eligible, you'll be better off contributing to a Roth IRA instead of making nondeductible contributions to a traditional IRA.

2011 income phaseout ranges for determining deductibility of traditional IRA contributions:
1. Covered by an employer-sponsored plan and filing as:
Single/Head of household	$56,000 - $66,000
Married filing jointly	$90,000 - $110,000
Married filing separately	$0 - $10,000
2. Not covered by an employer-sponsored retirement plan, but filing joint return with a spouse who is covered by a plan	$169,000 - $179,000

Roth IRA

You can contribute to a Roth IRA if your MAGI is within certain dollar limits (even if you're 70½ or older). For 2011, if you file your federal tax return as single or head of household, you can make a full Roth contribution if your income is $107,000 or less. Your maximum contribution is phased out if your income is between $107,000 and $122,000, and you can't contribute at all if your income is $122,000 or more. Similarly, if you're married and file a joint federal tax return, you can make a full Roth contribution if your income is $169,000 or less. Your contribution is phased out if your income is between $169,000 and $179,000, and you can't contribute at all if your income is $179,000 or more. And if you're married filing separately, your contribution phases out with any income over $0, and you can't contribute at all if your income is $10,000 or more.

Even if you can't make an annual contribution to a Roth IRA because of the income limits, there's an easy workaround. If you haven't yet reached age 70½, you can simply make a nondeductible contribution to a traditional IRA, and then immediately convert that traditional IRA to a Roth IRA. (Keep in mind, however, that you'll need to aggregate all traditional IRAs and SEP/SIMPLE IRAs you own (other than IRAs you've inherited) when you calculate the taxable portion of your conversion.)

Finally, keep in mind that if you make a contribution to a Roth IRA for 2011--no matter how small--by your tax return due date, and this is your first Roth IRA contribution, your five-year holding period for identifying qualified distributions from all your Roth IRAs (other than inherited accounts) will start on January 1, 2011.

Womack: Market off to a great start in 2012

Tue, 06 Mar 2012 00:00:00 -0500

The Markets

It may not feel like it, but the U.S. stock market is off to its best start to the year since 1991, according to CNBC.

With a rise of 8.9 percent for the year, the S&P 500 index has now risen eight of the last nine weeks. Some analysts cite improving economic data, solid corporate earnings, and a stronger job picture for the bubbling stock market, according to Reuters.

But, before we get too carried away, the S&P 500 index would still need to rise about 15 percent to match its all-time record high of 1,565 hit back on October 9, 2007, according to The Wall Street Journal. The gap is not as wide if you reinvested dividends since October 2007. On that score, the S&P would be just 3.5 percent below its all-time high.

Data as of 3/2/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.3%	8.9%	3.8%	25.0%	-0.3%	1.7%
DJ Global ex US (Foreign Stocks)	-0.2	12.6	-8.5	222.5	-2.8	5.6
10-year Treasury Note (Yield Only)	2.0	N/A	3.5	2.9	4.5	5.0
Gold (per ounce)	-4.0	8.4	18.9	22.1	21.2	19.1
DJ-UBS Commodity Index	-1.1	5.0	-12.0	13.1	-2.6	4.8
DJ Equity All REIT TR Index	-0.7	5.8	9.3	45.4	-1.0	10.3

CAN WE LEARN FROM OTHER PEOPLE’S WISDOM?The answer to that question is yes since no one of us is as smart as all of us. With that in mind, here are eight tidbits of investment advice from Jeremy Grantham, the co-founder and chief investment strategist of GMO, a $97 billion global investment management firm.

1.Believe in history.While past performance is no guarantee of future results, we should pay heed to history and avoid using the words “this time is different.” As the old Wall Street saw goes, “history doesn’t repeat itself, but it rhymes.”

2.“Neither a lender nor a borrower be.”Don’t borrow money to invest. If you do, “it will interfere with your survivability.”

3.Don’t put all of your treasure in one boat.This is investing 101 and it’s a basic tenet of sound investment practices.

4.Be patient and focus on the long term.Another piece of sound advice that is easier said than done – but it is well worth striving toward.

5.Try to contain natural optimism.While optimism may be a good survival characteristic, it can get in the way of good investment results. How? If you’re too optimistic, you may dismiss bearish news and go down with a sinking ship while those who had their eyes and ears open reached out for the lifeboat.

6.But on rare occasions, try hard to be brave.There may be times when it makes sense to be bolder than normal. If the odds look stacked in your favor, Grantham says it might make sense to be brave.

7.Resist the crowd: cherish numbers only.It’s easy to get caught up in the euphoria of a crowd – that’s how manias get rolling. But, as an investor, you have to put your analytical hat on, ignore the crowd, and sharpen your pencil (or calculator or computer!).

8.“This above all: to thine own self be true.”In order to succeed as an investor Grantham says, “It is utterly imperative that you know your limitations as well as your strengths and weaknesses. If you can be patient and ignore the crowd, you will likely win. But to imagine you can, and to then adopt a flawed approach that allows you to be seduced or intimidated by the crowd into jumping in late or getting out early is to guarantee a pure disaster. You must know your pain and patience thresholds accurately and not play over your head.”

While there are many top 10 lists of how to be a better investor, these eight from Grantham are a nice place to start.

Weekly Focus – Think About It

“Risks must be taken because the greatest hazard in life is to risk nothing.”
--Leo Buscaglia, Ph.D., professor, New York Times bestselling author

Market Week: March 5, 2012

Tue, 06 Mar 2012 00:00:00 -0500

The Markets

The small caps of the Russell 2000 took it on the chin last week, while the other indices more or less held their own. The Dow finally managed to close above 13,000, which it hasn't done since May 2008, but couldn't hang on through the end of the week. Meanwhile, the Nasdaq continued to outpace its domestic peers.

Market/Index	2011 Close	Prior Week	As of 3/2	Week Change	YTD Change*
DJIA	12217.56	12982.95	12977.57	-.04%	6.22%
Nasdaq	2605.15	2963.75	2976.19	.42%	14.24%
S&P 500	1257.60	1365.74	1369.63	.28%	8.91%
Russell 2000	740.92	826.92	802.42	-2.96%	8.30%
Global Dow	1801.60	2000.96	1999.88	-.05%	11.01%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.98%	1.99%	1 bps	10 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·The U.S. economy grew at an annual rate of 3% in Q4 2011, a more rapid pace than the 2.8% previously estimated. According to the Bureau of Economic Analysis, inventories, consumer spending, and commercial construction were major contributors to the increase.

·European Union leaders (other than those of the United Kingdom and the Czech Republic) signed a treaty intended to impose greater fiscal discipline in the EU. Meanwhile, the German parliament voted to support the second Greek bailout and eurozone finance ministers agreed to release new funds for the permanent European Stability Mechanism that will handle financial assistance efforts. Also, European banks refinanced almost €530 billion worth of loans as part of the European Central Bank's second long-term refinancing operation (LTRO) to maintain liquidity in the financial system.

·Orders for durable goods such as autos, appliances, and furniture fell 4% (3.2% if transportation is excluded) in January after three straight monthly increases. The Department of Commerce said transportation equipment, especially orders for commercial aircraft, fell the most (-19%). However, declines also were seen in computers and heavy machinery, both down more than 10%, while orders for cars were up 0.9%.

·U.S. manufacturing continued to expand in February for the 31st straight month, though at a slightly slower pace. The Institute for Supply Management said new orders, production, and employment also grew.

·Recent increases in housing sales didn't translate into higher prices in December. The S&P/Case-Shiller national index showed home prices at their lowest level since mid-2006; the index was down almost 34% from its Q2 2006 peak.

Eye on the Week Ahead

Global markets will watch to see whether at least 30% of Greece's bondholders formally accept its bond swap offer on Thursday. U.S. unemployment numbers and eurozone GDP data also will be of interest.

Key dates and data releases: factory orders, U.S. services sector (3/5); labor productivity/costs (3/7); unemployment/payrolls, balance of trade (3/9).

Weekly Commentary

Wed, 29 Feb 2012 00:00:00 -0500

The Markets

It’s been rather calm in the stock market lately.

For the past couple years, the euro zone debt problems and the “will we or won’t we relapse into a recession” worry have been on center stage. Now, Europe’s immediate liquidity issue has been patched and the U.S. economy seems to be on firmer footing. Accordingly, the stock market has responded to these developments and, last week, the S&P 500 index closed at its highest level in more than 3½ years, according to The New York Times.

Fear has declined, too. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, ended last week at about 17. That’s down from 48 reached last August and well below the 22-year average of 20.6, according to CNBC and Bloomberg. A low VIX suggests investors are less fearful of near-term market volatility.

Are there any worries on the horizon that could upset this calm?

Oil prices are one thing to keep an eye on. They rose 6 percent last week and closed at nearly $110 per barrel. Geopolitical tensions in the Middle East contributed to the rise as Iran is reportedly within sight of creating a nuclear bomb. That, of course, creates major headaches not only for the Middle East, but for the world in general.

On top of that, “There's also an oil pipeline dispute between Sudan and South Sudan in northeastern Africa; unrest in Syria, Yemen, and Nigeria; varying levels of tribal infighting in Iraq and Libya; and the possibility of leadership issues in Venezuela, where the president is undergoing his third surgery for an undisclosed type of cancer,” according to The Milwaukee Journal Sentinel.

So far, the stock market hasn’t flinched in the face of these flashpoints. However, an unexpected turn for the worse in any of these areas could trip the markets. And, since the S&P 500 index has more than doubled in value since the March 9, 2009 low, according to The New York Times, it might not take much to trigger a market correction.

As a financial advisor, we know that there is always something to worry about. Frankly, it’s our job to worry about what could go wrong so you don’t have to. The good news is, as a country we always seem to find a way to overcome whatever obstacle is thrown our way.

Data as of 2/24/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.3%	8.6%	3.5%	20.9%	-1.2%	2.1%
DJ Global ex US (Foreign Stocks)	1.4	12.8	-6.8	20.7	-3.8	6.3
10-year Treasury Note (Yield Only)	2.0	N/A	3.4	2.8	4.6	4.9
Gold (per ounce)	3.2	12.9	25.9	21.8	21.0	19.8
DJ-UBS Commodity Index	2.5	6.2	-8.0	12.9	-3.0	5.3
DJ Equity All REIT TR Index	-0.7	6.6	10.4	37.8	-1.8	10.6

INVESTORS TEND TO GET CAUGHT UP IN THE DAY-TO-DAY NOISEof the financial markets even though the markets often move in long secular cycles that can last more than a decade. For example, let’s look at interest rates.

