Market Commentary
For the week of July 27, 2009

The Market
The housing sector propelled the markets higher this week as data from the National Association of
Realtors showed sales of existing homes rising for a third consecutive month, a streak last seen in early
2004. The news pushed the Dow above 9,000 for the first time since January. Existing home sales rose
3.6 percent last month, and all four regions of the country showed increases. The Conference Board’s
index of leading economic indicators – including home construction permits, stock prices and first-time
unemployment claims – also improved for the third consecutive month, rising 0.7 percent in June,
exceeding economists’ prediction of a 0.4 percent gain. For the week, the Dow gained 4.03 percent to
close at 9,093.24, the S&P rose 4.16 percent to end the week at 979.26, and the NASDAQ was up 4.21
percent to finish the week at 1,965.96.

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.

Four Months In A Row The S&P 500 gained 0.2 percent (total return) in June 2009, its fourth
consecutive up-month (i.e., March-April-May-June). The four straight up-months were the stock index’s
best run since it advanced over eight successive months from June 2006 to January 2007. 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).  

Net Worth At The Top The average net worth of American families ranked in the top 10 percent of
income earners is $3.3 million. This data is part of the 2007 Survey of Consumer Finances collected by
the Federal Reserve and was released in June 2009 (Source: Federal Reserve, BTN Research).  

Tax Stat The last year in which the highest marginal tax bracket for individual taxpayers was as high as
50 percent was 1986. The top 1 percent of taxpayers paid 26 percent of all federal income tax in 1986.
The highest marginal tax bracket for individual taxpayers was 35 percent in 2006 (note that the top
bracket is still 35 percent today). The top 1 percent of taxpayers paid 40 percent of all federal income tax
in 2006 (Source: Internal Revenue Service, BTN Research).   

WEEKLY FOCUS – Countdown to College: Cash Management

This article is the final in a series on preparing financially
for your child or grandchild to start college.

If your child or grandchild lacks experience in managing
money – or has a history of doing it poorly – a crash
course may be in order before that move to campus this
fall. College life comes full of temptations like pizza
delivery, movie rentals and road-trip gas. Without a
budget, students may run out of money before they run
out of semester.

Help your student by discussing sources of income –
student loans, grants, job wages, savings and parental
contributions – and expenses such as tuition, housing or
rent, phone, books, supplies, food, gas, entertainment and clothing. Some of those will hit at the
beginning of the semester while others will be on-going. A monthly or even weekly
budget will help your
student visualize potential cash flow pitfalls – like spending student loan money on clothes rather than

If your student doesn’t already have a checking account, he or she will probably need one. Help by
reviewing account options and bank policies, especially regarding overdraft fees. Overdraft protection
can look like a good thing by covering checks when funds are insufficient, but if a student maxes out that
protection, an even deeper hole has been dug. Have a frank discussion about what will happen if money
runs out or overdraft charges are incurred. Show your student how to balance an account statement and
use transactions to track spending. A budget adjustment may be necessary if, for example, gas prices
increase dramatically.

Estimating variable expenses like food and gas can be difficult for new college students. One suggested
method involves placing the budgeted cash for a category – such as gas, food, entertainment – in its own
envelope. When the money is gone, no more can be spent on that category until it can be replenished
according to the budget.

Helping students set a budget and monitor cash flow not only teaches them how to manage money on
their own, it may save you from at least a few of those plaintive calls for financial help. If you or your
student has questions about managing finances during the college years, please give our office a call.

* 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# 299260
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Returns through 7/24/09
1 Week  
Dow Jones Industrials  
NASDAQ Composite
S&P 500