Weekly Commentary
July 28, 2008
The Markets
Despite a 15.2% drop in the price of a barrel of oil last week, the stock market finished mixed as weak jobs and housing data took center stage, according to MSN Money.
The Labor Department helped sour
the market last Thursday by reporting another rise in first-time claims for
state unemployment benefits. That kept fears of a slowing economy top of mind
with investors. Shortly after that release, the National Association of
Realtors delivered the dour news that sales of existing homes in the
In order for this market to begin a sustained rally, we may need to see some stability in the housing market. Currently, falling home sales combined with decreasing home prices (a 15.3% decline for the 12 months ending April 2008, according to the S&P/Case-Shiller Home Price Index), is a not a good recipe for a bull market. When prices drop, that’s bad news for financial institutions because it may cause them to take write-offs and raise additional capital that may dilute existing shareholders.
On top of the declining home sales and falling prices, mortgage rates hit their highest level in nearly a year last week, according to data from Freddie Mac. Thirty-year mortgage rates averaged 6.63% last week, which is a sharp increase of more than a third of a percentage point from the week before. Freddie Mac’s chief economist said rising inflation concerns and a greater probability that the Federal Reserve will start raising short-term interest rates later this year were factors in last week’s mortgage rate increase.
The good news is the housing sector should eventually turn around. At some point, we expect the current glut of homes on the market to be chipped away and prices to firm. That will likely occur when the economy strengthens and jobs become plentiful again.
While we don’t take any pleasure in weak financial markets, we try to make the best of the situation by acting on any opportunities that they may present.
|
Returns
through 7/25/08 |
1-Week |
Y-T-D |
1-Year |
3-Year |
5-Year |
10-Year |
|
Dow Jones Industrials |
-1.1 |
-14.3 |
-14.3 |
2.4 |
4.1 |
2.3 |
|
NASDAQ Composite |
1.2 |
-12.9 |
-9.8 |
2.2 |
5.9 |
1.8 |
|
Standard & Poor's
500 |
-0.2 |
-14.3 |
-13.8 |
0.8 |
4.7 |
0.9 |
Sources: Yahoo! Finance,
Barron’s. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested
into directly. Three-, Five-, and 10-year returns are annualized. Assumes dividends are not reinvested.
BRETT FAVRE’S ON AGAIN, OFF
AGAIN RETIREMENT SAGA is
causing heartbreak for many Green Bay Packers fans, but in his struggle, we can
all learn an important lesson. As you may know, for several years, legendary
quarterback Brett Favre wrestled with the issue of retiring. After last season,
he finally decided to pull the plug and retire… or so we thought.
Favre recently
told the Packers he wants to play football again and, if it’s not with the
Packers, then he’d like to be traded to a team of his choice. Ouch! Seeing
Brett Favre suiting up in a non-Packers uniform would be just too much to bear
for some fanatical cheeseheads. The Packers organization has said Favre can
come back, but he would not begin the season as the number one quarterback.
Here’s the key
point in this drama that most of the media is missing – Brett Favre was totally unprepared for life after football. As the quintessential
quarterback, Favre gave his heart and soul to the gridiron. Unfortunately, he
didn’t prepare himself emotionally
for the day when he’d have to hang up the cleats.
Having enough
money to retire with dignity is one thing, but having the emotional wherewithal
to handle stepping out of the job, career, or calling that you’ve worked so
hard at could be a completely different thing. If you’re nearing retirement,
it’s time to ask yourself some tough questions. Here are a few to consider:
·
How
will you and your spouse interact now that you may be spending a lot more time
together?
·
Do
you have a hobby to keep you busy in retirement?
·
Do
you want to find a part-time job in an area that you are passionate about?
·
Do
you want to volunteer and give back to your community?
·
Do
you want to travel more and, if so, where do you want to go?
·
Will
you relocate and, if so, where will you move to?
·
How
will you replace the intellectual stimulation and satisfaction you received
from paid work?
Some people are
able to quit working and never look back. But, many people struggle with how to
redefine their lives after their main working period ends. While athletes such
as Brett Favre, Michael Jordan, and Joe Montana all publicly struggled with
letting go of their athletic careers, the change can be just as tough for the
unsung average American who worked hard for many years to be a good family
provider.
The key is to
understand that with some thoughtful advance planning, retirement can be one of
the happiest periods of your life. We’re here to help make that happen in any
way we can.
Weekly Focus
– Retirement Thoughts
Here are a few
quotes about retirement that are worth pondering:
“Retire from
work, but not from life.” – M.K. Soni
“Don't simply
retire from something; have something to retire to.” – Harry Emerson Fosdick
“A retired
husband is often a wife's full-time job.” – Ella
Harris
“Retirement is
like a long vacation in
Best regards,
John F. Reutemann, Jr., CLU, CFP®
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* The Dow Jones Industrial Average is a
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* The NASDAQ Composite Index is an unmanaged,
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*Yahoo! Finance is the source for any
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*
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*
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*
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*
Past performance does not guarantee future results. mc101507
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