At the end of 1964, the 10-year U.S. Treasury note yielded 4.2 percent. Over the following nearly 17 years, the yield rose until it peaked at 15.8 percent in September 1981, according to Bloomberg. During that span, the yield fluctuated significantly (the noise), but the long-term secular trend was a rising interest rate environment.

Since that peak in September 1981, the yield on the 10-year Treasury has been in a more than 30-year long-term secular decline. In fact, the yield was a slim 2.0 percent last week – well below 1964’s 4.2 percent. This decline was interrupted by numerous interest rate increases along the way (the noise), but the long-term trend was a decline in rates.

Turning to the stock market, it also exhibited significant moves during these two interest rate cycles.

From the end of 1964 to the end of 1981, the Dow Jones Industrial Average rose from 874 to 875. That’s no misprint. Over that 17-year period, the Dow rose exactly 1 point. In other words, it went nowhere. However, during that period, it rose as high as 1,052 and dropped as low as 578, according to Bloomberg. Here, the long-term secular trend in the equity market was to move sideways with lots of noise in between.

Fast forward to 1982. From its low in August that year, the Dow Jones Industrial Average took off on a 17+ year secular bull market that saw the Dow rise 15-fold, according to Bloomberg. And, yes, there was lots of noise during that 17-year bull run including the 22 percent decline – in one day on Black Monday – October 19, 1987.

Here’s the takeaway – markets are very noisy. While we monitor what happens in the short-term, we want you to focus on the long-term. Day-to-day fluctuations may top the headlines, but it’s the long-term trends that you should pay attention to.

Weekly Focus – Think About It

“Only put off until tomorrow what you are willing to die having left undone.”
--Pablo Picasso, Spanish painter, draughtsman, and sculptor

Greg Womack webinar: Forecast 2012

Mon, 27 Feb 2012 00:00:00 -0500

Did you miss Greg Womack's financial forecast for 2012?

You can watch his webinar by clicking here.

Market Week, Feb. 27, 2012

Mon, 27 Feb 2012 00:00:00 -0500

The Markets

The S&P 500 followed the Dow in hitting a year-long high. Meanwhile, the Dow crept over 13,000 repeatedly (though it could never quite manage to hold on to that level through the closing bell) and the Nasdaq saw its highest close since 2000. Concern over tensions with Iran helped send oil to $109 a barrel.

Market/Index	2011 Close	Prior Week	As of 2/24	Week Change	YTD Change*
DJIA	12217.56	12949.87	12982.95	.26%	6.26%
Nasdaq	2605.15	2951.78	2963.75	.41%	13.77%
S&P 500	1257.60	1361.23	1365.74	.33%	8.6%
Russell 2000	740.92	828.68	826.92	-.21%	11.61%
Global Dow	1801.60	1989.39	2000.96	.58%	11.07%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.01%	1.98%	-3 bps	9 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·The National Association of Realtors® said home resales in January saw a strong increase of 4.3%. That's the third increase in the past four months, and it put sales 0.7% ahead of the same time last year. However, the $154,700 median sales price was down 2% from last year's $157,900.

·Sales of new homes were down in January for the first time in five months. However, according to the Commerce Department, the 0.9% decline still left sales 3.5% higher than the year before, though the median price of $217,000 was down 9.6% from January 2011.

·President Obama proposed a menu of sweeping changes to the corporate tax code. Though any reform legislation would have to go through Congress, options outlined in the proposal include cutting the top corporate tax rate from 35% to 28% (a 25% effective tax rate for U.S. manufacturing companies), eliminating certain deductions and tax credits for the oil and gas industry and making clean-energy incentives permanent, simplifying tax filing for small businesses and expanding their ability to expense investments, taxing carried interest as ordinary income, instituting a minimum tax on overseas profits, revamping taxation of pass-through entities, and reducing the deductibility of corporate interest payments.

·Officials of the G-20 nations postponed until April a decision on committing additional resources to the International Monetary Fund, saying they want to gauge the progress of rescue efforts within the eurozone itself.

·The European Commission's economic arm predicted stagnating growth in the EU and a mild (-0.3%) recession for the eurozone this year.

Eye on the Week Ahead

Domestic economic data on gross domestic product, manufacturing, personal income, and housing will shed light on the likelihood of continued economic growth, while oil will be watched for its potential impact on gas prices and the recovery. Also, Germany's governing body is scheduled to vote on the country's participation in the new bailout, and eurozone leaders will meet at week's end to review whether to increase funding for the joint lending facilities set up to deal with the sovereign debt crisis.

Key dates and data releases: pending home sales (2/27); durable goods orders, home prices, consumer confidence (2/28); second estimate of Q4 gross domestic product, Fed beige book release (2/29); auto sales, personal income/spending, U.S. manufacturing, construction spending (3/1).

Womack: Gross vs. Buffett; Apple vs. Cisco

Thu, 23 Feb 2012 00:00:00 -0500

Who should you believe, Warren Buffett or Bill Gross?

Buffett and Gross are generally recognized as two of the world’s greatest investors. Buffett made his name in equities while Gross made his name in bonds as the head of Pimco, a trillion-dollar money management company. Both have outstanding multi-decade track records and both are billionaires.

Yet, today, they disagree on the merits of investing in “currency-based investments” such as money-market funds, bonds, mortgages, bank deposits, and other instruments.

Buffett says these investments “are among the most dangerous of assets. Their beta may be zero, but their risk is huge.” Further, he says, “Right now bonds should come with a warning label,” according to a February 9Fortunemagazine article.

His beef with currency-based investments is they do not protect you from the risk of inflation. You may get your principal back plus interest, but, in times of high inflation, your “real” return may not keep up with inflation and you could lose purchasing power.

Gross, on the other hand, has piled into bonds in a big way.

After dumping all of his U.S. government debt securities in early 2010, Gross has steadily built it back up according to Bloomberg.

Gross favors government securities in the 5- to 7-year maturity range because of the Federal Reserve’s pledge to keep short-term rates low.

Okay, how do you reconcile the divergent views of two outstanding investors? Quite likely it’s a matter of timing. Buffett is probably looking at a 7- to 10-year time horizon and, in that scenario, bonds might lose purchasing power and could experience capital losses if interest rates rise and bond prices decline.

Gross, though, is probably thinking shorter term. With the Fed’s pledge to keep interest rates low for the next couple years and the economy still stuck in slow motion, the risk of bond prices declining and inflation rising rapidly in the short term may be manageable.

Bottom line, it’s not just your outlook that matters, it’s also important to know thetimeframefor your outlook.

Data as of 2/10/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-0.2%	6.8%	1.0%	17.5%	-1.3%	1.9%
DJ Global ex US (Foreign Stocks)	-0.4	9.6	-9.9	14.8	-3.7	5.9
10-year Treasury Note (Yield Only)	2.0	N/A	3.7	2.9	4.8	4.9
Gold (per ounce)	-1.3	8.7	26.5	23.4	20.8	19.1
DJ-UBS Commodity Index	-0.4	3.0	-11.3	9.4	-2.4	4.8
DJ Equity All REIT TR Index	-2.1	6.7	9.0	33.6	-1.9	10.8

What ifthe keepers of the Dow Jones Industrial Average added Apple to the index in 2009 instead of Cisco Systems? This is not just a hypothetical exercise; rather, it makes an important point about using indices to measure overall market performance.

In June 2009, General Motors and Citigroup were removed from the Dow 30 average and replaced by Cisco and Travelers Cos, according to Bloomberg. At the time, Cisco was trading at about $19.50 per share. Last week, Cisco traded at about $20.00 per share – essentially no change in nearly three years. By contrast, Apple was trading at about $143 per share in June 2009 and closed last week near $500 per share.

Unlike most other market indexes, the Dow Jones Industrial Average is a “price weighted” index, which means stocks with a higher price (e.g., Apple) have greater impact than lower-priced stocks (e.g., Cisco).

So, taking a look at the woulda, shoulda, coulda, Bespoke Investment Group recalculated where the Dow would be if Apple was added to the index in 2009 instead of Cisco. They discovered that instead of the Dow being in the 12,800 range last week, it hypothetically would have been near 14,600 – an all-time record high.

Notice how one stock could have made nearly a 2,000 point difference in the Dow index in less than three years. Of course, the reverse is also true. A stock could have been added to the Dow in 2009 and gone down the last couple years and taken the Dow down with it.

Here’s the point. We tend to think of indexes are representing “the market,” but, in reality, they represent thekeepers of the indexes representation of the market.There’s human intervention in some of these indexes and that could greatly influence their performance.

In the end, the only index that matters is your index – the one that measures your progress toward reaching your goals. That’s the index we try to beat.

Weekly Focus – Think About It

“One must maintain a little bit of summer, even in the middle of winter.”
-- Henry David Thoreau, author, poet, philosopher

Market Week, Feb. 21, 2012

Tue, 21 Feb 2012 00:00:00 -0500

The Markets

Equities returned to their winning ways. The Dow hit a level it hasn't seen since May 2008, and the S&P 500 last saw its current 1361 in May of last year. A slight loss on Friday nudged the Nasdaq away from the year-long high it hit on Thursday, while the Russell 2000 had the best week of the group. Renewed hope for an agreement on a second bailout package helped lift the Global Dow. The 10-year Treasury yield rose slightly, while oil prices once again rose over $100 a barrel.

Market/Index	2011 Close	Prior Week	As of 2/20	Week Change	YTD Change*
DJIA	12217.56	12801.23	12949.87	1.16%	5.99%
Nasdaq	2605.15	2903.88	2951.78	1.65%	13.31%
S&P 500	1257.60	1342.64	1361.23	1.38%	8.24%
Russell 2000	740.92	813.33	828.68	1.89%	11.84%
Global Dow	1801.60	1964.70	1989.39	1.26%	10.42%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.96%	2.01%	5 bps	12 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·Congress agreed to extend the reduction in payroll taxes, which had been scheduled to revert on March 1 to 6.2% (12.4% for the self-employed), through the end of 2012. The legislation also will extend long-term unemployment benefits for up to 99 weeks, but will gradually reduce the duration of benefits over the year to 73 weeks. The provisions will be offset in part by, among other things, requiring federal workers hired starting next year to increase contributions to their pension system, and auctioning broadcast spectrum bandwidth to permit expansion of broadband wireless services.

