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"Regardless of the dollar
price involved, one ounce of gold would purchase a good-quality
man's suit
at the conclusion of the Revolutionary War, the Civil War,
the presidency of Franklin Roosevelt, and today." - Peter
A. Burshre
The Markets
Black gold (oil) and the shiny yellow
metal we simply call “gold” both seem to be coveted
items these days. Last week, crude oil prices reached an
intraday all-time high of $92.22 per barrel on the New York
Mercantile
Exchange,
according to Barron’s. That’s up nearly 30% from
its price on August 24th. Surprisingly (and we’re not
complaining), prices at the gas pump have not moved up nearly
as much as oil prices. So what’s driving the spike
in oil? According to MarketWatch, you can point to falling
energy supplies, global political tensions, and weakness
in the U.S. dollar.
It’s interesting to note that with all the talk about
global warming, going green, and the search for alternative
sources of energy, you’d think there’d be less
demand for oil and hence, a drop—not a rise—in
oil prices. Sometimes, the market appears to be illogical,
but long term, it usually comes to its senses.
Gold is another
eye-opening situation as it closed at $787.50 per ounce last
week on the New York Mercantile Exchange.
According to Action Economics, gold shot to its "highest
level since January 1980 on a combination of inflation concerns
and safe-haven buying in the wake of a sensitive geopolitical
environment and renewed concerns about the U.S. growth outlook." Throw
in a weak dollar and the possibility of more interest rate
cuts and you may have a recipe for continued strong gold
prices, they added.
It was way back on January 21, 1980, that
gold set its all-time record high of $875.00 per ounce,
according to MarketWatch.
Of course, after adjusting for inflation, current gold
prices are dramatically below their 1980 high, whereas oil
prices
are very close to their inflation-adjusted all-time high.
With
so many things to invest in these days besides the stock
market, it seems like there’s always something
that’s going up. That’s one good reason why it
makes sense to diversify—you may have a better chance
to own one of those things that’s going up.
| Returns through 10/26/07 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
| Dow Jones Industrials |
2.1 |
10.8 |
14.2 |
11.0 |
10.1 |
6.6 |
| Nasdaq Composite |
2.9 |
16.1 |
19.3 |
12.2 |
15.7 |
5.9 |
| Standard & Poor's 500 |
2.3 |
8.3 |
11.5 |
10.6 |
11.0 |
5.5 |
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:
- Existing
Home Sales dropped 8% for the month of September,
marking the lowest level in eight years. September's
report provided further evidence of the credit squeeze's
effect on the housing market. (10/24)
- Durable
Orders fell farther than expected by 1.7% for
the month of September. The decline was led by a
record 39% decrease in orders of defense goods. (10/25)
Earnings Snapshot:
- Merrill
Lynch (MER) moved the markets lower in
early trading on Wednesday morning after reporting
a $7.9 billion
write-down for subprime loans and related securities.
Further disappointing news came in the company's
earnings announcement as the banking giant reported
a 94% decrease
in 3Q revenue from a year ago. (10/24)
- American
Express (AXP) remained unaffected by the recent credit crunch
as the Dow component saw an 11% rise in
income to $1.07 bln for the third quarter. The
report sent shares soaring in early trading Tuesday.
(10/22)
- Apple (AAPL) shares reached all time highs this
week after the tech giant reported a 67% increase
in earnings
for the fourth quarter. Apple said the strong results
were fueled by the success of the iPhone and its
carry over popularity into other Mac products. (10/22)
- Amazon (AMZN) earnings soared to $80 mln for the
3Q, compared to $19 mln a year ago. Shares gapped higher
on Wednesday after the news, but went on to correct
to previous levels after the opening bell on Thursday
on
worries about upcoming holiday sales. (10/23)
- Microsoft (MSFT) shares jumped 12% in early trading Friday
after the entertainment and devices division reported
a profit $165 mln for the first quarter, compared
to a loss of $142 mln a year ago. This was this division's
first profitable quarter since 2005. (10/25)
 LAST
WEEK, THE INTERNAL REVENUE SERVICE (IRS) released its cost
of living adjustments for contributions to a variety of retirement
saving vehicles. The limits affecting 401(k) plans, the federal
government’s Thrift Savings Plan (TSP), and other similar
programs provided for by Section 402(g)(1) remain the same
at $15,500. However, the limitation for defined contribution
plans under Section 415(c)(1)(A) increased from $45,000 to
$46,000 and the annual benefit limitation for a defined benefit
plan under Section 415(b)(1)(A) increased from $180,000 to
$185,000. Other increases include:
- The applicable
dollar amount under Section 219(g)(3)(B)(i) for determining
the deductible amount of an IRA contribution
for taxpayers who are active participants filing a joint
return or as a qualifying widow(er) increased from $83,000
to $85,000. Additionally, the applicable dollar amount
under Section 219(g)(3)(B)(ii) for all other taxpayers
(other than
married taxpayers filing separate returns) increased from
$52,000 to $53,000. The applicable dollar amount under
Section 219(g)(7)(A) for a taxpayer who is not an active
participant,
but whose spouse is an active participant, increased from
$156,000 to $159,000.
- The adjusted gross income limitation
under Section 408A(c)(3)(C)(ii)(I) for determining the
maximum Roth IRA
contribution for taxpayers filing a joint return or as
a qualifying widow(er) increased from $156,000 to $159,000.
The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(II)
for all other taxpayers (other than married taxpayers filing
separate returns) increased from $99,000 to $101,000.
These
aren’t exactly huge changes…but every
little bit helps.
Each of the following letters stands for
a different digit. Determine their values to solve the subtraction
problem. This puzzle comes from Scientific American Mind
magazine.
A N T E – E T N A = N E A T
Click here for the answer.
Best Regards,
P.S. Please feel free to forward
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