Market Commentary
For the week of May 25, 2009

The Market
Worries that a growing federal budget deficit may ultimately erode gains from the stimulus packages
kept stocks falling for most of last week. The major indexes, however, all finished the week moderately
higher, with trading light in advance of the Memorial Day holiday weekend. The Dow gained 0.21 percent
to close the week at 8.277.32. The S&P rose 0.53 percent to finish the week at 887.00, and the
NASDAQ climbed 0.71 percent to end the week at 1.692.01.









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.

Cutback Thirty percent of U.S. companies have either reduced the employer match to the firm’s 401(k)
retirement plan during 2009 or expect to reduce it within the next year (Source: U.S. News & World
Report, BTN Research).  

A Million Fewer As of March 31, 2009, there were 3.7 million existing homes for sale in the U.S. Just
eight months earlier (July 31, 2008), the number of homes on the market was 4.7 million (Source:
National Association of Realtors, BTN Research).  

Other Stock MarketsThe international stock index EAFE did not beat the S&P 500 on a total return
basis in 2008, but had bested the domestic stock index in each of the six previous years (2002-07).
Before that, the S&P 500 had a higher total return than the EAFE in 10 of the prior 13 years (1989-2001).
The EAFE index is an unmanaged index that is generally considered representative of the international
stock market. These international securities involve additional risks including currency fluctuations,
differing financial accounting standards and possible political and economic volatility (Source: BTN
Research).    

Stocks and Recessions The two best years ever on a total return basis for the S&P 500 took place
in 1933 (up 53.9 percent) and 1954 (up 52.6 percent). The U.S. was in a recession during the first three
months of 1933 and during the first five months of 1954. The S&P 500 is an unmanaged index of 500
widely held stocks that is generally considered representative of the U.S. stock market (Source: BTN
Research).

WEEKLY FOCUS – Taming Debt While Growing Savings

On Friday, President Obama signed the Credit Card
Holders’ Bill of Rights, legislation that will restrict certain
credit card practices and eliminate sudden interest rate
increases and late fees. The legislation, introduced last
fall, comes as Americans deal with more than 15 years
of mounting credit excesses.

During the eight years of the Clinton administration,
household debt grew 83 percent while personal income
grew only 57 percent. The trend continued during the
Bush years, as household debt grew another 88
percent – double the growth in personal income,
according to the Federal Reserve. Over the past
decade, U.S. household debt has grown to equal
100 percent of our gross domestic product (GDP), as reported by the Commerce Department.

In December, the Federal Reserve was joined by the Office of Thrift Supervision and the National Credit
Union Administration in revising regulations to prohibit banks from applying interest payments so as to
maximize penalties and to require credit card companies to give holders at least 21 days to make
payments. Those rules take effect in July 2010.

The Credit Card Holders’ Bill of Rights signed Friday, which will take effect in nine months, goes even
further. It prohibits credit card companies from issuing cards to people under 21 without proof of means
to pay or a parent or guardian as co-signer. Companies cannot increase rates for late payment until the
customer is more than 60 days delinquent; if the customer pays the minimum balance on time for six
months, the credit card company must restore the previous lower rate. Other provisions in the bill apply to
rate increases in the first year the account is open and on existing balances as well as limits on fees and
penalties.

Americans appeared to be adopting a self-imposed “debt diet” – in the third quarter of 2008, as
consumer debt fell 0.8 percent to an annualized $30 billion, according to the Federal Reserve. That’s
great news, but the focus on
debt reduction has left many families wondering how to pay off loans near
term and still save for long-term goals like college and retirement – particularly as employers freeze
wages and bonuses and eliminate pension benefits and 401(k) matches.

The question of where your discretionary dollars go – toward debt or toward saving and investing – can
be complicated and depends a great deal on your personal situation, including your age, your income,
your existing savings and your long-term goals. Our office can help you analyze your need to save and
invest while strengthening your financial foundations by decreasing your debt. We are happy to work in
conjunction with your accountant or other financial professionals. Call us today for an appointment.


* 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. Written by Securities America. SAI# 297762
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Returns through 5/22/09
1 Week  
YTD
1-Year  
3-Year
5-Year
Dow Jones Industrials  
0.21
-4.19
-32.20
-6.91
-1.19
NASDAQ Composite
0.71
7.29
-31.35
-8.00
-2.42
S&P 500  
0.53
-0.68
-34.65
-9.12
-2.12
MSCI EAFE
3.55
6.56
-38.05
-8.18
3.00