·After delaying a decision last week, eurozone finance ministers approved €130 billion in financial assistance for Greece, which the country needs in order to redeem €14.5 billion worth of bonds on March 20. Under the agreement, private bondholders will agree to swap their bonds for ones worth 53.5% less, which will help Greece reduce its debt from the current 164% of its gross domestic product to 120.5% by 2020. The International Monetary Fund will review the proposal in early March to determine its contribution to the bailout.

·Guilt by association: Moody's not only cut bond ratings for several European countries, but issued a negative outlook for Aaa-rated France, Britain, and Austria because of their exposure to potential fallout from other European countries. Moody's said it downgraded Spain's rating by two notches, putting it even with Italy at A3, because of skepticism that Spain would be able to meet its deficit reduction target. Italy, Portugal, and three much smaller countries were downgraded by one notch. Meanwhile, French and Belgian securities regulators lifted a ban imposed last August on short-selling of financial shares.

·Wholesale inflation rose 1% in January; the Bureau of Labor Statistics said the 4.1% year-over-year increase was the smallest since the previous January. The average cost of raw materials was up 1.5% for the month. Meanwhile, consumer inflation rose 0.2% during the month; the broad-based increase put the 12-month inflation rate at 2.9%.

·January's retail sales were up a modest 0.4% last month, according to the Commerce Department; that's 5.8% higher than last January. Unlike the previous month, general merchandise accounted for most of the increase, while auto sales, which had a big month in December, were down.

·U.S. manufacturing continued to improve in January. The Federal Reserve's Empire State manufacturing survey hit 19.5, its highest level in over a year, and the Philly Fed index was at its highest level (10.2) since October.

·The Conference Board's index of leading economic indicators rose for the fourth consecutive month. Improving financial and credit indicators and higher average workweek levels contributed to a 0.4% increase that pushed the index to 94.9.

·Housing starts were up 1.5% in January, and were 9.9% higher than last January. According to the Commerce Department, most of the activity was in multifamily building; single-family starts fell 1%. Residential building permits were 0.7% above December's level and a whopping 19% higher than the previous January. Meanwhile, the Mortgage Bankers Association said the rate of new delinquencies and foreclosure filings in 2011's last quarter fell to levels not seen in the last three years. According to the MBA, 7.6% of all mortgages were either delinquent or behind on at least one payment; that's lower than Q4 2010's 8.25%.

·Swiss police confiscated $6 trillion worth of counterfeit U.S. Treasury bonds from three Zurich safe-deposit boxes as part of an Italian police investigation. If real, they would represent roughly 40% of the total U.S. national debt.

Eye on the Week Ahead

Investors will get their first chance to assess the potential impact of the decision on the Greek bailout. German economic data also could receive attention, while housing data will dominate a week that's light on domestic economic news.

Key dates and data releases: home resales (2/22); new home sales, consumer sentiment (2/24).

Weekly Commentary: What about the Wall of Worry?

Tue, 21 Feb 2012 00:00:00 -0500

The Markets

Valentine’s Day is over, but there’s still a “whole lotta love” swirling around the stock market these days.

The Dow Jones Industrial Average closed last week at its highest level since May 2008 while the S&P 500 is knocking on the door of its highest close in almost four years, according to The Wall Street Journal. The gains were driven by optimism that Greece will get another bailout and better-than-estimated data on jobless claims, manufacturing, and housing, according to Bloomberg.

Even though the market has been rising, potential party spoilers abound.

You may have noticed the last time you filled your car gas prices are on the rise again. In fact, CNBC reported gas prices are at a record high for this time of year. The report says gas prices could hit an all-time record high this spring.

Gas prices aren’t the only thing on the rise. Tensions in Iran and the Middle East are stoking a rise in oil prices. Together, higher gas and oil prices could take a bite out of consumer and corporate wallets.

Over the weekend in Asia, China announced a change in its banking system reserve ratio in an effort to spur lending and economic growth. This monetary easing comes on the heels of a report that shows housing prices declined in 47 out of 70 major Chinese cities in January. Housing has been a strong economic engine for China for years and any slowdown there could cause problems.

Across the pond, new numbers show that Italy, Greece, Portugal, the Netherlands, and Belgium are now officially in recession, according to The Wall Street Journal. Even mighty Germany saw its economy slightly contract in the fourth quarter of 2011 compared to the third quarter.

Despite these negatives, the market seems to be climbing the proverbial “wall of worry.” Whether it will scale this wall and stay on top or fail to reach the top and retreat remains to be seen.

Data as of 2/17/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	1.4%	8.2%	1.4%	19.9%	-1.3%	2.3%
DJ Global ex US (Foreign Stocks)	1.5	11.3	-10.2	18.1	-4.0	6.0
10-year Treasury Note (Yield Only)	2.0	N/A	3.6	2.7	4.7	4.9
Gold (per ounce)	0.7	9.4	25.0	21.2	20.8	19.2
DJ-UBS Commodity Index	0.6	3.6	-10.6	12.1	-2.7	4.9
DJ Equity All REIT TR Index	0.5	7.3	8.8	39.8	-2.2	10.8

HOW MUCH INCOME WOULD YOU NEEDto feel “rich?” Gallup recently conducted a poll and discovered that the median income needed by Americans to feel rich was $150,000. That is three times the roughly $50,000 median annual household income of Americans.

Probing a little deeper, the survey results revealed the following interesting points:

1) 15 percent of the respondents said they needed to earn $1 million or more to feel rich while 30 percent said $100,000 or less would make them feel rich.

2) Women said they needed $100,000 per year to feel rich while men needed $150,000.

3) College graduates needed $200,000 to feel rich while non-college graduates needed $100,000.

In a separate question, Gallup asked Americans how much net worth they would need to feel rich. The median response was $1 million.

So there you have it – to feel rich in America the average American needs either $150,000 in annual income or $1 million in net worth.

Now, let’s contrast that with our tax laws. The highest marginal tax rate starts when single filers or married couples filing jointly reach $379,150 in taxable income. That’s quite a bit above the median $150,000 number that was reported by Americans to make them feel rich.

According to Gallup, “The question of the point at which someone becomes rich certainly has policy implications in the United States. Gallup finds Americans now about evenly divided on whether the rich, broadly speaking, should be heavily taxed.”

You can expect to hear a lot more about tax policy during the upcoming elections later this year.

All you need to know about new 401(k) plan disclosure rules

Tue, 14 Feb 2012 00:00:00 -0500

As 401(k) plans have become more popular, plan participants have become increasingly responsible for making their own retirement savings decisions. The Department of Labor (DOL) has become concerned that participants in self-directed 401(k) plans (those that allow participants to direct the investment of their own accounts) might not have access to, or might not be considering, information critical to making informed decisions about the management of their accounts--particularly information on investment choices, fees, and expenses.

As a result, in October 2010, the DOL issued new regulations that require self-directed 401(k) plans to provide detailed information to participants about the plan and its investments, on a regular and periodic basis, so that participants can make informed investment decisions. Some information must be provided on an annual basis, and some information must be provided quarterly. For most plans, the initial annual disclosure must be furnished no later than August 30, 2012. The first quarterly statement must be furnished no later than November 14, 2012 (for July through September).

What's changing?

If you're currently participating in a 401(k) plan, chances are you're already receiving similar information as a result of an earlier set of DOL regulations. However, employer compliance with the older regulations was voluntary, whereas the new disclosure rules are mandatory for all self-directed 401(k) plans. Even participants in plans that previously complied with the earlier disclosure rules will see some changes when the new regulations take effect. For one, you'll receive more detailed information about investment fees and expenses. Another change is that plan investment information must be provided in a chart, so that you'll be better able to compare investment alternatives. And plans will no longer be required to automatically provide a prospectus, although one must be provided if you request it.

Which plans do the new rules apply to?

These new disclosure rules apply to 401(k) plans and other plans that allow participants to direct their own investments, but they do not apply to IRAs, SEPs, or SIMPLE IRA plans. They also do not apply to plans that are not covered by the Employee Retirement Income Security Act of 1974 (ERISA), including governmental plans, owner-only plans, certain 403(b) plans, and certain church plans.

Market Week, Feb. 13, 2012

Mon, 13 Feb 2012 00:00:00 -0500

The Markets

Concerns about whether Greece would fulfill the conditions necessary to obtain a second bailout brought on the first down week of 2012 for the domestic equities indices (except for the Dow, which had a down week in late January). Meanwhile, 10-year Treasury yields remained relatively stable as investors continued to seek out bonds.

Market/Index	2011 Close	Prior Week	As of 2/10	Week Change	YTD Change*
DJIA	12217.56	12862.23	12801.23	-.47%	4.78%
Nasdaq	2605.15	2905.66	2903.88	-.00%	11.47%
S&P 500	1257.60	1344.90	1342.64	-.17%	6.76%
Russell 2000	740.92	831.11	813.33	-2.14%	9.77%
Global Dow	1801.60	1976.98	1964.70	-.63%	9.05%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.97%	1.96%	-1 bps	7 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·Greece's coalition government reached an agreement on austerity measures needed to receive the second bailout from its peers, and at the insistence of the eurozone's finance ministers, the agreement was approved by the full Greek parliament. To protest the measures, Greece's unions called a 48-hour strike over the weekend and demonstrators took to the streets.

·Five major banks will pay $26 billion to settle a suit by 49 state attorneys general and federal officials over faulty foreclosure procedures, and nine other financial institutions are also in negotiations over the same issue. According to the agreement, $17 billion will be used over the next three years to assist homeowners, and 60% of that amount will help reduce principal on qualifying mortgages.

·According to the Commerce Department, higher imports of autos, auto parts, and industrial machinery helped push the U.S. trade deficit to $48.8 billion, the highest level since June. Imports rose 1.3% while exports were up 0.7%

Eye on the Week Ahead

European economic growth data and Wednesday's meeting of eurozone finance ministers, when final approval of the newest Greek bailout is expected in the wake of last weekend's parliamentary vote, will be a focus of attention. Domestic data on inflation, manufacturing, and housing also will be watched.

