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Note!
The markets and our office will be closed next Monday
for Labor Day.
We
hope you and yours have a wonderful holiday weekend!
The
Markets
Sometimes
Wall Street has a short-term memory. It was just a few short
days ago on August 16th, that the Dow Jones Industrial Average
hit an intra-day low of 12,455,
which was an 11% drop from its July 19, 2007, all-time closing
high 14,000, according to Yahoo! Finance. Remember that?
Things were so tenuous in the credit markets that the Federal
Reserve felt compelled to step in and add billions of dollars
of liquidity to banking systems and to cut the discount rate.
However, with last week’s strong rally, the Dow closed
last Friday just 4.4% below its all-time high. And year-to-date,
the Dow is up 7.4%, which is nothing to sneeze at.
Are all
the problems that prompted the Fed to take action now behind
us? The short answer is nobody knows. With all
the exotic securities and new-fangled investments that have
been sold in the past few years, it may take more time for
the effects of subprime problems and liquidity issues to
work their way through the system. Then again, it’s
possible that the Fed’s action was all that was needed
to cure the problem. Of course, we continue to monitor the
situation.
Liquidity issues took a backseat last week
as good economic news helped drive a nice rally in the stock
market. In particular,
data on durable goods orders and new home sales were perceived
positively by the markets, according to MarketWatch.
With
a lot of traders and Money Managers away from their desks
next week before the Labor Day weekend, markets should
be fairly range bound. It’s similar to a heavyweight
fight… after several rounds of delivering heavy blows
the Bulls and the Bears are now in the middle of the ring
leaning on each other trying to catch their collective breath.
When traders return to their desk post holiday, the battle
will continue.
| Returns through 08/24/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
2.3 |
7.4 |
18.6 |
9.0 |
8.0 |
5.2 |
| Nasdaq Composite |
2.9 |
6.7 |
20.4 |
10.9 |
12.5 |
4.6 |
| Standard & Poor's 500 |
2.3 |
4.3 |
14.2 |
9.7 |
8.8 |
4.6 |
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.
Top Headlines:
- Leading
Indicators rose 0.4% in the month
of July. This increase indicates likely economic growth
in the near future lead by consumer expectations, vendor
performance and jobless claims. (8/20)
-
News of a possible merger between brokers TD Ameritrade
(AMTD) and ETrade (ETFC) sent the markets higher this
week. Also discussing possibilities are hotel giants
MGM and Dubai World. After minimal M&A activity
this past month, investors looked favorably upon these
announcements.
(8/22)
- Bank of America (BAC) invested $2 bln into Countrywide
Financial (CFC) preferred stock. Bank of America
says the deal will be mutually beneficial and strengthen
both parties. (8/22)
- The Bank of Japan held interest
rates at 0.5% this week. The move did not surprise analysts
due to recent turbulence
in the global credit markets. (8/23)
- Durable Orders
rose to 5.9% for the month of July. This gain was marked
by an increase in demand for airplanes,
vehicles, computers, machinery and steel. (8/24)
- New
home sales increased 2.8% in the month of July to 870,000.
While this number was higher than 820,000 expected
by economists, sales are down 10.2% compared
with last July.
Although many think of Labor Day as
a fashion marker—the last day to wear white—the
holiday should mark far more.
During the 1880s, the first
Monday in September was set aside to celebrate America’s working class and give
those workers a day of rest. At that time, the American work
week was 60 hours long: 10 hours a day, six days a week.
In those days, employers provided few perks. Lunch hours,
vacation days, sick leave, minimum wage, insurance coverage,
retirement plans, stock options, and other benefits that
we enjoy—and often take for granted—did not exist.
The rights that we expect in our workplaces
today are the fruit of the struggles of the American workers
who came before
us, including children. During the late 1800s and early 1900s,
every member of working class families worked and children
earned substantially lower wages than their parents. Experts
estimate that one of every six children in the U.S. under
the age of 16 was working in 1880. They worked 60 hours a
week, just like the adults. Although today’s children
might not believe it, during a notable Philadelphia textile
mill strike, children held signs that read, “We want
to go to school!”
By the 1920s, the work week was shorter:
eight hours a day, six days a week. Although Congress attempted
to pass a constitutional
amendment that would create a national child labor law
during the same decade, it was blocked. Children remained
an essential
part of the American workforce until the Great Depression
when jobs were scarce. In the 1940s, the standard forty-hour
work week was established, although many Americans continue
to work much longer hours.
American workers owe a debt
of gratitude to our ancestors—skilled
and unskilled, blue and white collar, of all ages and ethnicities—who
fought to secure a better world for us. This Labor Day, remember
to celebrate the strength and spirit of American workers.
If you’re interested in securing a better financial
future for your children and grandchildren, please give us
a call. We would be happy to help.
WILL TAKING A PERSONAL FINANCE CLASS
IN HIGH SCHOOL help your child later in life? According
to a new study, your teenager may be better off selecting
another
elective. Researchers at Ohio State found that adults who
took a high school personal finance class didn’t
score any better on a test of basic investment knowledge
than those
without a personal finance primer. Interestingly, however,
respondents who took a personal finance class in college
scored more than a full point (or a letter grade in academic
terms) higher than those who took a high school personal
finance course. Published in a recent issue of the Journal
of Family and Economic Issues, the study involved 1,039 alumni
of Ohio State. So why would college classes
be more effective than those in high school? Study co-author
Jonathan Fox, an associate professor of consumer sciences
at Ohio State University,
says college classes are more comprehensive and that personal
finance lessons may be more applicable for college students
who are living on
their own, paying bills, and dealing with financial aid issues.
Additionally, with study respondents who
held a bank account before age 18 scoring more than 5% higher
than those who
didn’t, Fox says
the study underscores the value of real-life financial experiences
as teaching tools. Accordingly, he suggests the best way
to convey the basics
of personal finance to high school students might be to include
real-world financial issues for teens in the curriculum.
There’s
plenty of room for improvement when it comes to educating
teens about personal finance. A 2006 survey measuring the
financial
knowledge
of 12th graders conducted by the Jump$tart Coalition for
Personal Financial Literacy found only 14.2% knew that stocks
have historically, over long
periods of time, returned more than bonds.
Place these 12 groups into
pairs to make six currencies.
Cha Int
Kor Kwa
Lar Udo
Una Dir
Dol Esc
For Ham
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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