MARKET COMMENTARY
For the week of February 4, 2008

THE MARKET
Merger news, specifically Microsoft Corp.’s offer for Yahoo Inc., outweighed economic data last week, as
the markets shrugged off a decline in jobs and a drop in construction spending. The Fed did its part on
Wednesday at its regular meeting, cutting both the federal funds rate and the discount rate by another
half a percentage point after a three-quarters of a point cut at an unscheduled meeting Jan. 22. The Dow
ended the week up 4.41 percent to close at 12,743.19. The S&P gained 4.90 percent to end the week at
1,395.42, and the NASDAQ rose 3.75 percent to finish the week at 2,413.36.









Source: Morningstar.com. * Past performance is no guarantee of future results. Indexes are unmanaged and
cannot be invested into directly. Three and five-year returns are annualized. The S&P, excluding “1 Week”
returns, is a reflection of return to an investor, by reinvesting dividends after the deduction of withholding tax.

Up And Down Days – The S&P 500 has gained an average total return of 12.7 percent per year over
the last 25 calendar years (1983-2007), exactly equal to 1 percent compounded per month for the last
300 months. Over this period, “up” trading days have taken place 53 percent of the time and “down”
trading days have occurred the other 47 percent of days (Source: BTN Research).   

Comeback – In 2006, only three of the Dow 30 stocks lost value during the year, the worst of which lost
19 percent. In 2007, that “worst” stock from 2006 gained 32 percent. The Dow Jones Industrial Average
is an unmanaged index of just 30 stocks and is not generally considered representative of the broad U.S.
stock market (Source: BTN Research).  

Gas Guzzlers – President Bush delivered the annual State of the Union address last week. In his
speech to the nation one year ago (Jan. 23, 2007), President Bush announced a goal for our country to
“reduce gasoline usage by 20 percent in the next 10 years.” The U.S. consumes 20.9 million barrels of oil
a day, of which 43 percent of that total is converted into gasoline used by autos and light trucks (Source:
White House, Wall Street Journal, Fortune, BTN Research).

IRA Facts – A recent study by the Investment Company Institute found that many Americans are hanging
on to their
IRA funds until forced by the government to take distributions. Less than 20 percent of
households with IRAs took withdrawals during the 2006 tax year, and 70 percent said they were unlikely
to take distributions before age 70½.
Required minimum distributions (RMD) are the most cited reason
for taking withdrawals. Forty percent of U.S. households have IRA savings, with nationwide IRA assets
totaling $4.6 trillion in mid-2007. The greatest growth in IRA assets has come from rollovers from
employer-sponsored defined contribution plans like 401(k)s. In 2006, only 14 percent of U.S. households
made direct contributions to an IRA. That may be due to contribution limits: in 2007, the limit for
401(k)
contributions was $15,500 or $20,500 for people over 50, while the
IRA limit was only $4,000 or $5,000
for people over 50. The IRA limit for 2008 increases to $5,000 or $6,000 for those over 50.

WEEKLY FOCUS - Retiree Insurance Review

If your retirement plans include moving to a smaller home,
condo or apartment, take the time to review your
homeowners or
renters insurance to make sure it still
meets your needs.

If you decide on an apartment or condo, your landlord or
condo association has insurance, but only on the building
and surrounding property. The contents of the building –
your personal contents – don’t fall under the building
insurance. Renters insurance covers loss of your
personal property from risks including fire or lightning,
windstorm or hail, explosion, smoke, theft or vandalism,
the weight of ice or snow, water-damage from home
utilities and electrical surges as well as volcanic
eruption or vehicles or aircraft crashing into your space. Like
homeowners insurance, flood and
earthquake aren’t usually covered, so if those catastrophes are inherent to your geography, you’ll need a
separate policy or rider to cover those losses.

Renters and homeowners policies usually cover either actual cash value or replacement cost. Cash value
will usually fall short of replacing your property, but replacement cost coverage typically costs more.  
Document your property and its condition with dated photos or video, and consider extra coverage or a
rider if you have particularly valuable possessions like jewelry, antiques or electronics whose value
exceeds the policy cap. You’ll need coverage for additional living expenses should you be unable to live
in your apartment or condo because of fire or water damage. Most insurance companies limit this
coverage to 30 or 40 percent of the total policy value and 12 months after you’re displaced. A
homeowners or renters policy can protect you from loss for personal or property damage when you’re at
fault. For example, if a person in your apartment slips and falls or your tub overflows and damages the
floor, renters insurance will protect you from liability and cover the damages.

If you sell insurable assets – cars, boats, art, antiques, etc – as part of your move, you may have more
coverage than you actually need. Also, discounts may be available for having devices like smoke and fire
detectors, burglar alarms and fire extinguishers; for policyholders older than 55 and retired; and for
purchase of other types of coverage, such as
auto insurance.

Just because the size or ownership of your home changes doesn’t mean you have less to lose.
Homeowners or renters insurance still has a place in your total risk management plan. Call our office for
a review of other financial matters that may be impacted by your retirement or move to a smaller home.

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of
the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded
blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter
common stocks traded on the National Association of Securities Dealers Automated Quotation System. The
Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely
recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies
representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all
dividends. WMCSAI# 267695
Copyright © 2010 The Money Alert.com. All rights reserved.
Returns through 2/1/08
1 Week  
YTD
1-Year  
3-Year
5-Year
Dow Jones Industrials  
4.41
-3.78
2.85
8.99
12.13
NASDAQ Composite
3.75
-9.01
-2.23
5.27
12.81
S&P 500  
4.90
-4.85  
-1.67
7.47
12.31
MSCI EAFE
1.85
-7.83
0.46
14.29
20.65
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