Key dates and data releases: retail sales, business inventories (2/14); Empire State manufacturing survey, industrial production, Federal Open Market Committee minutes, international capital flows (2/15); housing starts, wholesale inflation, Philadelphia Fed survey (2/16); consumer inflation, index of leading economic indicators, options expiration (2/17).

Womack: Market rally spurred by more job

Fri, 10 Feb 2012 00:00:00 -0500

The Markets

How do you spell market rally? How about “Jobs.”

A much higher than expected 243,000 jobs were added to our economy in January and that helped push the Dow Jones Industrial Average to its highest close since May 2008, according to Bloomberg. On top of that, the unemployment rate dropped to 8.3 percent – the lowest since February 2009.

More good economic news came from the services sector as the pace of growth in January accelerated to its highest level in nearly a year, according to the widely followed index from The Institute of Supply Management and reported by CNBC.

While the overall economy has gained some momentum lately, the housing market is still stuck in the gutter. According to data released last week, the S&P/Case-Shiller index of home prices in 20 major cities declined 3.7 percent in the 12 months ending November 2011. Since its 2006 peak, average homes prices in the index have dropped 33 percent and prices are now back to where they were in mid-2003.

On the bright side, if you’re looking to buy a house or refinance, now is a great time. The average rate on a 30-year fixed-rate mortgage fell to 3.87 percent last week. That’s an all-time record low, according to MarketWatch.

Overall, after a scare back in the fall of 2011, the economy seems to be gaining steam and stock prices have reflected that. The big question remains… is this sustainable growth or is it temporarily driven by government stimulus and intervention?

Data as of 2/3/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	2.2%	6.9%	2.6%	17.1%	-1.5%	2.1%
DJ Global ex US (Foreign Stocks)	2.5	10.1	-10.3	15.9	-3.7	5.9
10-year Treasury Note (Yield Only)	2.0	N/A	3.5	2.8	4.8	4.9
Gold (per ounce)	0.5	10.1	30.6	24.2	21.7	19.7
DJ-UBS Commodity Index	-0.7	3.5	-11.4	9.9	-2.5	5.0
DJ Equity All REIT TR Index	2.1	9.0	12.5	32.1	-1.5	11.1

CAN THE INTERSECTION OF TWO MOVING AVERAGESforetell the future direction of the stock market? Chart watchers like to follow what’s called the 50-day moving average (50 DMA) and the 200-day moving average (200 DMA). These are lines which plot the closing price of the S&P 500 index for the last 50 and 200 days. When a new day is added, the oldest day is dropped off, hence the term “moving” average.

The 200 DMA is supposed to reflect the longer-term “wave” or trend in the market while the shorter 50 DMA captures the shorter-term trend or momentum. How these two lines move relative to each other is what gets chart watchers excited.

Last week, the 50 DMA crossed above the slower moving 200 DMA. Market technicians refer to this as a “golden cross.” In layman’s terms it’s considered a bullish market signal, according to CNBC. In fact, Birinyi Associates said that in the 26 instances since 1962 when the 50 DMA crossed above the 200 DMA, the market was higher six months later 81 percent of the time.

Not surprisingly, when the 50 DMA crosses below the 200 DMA, there’s a name for that, too. It’s called a “death cross” and it’s supposed to signal bad times ahead. However, the last two “death crosses,” which occurred on August 15, 2011 and July 2, 2010, were not very prescient, according to The Wall Street Journal.

And, we can get further carried away with the funny technical names by throwing in the “Hindenburg Omen.” By its very name you can tell it’s not something you want to see in the markets, and, we’re happy to report, it is not being signaled right now.

Okay, does all this technical stuff really matter? It matters to the extent that some serious market participants invest based on these technical signals and their buying and selling based on these signals may affect the markets.

So, whether you believe in this type of market analysis or not, it may be helpful to at least be aware of it.

Weekly Focus – Does this make sense?

Of our five senses, which one do you think is most important? Interestingly, if brain space indicates the importance of a sense, then vision is the most important. According to The National Geographic Society, roughly 30 percent of neurons in the brain's cortex are devoted to vision. By contrast, just 8 percent are devoted for touch and 2 percent for hearing.

Market Week, Feb 6, 2012

Mon, 06 Feb 2012 00:00:00 -0500

The Markets

Bolstered by a strong rally in the wake of Friday's encouraging employment report, both the Nasdaq and the Dow ended the week above last year's highs, and the Nasdaq actually hit a closing level last seen in December 2000. The S&P 500 and Russell 2000 weren't far from their 2011 highs; the Russell has now risen more than 36% from its most recent low in October 2011.

Market/Index	2011 Close	Prior Week	As of 2/3	Week Change	YTD Change*
DJIA	12217.56	12660.46	12862.23	1.59%	5.28%
Nasdaq	2605.15	2816.55	2905.66	3.16%	11.54%
S&P 500	1257.60	1316.33	1344.90	2.17%	6.94%
Russell 2000	740.92	798.85	831.11	4.04%	12.17%
Global Dow	1801.60	1928.27	1976.98	2.53%	9.73%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.93%	1.97%	4 bps	8 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·The U.S. economy added 243,000 jobs in December, and according to the Bureau of Labor Statistics, retail jobs for the holidays weren't the major reason. Professional/business services, manufacturing, and leisure/hospitality saw the biggest job growth. The number of unemployed people also fell to a three-year low of 12.8 million. The gains brought the unemployment rate down to 8.3% and represented the fifth consecutive month of lower unemployment.

·The nonpartisan Congressional Budget Office predicted the nation's budget deficit for 2012 will be $1.1 trillion, down slightly from 2011's $1.3 trillion. The report said spending cuts and tax increases scheduled for the end of 2012 will increase the deficit by $3.1 trillion over the next 10 years, but that ending them would increase the deficit by more than $11 trillion in that time. The CBO also predicted that those tax and spending measures would cut GDP to 1.1% next year, as well as keep the unemployment rate above 8% for the next 2 years and above 7% until 2015.

·Home prices in the 20 cities tracked by the S&P/Case-Shiller index fell 1.3% in November, putting the year-over-year decline at 3.7%. According to the report, home prices have now fallen 32.9% on average since July 2006. The monthly decline was the third consecutive decrease.

·U.S. labor productivity rose 0.7% during Q4 2011; business output was up 3.6% while the number of hours worked rose 2.9%, according to the Bureau of Labor Statistics. Meanwhile, the Commerce Department said factory orders were up 1.1% in December. And the Institute for Supply Management's index of the manufacturing sector rose 1% to 54.1%, with 9 of 18 industries reporting growth, while the ISM's services index was up 0.6% to 52.6%.

·Construction spending rose 1.5% in December, putting it 4.3% above a year earlier, according to the Commerce Department. The bulk of December's growth--2.1%--was in the private sector, with nonresidential construction accounting for most of the increase.

·Status update: Facebook, founded in 2004, filed plans to go public later this year.

·Federal Reserve Chairman Ben Bernanke lectured Congress about the need to address unsustainable deficit levels to prevent the possibility of another financial shock. However, he also said that at the same time, lawmakers need to be careful not to choke off economic recovery, which he said was not incompatible with fiscal responsibility.

Eye on the Week Ahead

As earnings season continues, the elusive Greek debt deal will continue to be a source of speculation. The European Central Bank and Bank of England are expected to keep interest rates stable during a week that's light on economic data.

Key dates and data releases: international trade, consumer sentiment (2/10).

Womack: Same data doesn't always equal same conclusions

Tue, 31 Jan 2012 00:00:00 -0500

The Markets

At its most basic level, a trade takes place when a buyer is willing to buy at a certain price and a seller is willing to sell at that price. Both parties could be smart, experienced, and looking at the same data, yet somehow one party thinks it’s a good price to buy and the other thinks it’s a good price to sell.

Last week, several news items represented good examples of how investors could look at the same data and draw different conclusions. Consider these:

1. Gross domestic product rose at a 2.8 percent pace in the October through December period.

Bullish investorssay that’s up from 1.8 percent the previous quarter and the fastest pace in a year and a half.

Bearish investorssay it’s less than the 3.0 percent growth expected by economists and most of the growth was due to inventory accumulation.
Source: MarketWatch

2. The International Monetary Fund (IMF) cut its forecast for global economic growth in 2012 and 2013.

Bullish investorssay fears are overblown as private-sector economic activity in the 17-nation euro zone showed small, but unexpected, growth in January and durable-goods orders were up a strong 3.0 percent in December in the U.S. – the third straight increase.

Bearish investorssay just heed the IMF’s warning, “Global growth prospects dimmed and risks sharply escalated during the fourth quarter of 2011, as the euro-area crisis entered a perilous new phase.”
Source: MarketWatch

3. Spanish and Italian bond yields dropped dramatically lately.

Bullish investorssay the drop in yields and the strong demand in January’s bond auctions suggest the euro zone crisis is easing.

Bearish investorssay the Portuguese bond market is now imploding, the Greek restructuring could fall apart, and the European Central Bank's December offer of unlimited three-year loans to banks has simply delayed the inevitable day of reckoning.
Source: The Wall Street Journal

Its differences of opinion like this that makes markets. Thanks to the free market, there always seems to be a buyer for every seller – at a price.

Like Joni Mitchell who sang, “I’ve looked at life from both sides now,” we look at the markets from both the bullish and bearish sides and, ultimately, make decisions which we think will best position you to meet your long-term goals and objectives.

Data as of 1/27/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.1%	4.7%	3.1%	15.9%	-1.5%	1.5%
DJ Global ex US (Foreign Stocks)	1.9	7.4	-12.2	14.5	-3.8	5.5
10-year Treasury Note (Yield Only)	1.9	N/A	3.4	2.5	4.9	5.1
Gold (per ounce)	4.4	9.6	29.3	24.4	21.8	20.0
DJ-UBS Commodity Index	3.8	4.2	-8.1	9.9	-1.8	5.2
DJ Equity All REIT TR Index	3.0	6.8	10.3	29.7	-1.5	10.9

WHAT WORRIES AMERICANS THE MOSTabout the national economy? Here’s the top 10 answers and the percentage who said it, according to an early January Gallup survey.

