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"Don't tell me what
to buy, tell me when to buy it." -John Magee
The Markets It
was a short, but positive week for the stock
market. High expectations for good earnings, continued M&A
deal making, and relief from geopolitical tensions in Iran
enabled gains across the board. The all-important
ISM Manufacturing survey came in at 50.9, just above the pivotal
growth/no growth level of 50, and ISM Non-Manufacturing (ie,
services) came in at 52.4, nearly a four-year low. Despite
these overall low readings, the prices paid components in
each, which are one gauge of inflation, perked up over the
prior month, suggesting stagflationary pressures still exist
in the economy.
During the first quarter, Investor
confidence swelled and swooned and this created volatility
in markets across the
globe. The Chicago Board of Options Exchange Volatility Index
(VIX)—a widely used measure of market risk often referred
to as the "investor fear gauge”— was up 27%,
its biggest increase since the current bull market began in
2002, according to Reuters.
What is an investor to do during periods
of market turbulence? If you are confident that you
have a balanced & diversified portfolio of
investments, sometimes the best thing to do is nothing. The
markets’ performance during first quarter was an excellent
reminder about the importance of having a well-diversified
portfolio to help protect your assets. Diversifying by type
of investment, geographic area, and other factors may help
reduce the overall volatility of your portfolio. Even during
volatile periods, some parts of the market may outperform
others. For example, U.S. economic growth may be slower this
year, but growth abroad is predicted to be robust in many
areas. Diversification (or a diversification strategy) may
help reduce volatility but it is important to remember that
it does not assure a profit or protect against a loss.
It’s worth remembering that
the new highs reached by some indexes are only now eclipsing
levels that were first
seen nearly seven years ago. Please feel free to contact me
if you have any questions. Thank you for your continued trust
and confidence. Article of Interest: The greatest threat facing America today is not terrorism,
or foreign economic competition, or illegal immigration. The
Federal Reserve Monopoly over Money - by Ron Paul
| Returns through 04/06/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
1.7 |
0.8 |
13.0 |
5.9 |
4.2 |
6.7 |
| Nasdaq Composite |
2.0 |
2.3 |
5.7 |
6.3 |
6.7 |
7.0 |
| Standard & Poor's
500 |
1.6 |
1.8 |
11.4 |
7.9 |
5.1 |
6.6 |
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.
As important as your saving and spending habits
are, being truly financially responsible involves much more.
To this end, I've put together a list of ten ways to cover your ass(ets)… This
list is by no means exhaustive, but it's a good starting point.
(1) Buy life insurance. Of course this really only
applies if someone depends on you for support. I'm a big fan of term
life insurance — as they say, buy term and invest the difference!
And don't just rely on the insurance that you get through your
employer… The base coverage may not be enough for your needs,
and it's also tied to your employment — lose your job
and you'll lose your insurance.
(2) Buy long-term disability insurance. For the
average Joe, the odds of suffering a debilitating injury
are considerably higher than the odds of dying young. What
if you couldn't work?
How would you get by? Long-term disability insurance covers
your butt in the event of that you suffer, well, a long-term
disability
!
(3) Buy health insurance. When you're young and in good health,
you feel invincible. But even a relatively minor health problem can
prove to be a major setback if you're uninsured. And a major
health problem can be catastrophic.
(4) Buy a personal liability umbrella insurance
policy. Carrying personal liability insurance is particularly important
for
homeowners and/or those with substantial
personal assets. Standard homeowner's, renter's, and auto policies
provide a degree of liability protection, but a personal liability umbrella policy
picks up where these other policies leave off.
(5) Write a will (or have one written): Having
a will greatly simplifies the process of disbursing your
assets after your death, and can go along way toward
easing unnecessary burdens on your loved ones during an exceptionally difficult
time.
(6) Name guardians for your kids. If you don't, the court will. Hopefully
they'll make a good decision, but there are no guarantees.
(7) Write a living will (or have one written). If you have specific wishes when it comes to healthcare decisions
that might need to be made while you're
incapacitated, then you'll want to arrange to have a like-minded
person at the helm.
(8) Grant power of attorney (in writing) to
someone you trust. If you're
ever incapacitated, someone is going to have to make financial decisions on your
behalf. Wouldn't you like to be the one who chooses who this will
be? Same goes for healthcare power of attorney.
(9) Update your beneficiaries - If you don't
name beneficiaries, your investment accounts, IRAs, life insurance,
etc. will go into your estate and will have to
be probated.
(10) Keep everything updated, and re-assess
your needs periodically. This is an incredibly important point.
If you don't re-evaluate your situation
periodically, your hard work will be all for naught, as your needs
will change over time. For example, we bought term life policies
in the summer/fall of 2005
but, after a number of major changes in our life, we needed to increase
our coverage just one year later.
So there you have it… Ten (relatively) simple
ways to cover your ass(ets)! Please feel free to contact me if you
have any questions.
"This telephone has too many short-comings to be
seriously considered as a means of communication." - Western
Union internal memo, 1876
"Everything that can be invented, has been
invented." - Charles
Duell, commissioner of the U.S. Office of Patents, 1899
"Airplanes are interesting toys but of no military
value." - Marechal Ferdinand Foch (1851-1929), professor
of strategy, Ecole superieure
de querre military school, Paris
"Who the hell wants to hear actors talk?" - H.M.
Warner, Warner Bros., 1927
"There is no reason anyone would want a computer
in their home." - Ken Olsen, founder, Digital Equipment Corp.,
1977
It's tax time. See if you know the answers to
these taxing trivia questions.
1. Which has more words: the tax code of the United States, the Gettysburg
Address, the Declaration of Independence, or the Oxford English Dictionary?
2. Which country has the highest taxes in the world?
3. Which country has the lowest taxes in the world?
Click here for the answers.
Best Regards,
P.S. Please feel free to forward this newsletter
to family, friends, or colleagues.
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