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The Markets
 The
markets rebounded last week, recovering about one third of
the prior week's loss that wiped out about $3.3 trillion
of world stock-market value in six trading days. Global markets
also stabilized as liquidity concerns were comforted as the
yen fell against all its major counterparts.
Last week's market action produced a bumpy ride. According
to Barrons.com, on Monday, markets were down because of investor
concerns about sell-offs in Asia and Europe. On Tuesday, they
bounced back on good news in the technology sector, and as
the result of market gains overseas. The market dipped again
on Wednesday when investors read the Federal Reserve's
Beige Book—a report on current U.S. economic conditions
that is published eight times each year— reported
some slowing. On Thursday, good news from Asia caused another
rise.
Finally, a favorable employment report boosted markets early
on Friday. Friday afternoon profit-taking reduced gains.
With all this recent economic information, investors are
trying
to figure out if goldilocks is still alive and well.
It's important to remember that the current “Bull
Market” has run the second-longest stretch in history
without a 10% correction. This is one reason we believe that
the potential for a much deeper correction still exists.
| Returns through 03/09/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
1.3 |
-1.5 |
10.8 |
5.5 |
3.0 |
5.7 |
| Nasdaq Composite |
0.8 |
-1.2 |
5.6 |
6.2 |
4.4 |
6.1 |
| Standard & Poor's
500 |
1.1 |
-1.1 |
9.5 |
7.1 |
3.7 |
5.6 |
Source: Yahoo! Finance, Barrons
Past performance is no guarantee of future results. Indices
are unmanaged and cannot be invested into directly.
Three-,
5-, and 10-year returns are annualized. Assumes dividends are
not reinvested.
The
origin of the expressions "bull" and "bear."
 Bull [n]
(bûl) An investor with an optimistic
market outlook.
Bear [n]
(bâr) An investor with a pessimistic
market outlook.
Where
do the terms "bull market" and "bear
market" come from? One common myth is that the
terms "bull market" and "bear market" are
derived from the way those animals attack a foe, because
bears attack by swiping their paws downward and bulls
toss their horns upward. While this may sound like a
logical explanation, it is not the true origin of the
terms.
The symbol of "The Bear" is thought to have
originated in a proverb that goes along the lines
of, "Don't
sell the bearskin before you've caught the bear." Long
ago, bear skin jobbers were known for selling
bear skins that they did not own; i.e., the bears
had not yet been caught. This term eventually was
used to
describe short sellers, speculators who sold shares
that they did not own, hoping for a drop in the price
of the shares, and then delivered the shares at a
profit. Because baiting bulls and bears to fight one another was once a
popular
sport in England, the two types of animals eventually
came to be seen as opposites.
In the late 1800s, editorial cartoonist Thomas Nast,
who also gave us the modern depictions of Santa Claus
and
Uncle Sam, helped cement this perception by
popularizing
the bull and bear as symbols for U.S. stock market
movement. 
THE PENSION PROTECTION ACT OF 2006 (PPA)
CREATED new opportunities for investors. Here is a brief
overview of some of the provisions of PPA.
- You can contribute more to your
Traditional and Roth IRAs. For the 2006 and 2007 tax
years, you may contribute
up
to $4,000. You can also contribute more to your employer's
plan—up to $15,000 to 401(k) or 403(b) accounts.
- If
you are age 50 or older you can contribute even more to
your Traditional and Roth IRAs—$1,000 for 2006—through
catch-up contributions. You can also make catch-up contributions
(up to $5,000 for 2006) to some types of employer-sponsored
retirement plans, including 401(k) and 403(b) plans.
- If
you are named as the beneficiary of a qualified retirement
plan account by someone other than your spouse, you may
be able to receive more favorable tax treatment by rolling over
into an inherited IRA. This may enable you to stretch distributions
from the account over your life expectancy. That means
the money can continue to grow tax-deferred, and you can avoid
the taxes that might be due on a lump sum distribution.
- You
can rollover directly to a Roth IRA if you take a distribution
from a plan account after December 31, 2007. Pre-tax contributions
and any earnings will be treated as taxable income in the
year the account is rolled over, but you won't have
to rollover into a Traditional IRA first.
- If you are least
70 ½ years of age, you can transfer
up to $100,000 per year directly from an IRA to a qualified
charity without having to report it as income for Federal
income tax purposes. These distributions may satisfy required
minimum distribution requirements. The provision is effective
until December 31 of 2007, but covers 2006 and 2007 tax
years.
- If you want to deduct contributions
to a Traditional IRA or contribute to a Roth IRA, but
have earned too much
to
be eligible in previous years, you'll be glad to
know that the PPA increases the Adjusted Gross Income limits
that
determine the deductibility of Traditional IRAs and eligibility
for contributing to Roth IRAs (in $1,000 increments) starting
in 2007.
If you would like to learn more about the PPA and its provisions,
give our office a call.
 Here you see five equal squares.
Can you leave
just three squares by taking away three sticks?
Click here for the answer.
Best Regards,
P.S. Please feel free to forward this newsletter
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