1. Jobs/unemployment 26%
2. National debt/Federal budget deficit16
3. Continuing economic decline/economic instability10
4. Outsourcing of jobs overseas/creating jobs in U.S. 6
5. Obama not doing a good job/no plan/lack of leadership5
6. Political bickering/Congress4
7. Healthcare/Medicaid3
8. Corporate corruption/corporations run the government3
9. Housing crisis3
10. The future of our children2
11. Eight other responses also checked in at 2 percent

The top two items are not really a surprise, but what’s revealing is how low some “important” issues ranked. Taxes, recession, social security, gas prices, education affordability, and the divide between rich and poor (think Occupy Wall Street) all pulled just 2 percent. The stock market and interest rates barely made the list at 1 percent each and ranking 21st and 25th, respectively, out of 26 on the full list.

Interestingly, if we can resolve the two biggest items on the list – the jobs and debt situations – it would most likely also resolve the third item on the list – continuing economic decline.

Do you think the politicians are listening?

(Note: responses total more than 100 percent due to multiple answers.)

Weekly Focus – Just for fun: How to Turn a Watch into a Compass

Let’s assume that you are lost in the wilderness, but you have a watch that still works. You can easily find the cardinal points by pointing the hour hand at the sun. Then form an imaginary line directly through the center of the “wedge” that is created between the hour hand and 12 o’clock. This is your south–north line. The height of the sun in the sky and the time of day will then show you which end of the line is north and which is south, remembering that the sun sets in the west and rises in the east. Try this at home first!

--Bear Grylls, survivalist, TV host, adapted from his 2008 book, “Man vs. Wild”

Market Week, Jan. 30, 2012

Mon, 30 Jan 2012 00:00:00 -0500

The Markets

A rally in domestic equities in response to Wednesday's Fed announcement of plans to keep interest rates low couldn't be sustained through the rest of the week. The Nasdaq and small-cap Russell 2000 saw the bulk of the week's gains, demonstrating resilience in the face of uncertainty about Greece's talks with its bondholders. The Fed's announcement pushed intermediate-term Treasury yields down but had little effect on longer maturities.

Market/Index	2011 Close	Prior Week	As of 1/27	Week Change	YTD Change*
DJIA	12217.56	12720.48	12660.46	-.47%	3.63%
Nasdaq	2605.15	2786.70	2816.55	1.07%	8.11%
S&P 500	1257.60	1315.38	1316.33	.07%	4.67%
Russell 2000	740.92	784.62	798.85	1.81%	7.82%
Global Dow	1801.60	1908.00	1928.27	1.06%	7.03%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	2.05%	1.93%	-12 bps	4 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·The exception becomes the rule: The Federal Reserve's Open Market Committee announced that interest rates will remain at today's exceptionally low levels longer than previously expected. Saying economic expansion continues to be moderate, the Fed forecast low rates will last through at least late 2014.

·Greece continued to negotiate with its private bondholders over a planned writedown on its sovereign debt. The sticking point is reportedly the interest rate on the bonds that will be exchanged for existing bonds. Meanwhile, leaders attending the Davos World Economic Forum said that despite economic uncertainty, they believe the European debt crisis has begun to come under control.

·The U.S. economy grew 2.8% in the final quarter of 2011. The initial estimate of gross domestic product is higher than the third quarter's 1.8% GDP, but according to the Bureau of Labor Statistics, higher inventory levels were a major factor.

·Sales of new homes fell sharply in December, according to the Commerce Department. The 2.2% monthly decline put sales 7.7% below December 2010, and the 302,000 homes sold in all of 2011 was 6.2% below 2010's total.

·Demand for transportation-related equipment helped produce a 1.8% increase in new orders from manufacturers in November. The Commerce Department said the strongest increase came in durable goods designed to last at least three years, which saw a 3.7% increase in orders. Even excluding transportation, new durable goods orders were up 0.3%, and non-defense-related orders other than aircraft were up 1.8%.

·The International Monetary Fund cut its forecast for 2012 global growth to 3.3%, slightly lower than 2011's 3.8%. Rising interest rates on European sovereign debt and bank deleveraging could bring on a mild recession there, the IMF said, but it also warned that overly aggressive austerity programs could choke off growth.

·The Conference Board's index of leading economic indicators rose 0.4% in December to 94.3. The organization said the reading would have been stronger except that the index included for the first time a measure of credit conditions, which was negative and helped moderate positive contributions from 7 of the index's 10 indicators.

Eye on the Week Ahead

Believers in the January indicator will be eyeing the end of the month on Tuesday for clues about how the rest of the year might go. A Greek bond agreement could produce euphoria, and a failure to come up with one could produce the opposite. Little change is anticipated in Friday's unemployment figure, and data on the nation's manufacturing and services sectors also will be watched.

Key dates and data releases: personal income/spending (1/30); home prices (1/31); auto sales, U.S. manufacturing, construction spending (2/1); weekly new jobless claims, business productivity and labor costs (2/2); unemployment/payrolls, U.S. services sector, factory orders (2/3).

Market Week, Jan. 23, 2012

Mon, 23 Jan 2012 00:00:00 -0500

The Markets

Downgrades? What downgrades? Having just lowered its long-term ratings on nine eurozone sovereigns, Standard and Poor's downgraded the European Financial Stability Fund itself early last week. European equity markets responded with a four-day rally, choosing to focus instead on the renewed possibility of a deal on Greek debt, and strong bond sales by France and Spain. The rally petered out on Friday, however, as doubts about Greece began to creep back in. Domestically, equities reached six-month highs, with the S&P 500 and Dow Industrials gaining every day of the holiday-shortened week (and the Nasdaq just missing that feat with a 1.63 point loss on Friday). This third straight week of equity gains--fueled by bank earnings, encouraging economic news, and eurozone optimism--slowed, at least temporarily, the flow of funds to U.S. Treasuries, which finished the week with yields on benchmark 10-year notes rising back above the 2% level.

Market/Index	2011 Close	Prior Week	As of 1/20	Week Change	YTD Change*
DJIA	12217.56	12422.06	12720.48	2.40%	4.12%
Nasdaq	2605.15	2710.67	2786.70	2.80%	6.97%
S&P 500	1257.60	1289.09	1315.38	2.04%	4.59%
Russell 2000	740.92	764.20	784.62	2.67%	5.90%
Global Dow	1801.60	1841.21	1908.00	3.63%	5.91%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.89%	2.05%	16 bps	16 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

Standard and Poor's downgraded its long-term rating on the European Financial Stability Fund from AAA to AA+, expressing some concern about the fund's bailout capabilities in light of S&P's downgrade of member states Austria and France.
Negotiators for Greece's private creditors left talks in Athens suddenly on Saturday, leaving the status of a possible deal unclear and resurrecting the specter of a disorderly default.
Despite the selloff in traditional notes, the Treasury Department announced the record sale of $15 billion of 10-year Treasury Inflation Protected Securities (TIPS) last week with a "high-yield" of negative 0.046%, marking the first time 10-year TIPS have been sold with a negative yield.
After revising the prior week's numbers back over the 400,000 benchmark, the Department of Labor reported that seasonally adjusted initial claims for unemployment benefits dropped by 50,000 to 352,000, the lowest total since April 2008. The somewhat less volatile 4-week moving average was 379,000, a decrease of 3,500 from the previous week's revised average of 382,500.
The Federal Reserve announced that industrial production increased 0.4% in December after having fallen 0.3% in November. For the fourth quarter as a whole, industrial production rose at an annual rate of 3.1%, its 10th consecutive quarterly gain. Manufacturing production climbed 0.9% in December, the largest increase in a year, with gains widespread among major industry groups.
The Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) remained flat for December. The index for all items other than food and energy (core inflation) increased just 0.1% in December, after rising 0.2% in November. However, the CPI rose 3% overall in 2011, compared to a 1.5% increase in 2010.
The Bureau also reported that the producer price index for finished goods (PPI, measuring wholesale inflation) declined 0.1% in December. Excluding food and energy, however, the index rose 0.3% in December, the largest increase since July 2011. The PPI rose 4.8% in 2011, after rising 3.8% in 2010.
There was some positive news in the housing sector. The National Association of Home Builders reported that builder confidence in the market for newly built single-family homes continued to rise for the fourth consecutive month, reaching its highest level since June 2007. The National Association of Realtors announced that sales of existing homes rose 5% in December to an 11-month high. For all of 2011, existing home sales rose 1.7% to 4.26 million, up from 4.19 million sales in 2010. And the Commerce Department reported that new single-family housing starts rose 4.4% in December. However, 2011 ended as the worst on record for single-family home construction. Meanwhile, Freddie Mac reported that the average 30-year fixed rate mortgage edged down slightly for the week ending January 19 to 3.88%, a new all-time record low, marking the seventh consecutive week below 4%.

Eye on the Week Ahead

The first look at U.S. economic growth for the final quarter of 2011 could suggest the potential for further recovery in the coming year. Wednesday's Fed announcement is scheduled to include a forecast for the federal funds interest rate at the end of the year; any projected change could affect bond markets. But Greece may take center stage yet again, as the race to avoid a disorderly default continues.

Key dates and data releases: Federal Open Market Committee announcement (1/25); durable goods orders, new home sales (1/26); initial estimate of Q4 2011 gross domestic product (1/27).

Calculating Cost Basis Gets Easier This Year

Thu, 19 Jan 2012 00:00:00 -0500

Anyone who has ever been baffled by calculating the net proceeds from the sale of an investment will find some relief, starting with the 2011 tax return due April 17. If you bought any stocks after January 1, 2011, and sold them later in the year, you should be receiving information from your broker shortly that tells you the adjusted cost basis of those stocks. Your adjusted cost basis, which affects the amount of tax you may owe on the sale, represents the original purchase price plus any commissions or other fees, and takes into account factors such as stock splits, corporate acquisitions or spinoffs, and reinvested dividends.

In the past, cost basis information has sometimes been available as a service; the Emergency Economic Stabilization Act of 2008 now requires all broker-dealers and other financial intermediaries to report the information on your 1099-B form. However, you won't be the only one to receive that information; your broker also is required to report the same information to the Internal Revenue Service. Individual taxpayers (or their tax preparers) will still be responsible for accurately reporting the net proceeds of a sale on their federal income tax returns, but the IRS will now have a better way to double-check those figures.

