For the week of Mar. 3, 2008
Stocks showed significant gains for the first three days of last week, but lost ground on Friday after
disappointing economic and corporate reports and higher oil prices. IBM Corp. provided a bright spot
with the announcement of a sizable stock buy-back plan, as did reinsurance company Assured Guaranty
Ltd, which will get a $1 billion infusion from investor Wilbur Ross. For the week, the Dow lost 0.90
percent to end the week at 12,266.39. The S&P dropped 1.62 percent to end the week at 1,330.63, and
the NASDAQ fell 1.38 percent to close the week at 2,271.48.
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.
Bookworms – Based upon the number of adults with a college degree, the cities of Boulder, Colo.,
Bethesda, Md., and Ithaca, N.Y., rank first, second and third in the nation as the “smartest cities in
America.” Fifty-three percent of the adults in Boulder who are at least age 25 have a bachelor’s degree
from college (Source: Forbes, BTN Research).
Consuming Assets – A lump-sum of $1.06 million in a tax-deferred account will sustain a static
$100,000 withdrawal for 20-years assuming the assets continue to earn 8 percent. However, if the
$100,000 annual withdrawal is adjusted upward each year to account for an assumed 3 percent inflation
rate, the funds are able to make only 14 years of payments. This mathematical calculation ignores the
ultimate impact of taxes on the account which are due upon withdrawal, is for illustrative purposes only
and is not intended to reflect any specific investment or performance. Actual results will fluctuate with
market conditions and will vary (Source: BTN Research).
And This Will Be Paid How? – Federal expenditures for Medicare (i.e., our nation’s health care
program for seniors at least age 65) are projected to be $477 billion in calendar year 2008, more than
double the $222 billion spent for Medicare in 2000. Projections for future Medicare costs anticipate an
additional 55 percent increase in the size of the program (to $741 billion) in just another six years
(Source: Medicare Trustees Annual Report, BTN Research).
Source of Payment – Forty-five percent of all health care expenditures are paid today by government
entities (e.g., Medicare or Medicaid) as opposed to payments made by private health insurance
companies or out-of-pocket payments made by individuals (Source: National Center for Health
Statistics, BTN Research).
WEEKLY FOCUS - Hoopla and Hype
Last weekend, after months of agonizing over whether
the writers strike would take the wind out of Oscar’s
sails, Hollywood’s finest put on their dress-up clothes
and walked the red carpet to honor their best and
brightest. After all that nail-biting and dire predictions
of what a ceremony-less Oscar night might mean to the
economy of Los Angeles, the televised Academy
Awards fell to an all-time low.
Would a lack of hoopla and ceremony make the
achievements of the honorees any less great? Not really.
And in a similar way, the hype surrounding the market
fluctuations over the past few months has about the
same amount of credibility. Economic conditions will
cycle, markets will fluctuate, and market-timers and pundits will try to predict both with varying degrees of
Much like a well made movie, a well constructed financial plan survives cycles and fluctuations. It brings
together the right cast (advisors such as attorneys, accountants and insurance professionals), uses a
script (the written plan), depends on a producer to pull all the elements together (that’s us) and needs a
director to provide the vision and call the shots (that’s you.) The end result stands the test of time,
regardless of what critics say.
You’ve heard the saying, “Everyone’s a critic.” We’re seeing a great deal of that today when it comes to
the markets and the economy. Everyone has an opinion on what is happening, what should be
happening and what will happen in the future. All of that matters very little when it comes to determining
whether your financial plan will produce the results that make you happy.
It can be difficult to ignore the hype. We hope you’ll do your best, and call us when you need to update or
create your financial plan – or you just need reassurance. In the end, “No Country for Old Men” is still this
year’s best picture – with or without the hoopla.
* 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# 270407
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