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"There is nothing
permanent except change." - Heraclitus
The Markets
Economic
data was
mixed last week, but that didn't stop the Dow from
reaching a new all-time high, or the Standard & Poor's
500 Index from coming close to its record high, which was
set in March of 2000, according to Barrons.com. Inflation,
as measured by the Consumer Price Index, eased (from up 2.8%
year-to-year in March to up 2.6% in April). It didn't
quite reach the Federal Reserve's target zone, though,
and higher food and energy prices threaten to push it up
once again. Information on the American housing market was
mixed, too with housing starts increasing and permits dropping.
The
markets mostly focused on the good news, driving blue chips
higher. Smaller company stocks and technology stocks
lagged, causing the NASDAQ to lose ground while other indices
gained. Looking forward, Yahoo! Finance says that merger
and acquisition activity could drive markets higher next
week, although rising oil prices and weaker retail sales
could slow gains.
The Fed is keeping a close eye on inflation.
What website can you use to do the same? www.bls.gov is the source for CPI and PPI data. You
can also find the Unemployment Rate, Payroll
Employment data and Productivity releases here.
Economic News coming out this week:
5/24: New Home Sales
5/25: Existing Home Sales
| Returns through 05/18/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
1.7 |
8.8 |
21.6 |
10.8 |
5.8 |
6.5 |
| Nasdaq Composite |
-0.1 |
5.9 |
16.6 |
10.5 |
8.5 |
6.7 |
| Standard & Poor's 500 |
1.1 |
7.4 |
20.2 |
11.7 |
6.9 |
6.2 |
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 NATIONAL RETIREMENT RISK INDEX (NRRI) was
created by the
Center for Retirement Research at Boston College. The June 2006 Index found
that 43% of all households
may be at risk of being unable to sustain their current standard of living
after retirement—even if they work to age 65 and annuitize all of
their financial assets. That's a 12% increase since 1983.
Why has the NRRI increased? According to the Center's research, the
primary reasons for the shift in the Index are that:
- Social Security benefits will replace a
smaller portion of pre-retirement income as the Normal Retirement Age
increases from 65 to 67.
- More workers will rely on savings accumulated
in 401(k) plans for retirement income rather than receive lifetime income
payments from defined benefit pension
plans. In theory, 401(k) plans could provide adequate retirement
income, but individuals make mistakes investing and distributing their savings,
and just
don't save enough.
- Annuity payments may be lower than in the
past because interest rates have fallen significantly.
Who is most at risk? According to the Center, the
first wave of baby boomers, born between 1946 and 1954, are the least at-risk
group
(39%)
because
they are likely to be covered by traditional employer pension plans.
The second
wave of boomers (born between 1955 and 1964) has a 44% risk of being
unable to maintain their standard of living after retirement. They
will be more
reliant on 401(k) plan assets, and will also receive less replacement
income from
Social Security. Generation X faces the greatest risk (49%) because
their youth often means they have accumulated fewer assets, and
they will also
receive less replacement income from Social Security.
If you would like to make sure you're saving enough for retirement,
discuss distribution options, or receive other assistance, please give us
a call. We would be happy to help.
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Paper Tiger
Oil painting by Femi Ford
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The Significance of Red Poppies on Memorial Day
Have you ever received an artificial red poppy when you made a donation to
a veteran's group? During World War I, Colonel John McCrae, a Canadian
surgeon of the First Brigade Artillery, wrote the poem “In Flanders
Fields” as a tribute to soldiers who died fighting there. Inspired
by the poem, Moina Michael, a Georgia native, wrote:
We cherish too, the Poppy red
That grows on fields where valor led,
It seems to signal to the skies
That blood of heroes never dies.
Soon after, people began wearing red poppies on Memorial
Day to honor fallen American soldiers.
The red poppy also may be thought of as a symbol of American
healing. Before World War I, the North and the South designated separate
holidays to remember their soldiers who had died during the Civil War. After
World War I, the holiday was changed to remember fallen Americans from all
wars, and the country united to remember those who gave their lives defending
our nation and its values.
Please join us this year in participating in the National
Moment of Remembrance. On Memorial Day, at 3 p.m. local time, take a few
minutes to remember the men and women who have died fighting for our country. 
Predictions:
* Think of a number.
* Add 7 to it.
* Subtract 2.
* Subtract your original number.
* Multiply by 4.
* Subtract 2.
I predict you ended with the number 18.
Was I right? If only predicting the markets was this simple.
Click here for the explanation.
Best Regards,
P.S. Please feel free to forward
this newsletter to family, friends, or colleagues.
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