In some cases, you're still on your own this year

The new reporting requirements don't mean you can empty your files completely. Because they're being phased in, the rules don't apply to stocks bought before January 1, 2011, for which you'll still need to do your own calculations, or to securities held in retirement accounts. Cost basis reporting does go into effect this year for mutual funds and stock bought as part of a dividend reinvestment plan; however, it will apply only to shares bought after January 1, 2012, and will be reported on the 1099-B that will be available in 2013 for the tax year 2012. And cost basis for bonds, options, and other securities won't have to be reported until 2013, so those will still need to be monitored independently.

Brokers also will be required to report losses that are disallowed as a result of a wash sale (which occurs when shares are sold and then repurchased within 30 days). However, they only have to do so if the newly acquired securities are identical to the securities sold (meaning the securities share the same CUSIP identification number). They also are not required to report adjusted cost basis for wash sales when the purchase and sale transactions occur in different accounts.

You can tailor your reporting method to suit your tax situation

Investors sometimes use cost basis to help manage their tax liability on a securities sale. If you're one of them, the reporting requirements make it more important to determine in advance what accounting method you wish to use for each sale. Most broker-dealers will designate a default option to use if you do not specify a method. That default will typically be the so-called FIFO method (an acronym for "first in, first out"), which means that the first shares of a security purchased are considered the first shares sold. However, your broker might also allow you to specify LIFO ("last in, first out") or designate specific shares as the ones sold. In some cases, such as shares bought through a direct reinvestment program, using an average cost basis for all shares may be most convenient (most mutual fund companies already employ this method of calculating cost basis).

If you don't want to use your broker's default method, you may be able to put in a standing order specifying the method you want to use for all trades, or choose on a case-by-case basis; you may also authorize your financial professional to make that decision for you. The rules permit investors to change the designated method for a given trade until the settlement date (the date on which money actually changes hands, which for a typical stock sale is three business days after execution of the trade). After the trade settles, you cannot change your mind about the method used.

Brokers also will be required to report to the IRS the cost basis of a short sale in the year in which the short is closed (in the past, it was done for the year a short sale was opened).

Who wants to join the downgrade club?

Wed, 18 Jan 2012 00:00:00 -0500

The U.S. became a member last August and, now, so has most of the eurozone. Unfortunately, it’s not a club you want to join.

Late last week, Standard and Poor’s (S&P) announced it was downgrading the credit rating of nine of the eurozone’s 16 members including behemoths France and Spain. In addition, 14 of the 16 members have “negative outlooks” which means S&P believes, “that there is at least a one-in-three chance that the rating will be lowered in 2012 or 2013.” The only two countries with stable credit outlooks are Germany (no surprise) and Slovakia, a former Communist country that became an independent state in 1993 after the dissolution of Czechoslovakia.

What does this mean for the future of Europe and the economy?

The New York Timescalled it, “A move that may have more symbolic than fundamental financial impact, but served as a reminder that Europe’s economic woes were far from over.” Underscoring that, the U.S. downgrade, has – so far – not caused much of a problem. The 10-year U.S. Treasury bond yielded a slim 1.85 percent last Friday, an indication that investors still view the U.S. as a safe haven. The bottom line is everybody knows Europe has problems and the downgrade, while not helpful, simply puts an exclamation point on the obvious.

Back in the U.S., investors seemed more interested last week in tracking our economic momentum which included an eight-month high in consumer sentiment and an improved assessment of the economy from the Fed’s Beige Book. Econoday summed it up nicely when they wrote, “Traders and investors have been moving toward the position that European problems deserve less weight than they have been given in recent months.” That may be true in the short term, but if Europe craters because of their sovereign debt problems, it’s unlikely the U.S. will escape unscathed.

Unlike Las Vegas, what happens in Europe may not stay in Europe.

Data as of 1/13/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	0.9%	2.5%	-0.3%	13.9%	-2.1%	1.3%
DJ Global ex US (Foreign Stocks)	1.3	1.5	-16.7	10.6	-4.9	4.8
10-year Treasury Note (Yield Only)	1.9	N/A	3.3	2.3	4.8	4.9
Gold (per ounce)	1.2	3.9	18.4	25.5	21.1	19.0
DJ-UBS Commodity Index	-1.4	-0.1	-13.2	7.4	-2.4	4.5
DJ Equity All REIT TR Index	1.4	1.2	8.6	26.8	-2.0	10.2

THE ANNUAL CONSUMER ELECTRONICS SHOW (CES)just wrapped up in Las Vegasand, as usual, it featured a dazzling array of must-have new gizmos and gadgets that willlikely show up in your hand or in your family room sometime down the road. With 2,700 exhibitors and 150,000 total attendees, it’s the showcase event for everything electronic.

We thought it’d be fun to take a look at some of today’s commonplace gadgets that were introduced at CES and have you guess the year of their debut. So, here goes…

• Digital video discs (DVDs)
• Satellite radio
• Videocassette recorder (VCR)
• CD player
• Blu-ray disc
• High-definition television
• Camcorder

It’s not all fun and games at a show like CES. As you can see from the list above, these devices have spawned major industries that generated tremendous economic activity. Innovation is vital for economic growth, and a show like CES helps spotlight the latest electronic advances and, perhaps, the next driver of the economy.

One of the big highlights at the just concluded show was the unveiling of LG's 55-inch OLED TV packed with 3D bells and smart TV whistles. So, what in the world is an OLED TV? It’s a TV that uses a new display technology called OLED (Organic Light Emitting Diodes). OLED televisions are brighter, more efficient, thinner, and feature better refresh rates and contrast than either LCD or Plasma TVs. And boy is it thin. The LG 55-inch OLED TV is only 0.2 inches deep at its thinnest point and weighs a measly 16.5 pounds. If you’re an early adopter, you’ll want one of these beauties in your home theater later this year.

Okay, here are the answers to the “device debut” question, according to CNBC.

Digital video discs (1996), Satellite radio (2000), Videocassette recorder (1970), CD player (1981), Blu-ray disc (2003), High-definition television (1998), and Camcorder (1981).

How many did you correctly answer?

Weekly Focus – Think About It

“It's easy to come up with new ideas; the hard part is letting go of what worked for you two years ago, but will soon be out of date.” --Roger von Oech, author, inventor, consultant

Market Week: Jan. 17, 2012

Tue, 17 Jan 2012 00:00:00 -0500

The Markets

Two in a row: Helped along by benign economic reports, domestic equities built on last week's gains. However, market leadership migrated to the Nasdaq and small-cap Russell 2000. Friday's after-hours release of Standard and Poor's European downgrades prevented the news from having much impact last week, though rumors weighed on markets during the week's final hours.

Market/Index	2011 Close	Prior Week	As of 1/13	Week Change	YTD Change*
DJIA	12217.56	12359.92	12422.06	.50%	1.67%
Nasdaq	2605.15	2674.22	2710.67	1.36%	4.05%
S&P 500	1257.60	1277.81	1289.09	.88%	2.50%
Russell 2000	740.92	749.71	764.20	1.93%	3.14%
Global Dow	1801.60	1812.76	1841.21	1.57%	2.20%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.92%	1.89%	-3 bps	0 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

·Standard and Poor's downgraded the AAA bond ratings of both France and Austria to AA+. It also cut Spain's rating to A and Italy's to BBB+, and reduced Portugal's rating to BB (junk bond status), all of which are likely to increase the cost of borrowing for those countries. Because France is Europe's second-largest economy and a pillar of the European Financial Stability Fund, the downgrades raised concerns about the impact on the fund's bailout capabilities.

·Meanwhile, the German economy contracted by 0.25% during the fourth quarter, and the 3% growth rate for all of 2011 was lower than the previous year's. Both the European Central Bank and the Bank of England kept their benchmark interest rates at 1% and 0.5%, respectively.

·Falling exports and higher foreign oil imports helped increase the U.S. trade deficit by more than 10% to $47.8 billion in November, the Commerce Department said. That's the largest increase since May.

·The Commerce Department also reported that retail sales rose 0.1% in December, up 6.5% from last December. However, not counting a 1.5% increase in auto sales, retail sales were down 0.2%.

·The Federal Reserve turned over to the U.S. Treasury $76.9 billion in net income, derived mostly from interest earned in 2011 from purchases of U.S. Treasuries and mortgage-backed securities bought as part of its quantitative easing programs. That's slightly less than the previous year's $79.8 billion, but still well above 2009's $47.4 billion.

·The Fed's "beige book" report said economic conditions increased at a "modest to moderate pace" during late November and December. That was an improvement from earlier in the year, and was helped along by retail sales that beat last year's and strong auto sales.

Eye on the Week Ahead

Though the reaction to the European downgrades will likely steal the spotlight, a data-heavy week also will include inflation and manufacturing data.

Key dates and data releases: Empire State manufacturing survey (1/17); wholesale inflation, industrial production, international capital flows (1/18); consumer inflation, housing starts, Philadelphia Fed manufacturing survey, weekly new jobless claims (1/19); home resales, options expirations (1/20).

What characteristic equaled best performance in 2011

Tue, 10 Jan 2012 00:00:00 -0500

Which stock characteristic most impacted the S&P 500’s performance in 2011?

To answer that question, Bespoke Investment Group performed a decile analysis and concluded that having a high dividend yield was the most important factor affecting stock prices in 2011.

In their analysis, they discovered that the three deciles with the highest dividend yield were the only ones to experience a positive return for the year. In fact, while the S&P 500 index was unchanged for the year, the top three highest-yielding deciles rose 10.4 percent, 6.4 percent, and 8.7 percent, respectively. The remaining seven deciles all experienced a loss for the year.

Now, it won’t always turn out that the highest dividend yielding stocks are the best performers. Some years, investors will be more adventurous and bid up the riskier stocks that tend to pay low or no dividends.

Will the tide turn in 2012 and see the outperformance of the low or no dividend stocks? A lot will depend on how the economy shakes out.

Based on last week’s unemployment report, it looks like we ended 2011 with some economic momentum. The U.S. economy added 200,000 jobs in December and the unemployment rate dropped to 8.5 percent, the lowest in almost three years, according to BusinessWeek.

This week marks the beginning of another quarterly earnings season so the next 30 days or so should give us a good indication of the strength of the underlying economy.

