Market Commentary
For the week of July 13, 2009

The Market
Uncertainty about the economic recovery, reflected in a drop in the U.S. consumer sentiment index,
brought the major indexes lower for last week. Several additional economic indicators will be released
this week, including the Commerce Department’s June retail sales report and May business inventories
report, the Labor Department’s June Producer Price Index and
Consumer Price Index, the Federal
Reserve’s June industrial production report and the National Association of Home Builders’ July housing
market index. Second quarter corporate financial results to be released this week include Goldman
Sachs Group, Intel Corp., Johnson & Johnson, Google, Bank of America, Citigroup Inc. and General
Electric. For the week, the Dow dropped 1.54 percent to close at 8.146.52. The S&P lost 1.87 percent to
end the week at 879.13, and the NASDAQ fell 2.25 percent to finish the week at 1,756.03.

Source: * 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.

Narrower GapThe U.S. trade deficit dropped to $26 billion in May, the lowest level in more than nine
years. The 9.8 percent drop from April surprised economists, who had expected the deficit to increase to
$30.2 billion. The annualized deficit rate is about $350 billion, roughly half of the $695.9 billion for all of
2008. The weak U.S. economy has lessened demand for imported goods, a trend that economists
expect to continue.

Service Shrinks Slower The U.S. services sector scored an index reading of 47 in June, up from 44
in May and better than the 45.5 reading that economists had predicted. The index is calculated by the
Institute for Supply Management, with readings below 50 indicating sector contraction. Although June
marked the ninth straight month of contraction in services, the month’s reading was the best since the
index was at 50 in September 2008.

Less Interest on School On July 1, interest rates on variable federal Stafford and PLUS loans
dropped from 4.21 percent to 2.48 percent, the lowest rate in the federal student loan program’s history.
The new rates are effective through June 30, 2010, and apply to loans issued between July 1, 1998, and
July 1, 2006. Student loan holders can only consolidate once, so the new rates don’t apply to previously
consolidated loans. Eligible graduates can get more information through the Federal Direct Loan
Consolidation program at

WEEKLY FOCUS – Countdown to College

This article begins a three-part series on helping your
child or grandchild prepare for the financial
responsibilities of going to college.

A 2005 study by Nellie Mae, a student loan financing
company, found that the average college freshman
already carries over $1,500 in
credit card debt. By the
time students graduate, that amount has nearly
doubled – and that doesn’t include other debt, such as
student loans. Credit card companies have become
masterful at targeting teens and young adults, who grew
up watching parents use credit or debit cards. Free
gifts, rewards programs and the school logo on the
card (you do want to support your school, don’t you?) are
just a few ways that college kids get hooked up with too much available credit at high interest rates.

Parents and grandparents can play an important role in helping students learn the basics of having a
credit card. No annual fee and the lowest interest rate possible are no brainers for getting a card. To
prevent overspending, the student – or parents or grandparents, if they are co-signers on the account –
can request a lower credit limit than most cards start with. As the co-signer, you can usually request a
duplicate account statement via mail or email, which you should review with the student monthly.

Late fees can be a major contributor to spiraling debt problems. Set up electronic payment from a
checking or savings account (yours or the student’s) and specify whether the minimum payment or full
payment should be deducted. Students should understand that a credit card is not an ATM, and therefore
shouldn’t be used for cash advances.

Explain to your student how credit ratings work and why multiple credit cards, even if unused, can
damage credit ratings. Encourage your student to stick to the one card you’ve helped him or her select
and resist the temptation to open additional accounts for the free gift. These amount to buying breakfast
cereal to get the prize in the bottom.

For more ideas on how to discuss credit cards and other financial issues with your student, watch for the
next article in this series or call our office. We’re happy to help with money issues affecting every
generation of your family.

* 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# 298951
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Returns through 7/10/09
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Dow Jones Industrials  
NASDAQ Composite
S&P 500