Data as of 1/6/12	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	1.6%	1.6%	0.5%	11.0%	-2.0%	0.9%
DJ Global ex US (Foreign Stocks)	0.2	0.2	-16.1	7.7	-4.9	4.3
10-year Treasury Note (Yield Only)	2.0	N/A	3.4	2.5	4.7	5.1
Gold (per ounce)	2.7	2.7	18.1	24.0	21.5	19.2
DJ-UBS Commodity Index	1.3	1.3	-10.3	4.9	-1.9	4.4
DJ Equity All REIT TR Index	-0.2	-0.2	7.8	20.8	-1.2	10.1

WERE THE “NIFTY-FIFTY” REALLY THAT NIFTY?Back in the early 1970s, pundits fawned over some of the era’s fastest growing, industry-leading companies who seemed to defy the sluggish overall economy. Dubbed the Nifty-Fifty, these glamour stocks were well-known “one-decision” stocks that institutional investors clamored to own. So, how well did these stocks do over the last 40 years? Were they truly “one-decision” stocks?

While there was no official list of the Nifty-Fifty, two competing lists of 50 stocks are commonly cited, according to a research report titled, “The Nifty-Fifty Re-Revisited,” by Jeff Fesenmaier and Gary Smith of Pomona College. For today’s purpose, we’ll look at the 24 stocks that made both lists and were dubbed the “Terrific 24” by Fesenmaier and Smith.

Some of the household names on the Terrific 24 list include: McDonald’s, Walt Disney, Avon, Johnson and Johnson, and Coca-Cola. These companies are still doing well. However, some other household names on the Terrific 24 list performed poorly. Consider the following:

Xerox:It’s still around, but is a shadow of its former self and trades for about $8 per share.

MGIC Investment Corp:It went through various corporate restructurings throughout the years, but is still around as a private mortgage insurer. However, it got battered in the mortgage insurance meltdown of recent years and trades for about $4 per share.

Polaroid:The inventor of instant film couldn’t make the transition to a new world and filed for bankruptcy in 2001.

Eastman Kodak:Perhaps the saddest story of the bunch, Kodak has struggled for years to make the transition to a digital world and is now rumored to have filed for bankruptcy as early as this month, according to Reuters. Its stock sold for less than 50 cents per share last week. Ironically, Kodak invented the digital camera in 1975, but was never able to capitalize on it.

With 40 years of history, here are three key lessons we can learn from the Nifty-Fifty story:

1. Some “glamour” stocks do remain glamorous for many years, e.g, McDonald’s, Walt Disney, and Coca-Cola (although each had its “rough periods” over the past 40 years).
2. Promoting “one-decision” stocks is more of a headline-grabbing marketing strategy than a sound investment strategy.
3. Even the “best” stocks can fall to zero so it’s important to have a sell discipline.

As the British statesman and philosopher Edmund Burke said, “Those who don’t know history are destined to repeat it.”

Weekly Focus – Think About It

“The supreme purpose of history is a better world.” --Herbert Hoover, U.S. President

Market Week, Jan. 9, 2012

Mon, 09 Jan 2012 00:00:00 -0500

So far, so good: The new year got off to a moderately encouraging start, beginning with solid reports on manufacturing and construction and ending with a fourth month of improved employment data. The Nasdaq took the lead; it was the first week since early October in which its gains outpaced those of the other three domestic indices. Not surprisingly, the Global Dow continued to be sluggish.

Market/Index	2011 Close	Prior Week	As of 1/6	Week Change	YTD Change*
DJIA	12217.56	12217.56	12359.92	1.17%	1.17%
Nasdaq	2605.15	2605.15	2674.22	2.65%	2.65%
S&P 500	1257.60	1257.60	1277.81	1.61%	1.61%
Russell 2000	740.92	740.92	749.71	1.19%	1.19%
Global Dow	1801.60	1801.60	1812.76	.62%	.62%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	1.89%	1.89%	1.92%	3 bps	3 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

Unemployment fell in December for the fourth straight month, hitting 8.5%; that's almost a full percentage point from last December's 9.4%. The Bureau of Labor Statistics said employers added 200,000 net new jobs, with the biggest gains occurring in transportation/warehousing, retail, and manufacturing. The measure of unemployment that includes underemployed workers also fell; it's down from 15.6% to 15.2%.
U.S. manufacturing growth accelerated in December, according to the Institute for Supply Management. The ISM's index hit 53.9%, its highest level since June; it was the 29th straight month of expansion. Meanwhile, the Commerce Department said new durable goods orders also rose by 3.8%. The growth, driven primarily by new orders for aircraft and other transportation equipment, represented the fourth increase in the last five months.
The Federal Reserve will start spelling out its expectations for the direction of short-term interest rates, including when it might start to raise rates. The forecasts will be made quarterly beginning with the January 25 release of other Fed economic forecasts, which will include projections for the end of this year.
Expansion in the U.S. services sector picked up at a faster pace in December as the Institute for Supply Management's index rose 0.6% to 52.6%. It was the 26th consecutive month of growth, with 11 of the index's 18 industries reporting improvement.
The average interest rate on 30-year fixed mortgages fell to 3.91% during the first week of 2012. According to mortgage giant Freddie Mac, that's as low as it's ever been. It also was the fifth straight week of rates under 4%.

Eye on the Week Ahead

Bond auctions are scheduled in Italy and Spain; with Italian 10-year yields over 7%, the results will be watched. Also, Monday's Alcoa earnings announcement represents the informal kickoff for the fourth-quarter earnings season.

Key dates and data releases: Fed "beige book" report (1/11); weekly new jobless claims, retail sales, business inventories (1/12); international trade, import/export prices, consumer sentiment (1/13).

Welcome back: Market Week for January 3, 2012

Tue, 03 Jan 2012 00:00:00 -0500

Shortened by the Christmas holiday, the last week of 2011 saw low volumes that, despite some volatility, left the domestic equity indices little changed. The Dow was the only one of the four to end the year with a gain, due in no small part to its nearly 12% bounce in the fourth quarter. Meanwhile, the S&P 500 closed out 2011 just four-hundredths of a point below where it began, with a Q4 gain of just over 11%. The summer's volatility cost the Nasdaq and small-cap Russell 2000 dearly; at year's end, they were down 9% and 14% respectively from their April 2011 highs despite the Russell's fourth-quarter 15% gain.

Market/Index	2010 Close	Prior Week	As of 12/30	Week Change	YTD Change*
DJIA	11577.51	12294.00	12217.56	-.62%	5.53%
Nasdaq	2652.87	2618.64	2605.15	-.52%	-1.80%
S&P 500	1257.64	1265.33	1257.60	-.61%	-0%
Russell 2000	783.65	747.98	740.92	-.94%	-5.45%
Global Dow	2087.44	1803.20	1801.60	-0%	-13.69%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.30%	2.03%	1.89%	-14 bps	-141 bps

*Equities data reflect price changes, not total return.

Last Week's Headlines

Home prices fell in October for the sixth straight month, according to the S&P/Case-Shiller 20-city composite index. Prices were down 1.2% from September, with all but one of the 20 cities tracked by the index showing a decline. Prices also were 3.4% lower than a year ago.
The National Association of Realtors® said pending home sales (sales for which a contract has been signed but which have not closed) rose 7.3% in November. That represented its highest level since April 2010.
Spain's new government announced a package of €8.9 billion worth of budget cuts and tax increases to try to attack a deficit that represents roughly 8% of the country's output.

Eye on the Week Ahead

Investors who believe that the first five days of January suggest something about the rest of the year will watch the coming week closely. Manufacturing and construction indicators as well as unemployment data on Friday could suggest whether economic recovery is likely to continue in 2012.

Key dates and data releases: U.S. manufacturing, construction spending, Federal Open Market Committee minutes (1/3); auto sales, factory orders (1/4); U.S. services sector, new weekly jobless claims (1/5); unemployment/payrolls, consumer credit (1/6).

Data sources: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. Equities data reflect price change, not total return. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

Weekly Commentary: A look back at 2011: Much ado about gold, Europe and planking

Tue, 03 Jan 2012 00:00:00 -0500

“Much Ado About Nothing” is one of Shakespeare’s famous comedies and, surprisingly, the title succinctly summarizes the U.S. stock market in 2011.

There was “much ado” during 2011 as we experienced one of the most volatile years on record. For example, regarding the S&P 500 index stocks, Bloomberg said, “Individual stocks were more volatile than in 2009 and 2010, with 55 losing more than 30 percent this year compared with a total of 13 in the prior two.”

On top of that, “Stocks swung at a daily rate of twice the 50-year average after the S&P 500 reached a three-year high in April.” After hitting that high in April, the S&P 500 then plunged 19 percent over the next five months. Continuing the whiplash, the market staged a remarkable comeback and that’s where the “about nothing” comes in to play.

By the time the final trades were placed on December 30, the S&P 500 ended the year exactly where it started – and we mean exactly! It started the year at 1,257.6 and it ended the year at 1,257.6. Yet, during that time, it moved up or down a total of 3,240 points when you sum the absolute daily changes on a closing basis, according to The Chart Store via Ritholtz.com. So, after all the volatility, after all the worrying, the market ended the year right where it began. Whew!

Despite the year ending in a push, here are 10 newsworthy items that hit the headlines.

Europe reached crisis mode.Several European countries experienced severe budget problems including Greece and Italy while the dithering of European politicians kept markets on edge. The three main causes of the crisis were 1) excessive government spending leading to 2) excessive government debt coupled with 3) slow economic growth.

Source: Anthony Sanders, Professor of Real Estate Finance at GeorgeMasonUniversity, December 15, 2011

Interest rates continued to fall.The 10-year Treasury ended the year yielding below 2 percent and the 30-year yielded below 3 percent. On a total return basis, the 30-year Treasury jumped 35 percent in 2011,which is higher than every stock in the Dow Jones Industrial Average!

Sources:The Wall Street Journal;Barron’s

The Middle East rose in protest.Mass protests swept the Middle East, governments were overthrown, and the political landscape was dramatically reshaped. The reverberations will last for years.

Source:The Economist

Apple and Steve Jobs were everywhere.Apple was 90 days away from bankruptcy in the late 1990s, but through the magic of Steve Jobs, the company briefly became the world’s most valuable company in 2011 – surpassing Exxon! The iPhone was the #1 most searched term on Yahoo! for the year. And, yes, Steve Jobs passed away from cancer at the much too young age of 56.

Sources: Bloomberg; Yahoo! News

Japan was rocked with a massive earthquake and tsunami.The devastating power of Mother Nature claimed more than 15,000 lives, shocked financial markets, and disrupted business around the world. The pain and scars of this tragedy will remain for many years.

Source: Bloomberg

The U.S. credit rating got “dinged.”In August, Standard & Poor’s downgraded the AAA credit rating of the United States due to political bickering and unsustainable budget deficits. The stock market promptly fell yet, surprisingly, interest rates ended the year at extremely low levels.

Source: Bloomberg

Gold kept its luster.Despite weakness at the end of the year, gold prices finished the year in positive territory for the 11^thconsecutive year. In times of uncertainty, investors have shown a preference for the yellow metal.

Source:The Economic Times

Foreign stock markets took it on the chin.Unchanged in the U.S. looks good compared to China, which fell 22 percent; Hong Kong, down 20 percent; Brazil, down 18 percent; Germany, down 14.7 percent; and Britain, down 5.6 percent. There’s no place like home!

Sources: Associated Press via Yahoo! News; Bloomberg

Burgers and banks were bookends.The best performing stock in the Dow Jones Industrial Average in 2011 was McDonald’s, which rose 31 percent. At the other extreme, Bank of America was the worst performer dropping 58 percent. Looks like a lot of people ordered an extra fry with that Big Mac.

Source: Associated Press via Yahoo! News

“Planking” became a worldwide phenomenon.Traced back to a 20-something Australian, planking involves lying face down on the ground with your arms at your side. The “trick” is to do it in unusual places or atop peculiar objects. The unrelated “fitness” version of planking also made headlines in 2011 when a 71-year-old Wisconsinite named Betty Lou Sweeney set a new Guinness World Record by holding an abdominal plank for an incredible 36 minutes and 58 seconds. What’s even more incredible is in 2009 she was “severely overweight and nearly died from complications from an infection that went septic and shut down her kidneys.” Two years later and 100 pounds lighter, she set the world record. Yes, there’s hope for all of us!

Source: Yahoo! News

Data as of 12/31/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-0.6%	0.0%	0.0%	11.7%	-2.4%	0.9%
DJ Global ex US (Foreign Stocks)	0.3	-16.7	-16.7	8.8	-5.2	4.5
10-year Treasury Note (Yield Only)	1.9	N/A	3.3	2.2	4.7	5.0
Gold (per ounce)	-2.1	11.6	11.6	22.1	19.9	19.0
DJ-UBS Commodity Index	-0.4	-13.4	-13.4	6.3	-3.3	4.7
DJ Equity All REIT TR Index	-0.3	7.5	7.5	20.8	-1.4	10.2

Sources: Yahoo! Finance, Barron’s,djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

As we embark on the New Year we look forward to serving you with your investment and financial planning needs. Please feel free to call and share with us your New Year’s resolutions; we’d be glad to assist you any way we can.

A look at the volatile market and the future of China

Mon, 19 Dec 2011 00:00:00 -0500

The Markets

It feels like the stock market has been volatile this year, you're right. Here are a few examples:

Three-month historic volatility for the 'fear" gauge known as the VIX hit a record on October 31, surpassing the prior peak from December 2008.
Intraday swings in the Dow Jones Industrial Average have averaged 261 points since August 2, an exceptionally large number.
On four consecutive days back in August, the Dow Jones Industrial Average alternated between gains and losses of more than 400 points, the longest streak ever.

Source: Bloomberg

All this volatility and the lack of a clear, sustained direction in the market have frustrated many investors.

The problems in Europe and the budget wrangling in the U.S. have kept investors in a risk-on, risk-off mode throughout much of this year. As a result, many stocks have traded in herd-like fashion without much regard to individual company fundamentals, according to investment manager Duke Buchan, III.

At times like this, it's important to have patience and as Warren Buffett says, wait for that "fat pitch."

Data as of 11/25/11	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 (Domestic Stocks)	-2.8%	-3.0%	-2.0%	10.1%	-3.0%	0.7%
DJ Global ex US (Foreign Stocks)	-3.9	-18.8	-16.7	8.3	-5.5	4.3
10-year Treasury Note (Yield Only)	1.9	N/A	3.5	2.4	4.6	5.3
Gold (per ounce)	-6.7	13.0	16.9	23.9	21.0	19.1
DJ-UBS Commodity Index	-4.2	-15.6	-10.8	6.4	-3.8	4.4
DJ Equity All REIT TR Index	0.2	3.6	9.2	19.6	-2.0	9.8

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.

WHAT IS THE PRICE OF ECONOMIC GROWTH in China and how does it affect us in the U.S.? Ever since 1978 when Chinese leader Deng Xiaoping laid out a vision of economic reform, China has been on a growth spurt of massive proportion. However, that growth comes with a huge price in the form of limited freedom. Last week, Chinese leaders clamped down again on freedom of speech in an effort to control the spread of social unrest.

In China, the government blocks access to the microblog service "Twitter" and, instead, a Chinese version called "Weibo" has become popular. In total, more than 300 million Chinese people use microblogs, with Weibo the most popular, according to Bloomberg.

Regarding last week's clampdown, Chinese officials announced that users of Weibo in Beijing will have to register their real names and be verified by government authorities before posting on the service. In addition, users are banned from posting anything that could lead to disrupting the social order, according to The Wall Street Journal.

This isn't the first government crackdown on freedom of speech. Earlier in the year, the government blocked citizens' access to searches on the "Arab Spring" that was rumbling through the Middle East. Prior to that, the government blocked access to Facebook, YouTube, and Google.

What's the government's problem with freedom of speech?

As the "Arab Spring" uprising in the Middle East demonstrated, social media can enable millions of people to communicate and mobilize in short order. China seems to be very afraid of letting its citizens have this capability for fear that a popular uprising could lead to chaos in a sprawling country of 1.3 billion people.

With China still a major growth engine for the world economy, we have to pay close attention to any social trends affecting the country. If the government clamps down too hard and its citizens rise up, it could quickly morph from a social/political movement to one that has major worldwide economic implications. On top of that, China is gearing up for a once in a decade leadership change in 2012 and, given the country's history, a smooth transition is not guaranteed.

When investing money, you have to consider possible "black swan" events that have a low probability of occurring, but, if they do occur, could wreak havoc. A Chinese uprising could be one of those and we want you to know that it's on our radar.

Weekly Focus – Think About It

“If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter.”

-- George Washington, U.S. President

Market Week, Dec. 19, 2011

Mon, 19 Dec 2011 00:00:00 -0500

The Markets

Domestic equities gave back last week's gains and then some. The Dow once again fell below the 12,000 mark but managed to remain the only domestic index in positive territory for the year, while the tech-heavy Nasdaq was the hardest hit. Meanwhile, investors once again fled to U.S. Treasuries, pushing the 10-year yield down to a level last seen in late September, while the euro dropped briefly below $1.30.

Market/Index	2010 Close	Prior Week	As of 12/16	Week Change	YTD Change
DJIA	11577.51	12184.26	11866.39	-2.61%	2.50%
Nasdaq	2652.87	2646.85	2555.33	-3.46%	-3.68%
S&P 500	1257.64	1255.19	1219.66	-2.83%	-3.02%
Russell 2000	783.65	745.40	722.05	-3.13%	-7.86%
Global Dow	2087.44	1830.78	1751.60	-4.32%	-16.09%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	3.30%	2.07%	1.86%	-21 bps	-144 bps

Last Week's Headlines

·Noting that the economy has been "expanding moderately," the Federal Reserve Open Market Committee gave no indication that additional quantitative easing measures are forthcoming. However, it will continue to replace short-term bond holdings with longer maturities and reinvest the proceeds of its portfolio of agency and mortgage-backed securities. It also kept the fed funds rate steady at 0.25%, marking the third anniversary of record low rates.

·The Commerce Department said that though the 0.2% growth in November's retail sales was slower than the 0.6% and 1.3% gains seen during the previous two months, sales were still 6.7% higher than a year ago. The biggest monthly increases were in electronics and appliances (2.1%) and sales by nonstore retailers (1.5%).

·Declining energy costs for the second month in a row helped keep consumer inflation flat in November, the Bureau of Labor Statistics said. That put inflation over the past 12 months at 3.4%, a more moderate pace than the 3.9% annual rate seen in June. Meanwhile, inflation at the wholesale level rose 0.3%, led by a 3.8% increase in raw materials. That put year-over-year inflation at 5.7%, the smallest annual increase since March.

·A parts shortage caused by flooding in Thailand contributed to a 3.4% drop in auto manufacturing, which in turn helped cut overall industrial production by 0.2% in November, according to the Federal Reserve. However, industrial production was still 3.7% higher than a year ago.

·The Securities and Exchange Commission filed civil charges against six former executives of Fannie Mae and Freddie Mac, accusing them of deliberately misleading the public about the extent of the mortgage giants' exposure to risky subprime mortgages prior to the 2008 financial crisis.

Eye on the Week Ahead

Housing data will trickle in throughout the week, while the final number for third-quarter economic growth is due Thursday. And a certain gentleman in red is expected to make an appearance on Sunday.

Key dates and data releases: housing starts (12/20); home resales (12/21); final Q3 gross domestic product (12/22); durable goods orders, personal income/spending, new home sales (12/23).

Coin this phrase � buy to hedge against inflation

Wed, 14 Dec 2011 00:00:00 -0500

If you haven’t purchased gold and silver coins, you may be getting your chance! I have been recommending to our clients for years to own some gold and silver coins.

Currently, gold and silver are going through a price-change -- gold down 15 percent from its highs, and silver down over 38 percent from its highs.

But long-term gold and silver should outperform other asset classes. As Europe and the United States are at the initial phases of their debt restructuring, they will be printing more money to grow their way out of the debacle for quite some time.

Every new dollar created out of thin air devalues the currency, thereby increasing the value of hard assets like gold and silver. Gold acts like “insurance” against all the politicians and worthless paper assets. Silver has great investment demand and, behind gold, as an inflation hedge.

I believe it is wise to use pull backs in the price of gold to getexposure. But remember, coins are for “storing” not trading. Gold ETFs and mining stocks are for trading and are part of your investment portfolio. I recommend 10-20 percent in gold and gold/silver investments. For coins, consider buying at least three to six months of your income. Store it in a safe and convenient location.

Buy bullion (coins), not collectibles. Gold Eagles or Gold Buffalos are my suggestion. For silver, buy the Silver Eagles.

Shop around at some of the larger online shops such as Monex, Kitco or Blanchard. Compare prices and get ready to buy your coins.