Market Commentary
For the week of September 21, 2009

The Market
As of Friday, Sept. 18, the Dow, NASDAQ and S&P have all ended higher for nine of the past 11 trading
days. Since reaching 12-year lows on March 9, the S&P has gained 58 percent and the Dow is up 50
percent. The NASDAQ has increased 68 percent since bottoming at a six-year low. At its meeting this
week, the Federal Reserve is expected to leave interest rates unchanged (Source: CNNMoney.com).
The Dow ended the week up 2.25 percent to close at 9,820.20. The S&P climbed 2.47 percent to finish
the week at 1,068.30, while the NASDAQ rose 2.50 percent to end the week at 2,132.86.











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.

First TimersMore than 1.4 million Americans have made use of a tax credit that began in January for
first-time home buyers. The credit covers 10 percent of the price of the home up to $8,000 according to
the Internal Revenue Service. Anyone who hasn’t owned a home for three consecutive years prior to the
purchase can apply. Couples must make less than $150,000 ($75,000 for individuals). Another half-
million people are expected to apply before the Dec. 1 closing deadline. The National Association of
Realtors has estimated the credit will result in an extra 350,000 sales, while the National Association of
Home Builders estimates a more modest 165,000 sales (Source: Internal Revenue Service).

Bigger Net The combined wealth of U.S. households increased by $2 trillion in the second quarter to
$53.1 trillion, the first gain since third quarter 2007, the Federal Reserve reported last week. The Fed
credited the increase to the largest quarterly rise in stock prices since 1998 and the first jump in home
values in over two years. Consumer spending, encouraged by the cash-for-clunkers incentive, tax credits
and extended unemployment benefits, climbed back from the largest slump in nearly 20 years.

Health Coverage or Car? Health insurance for a family now averages $13,375 per year –
comparable to the cost of a compact car. According to the Kaiser Family Foundation and the Health
Research & Educational Trust survey of 2008 costs, the cost of a family policy has risen 5 percent since
2008, while wages have risen only 3 percent in the same period. Premiums for families have risen 131
percent in the past 10 years, the report said.

WEEKLY FOCUS – Roth IRA Conversions: Right for You?

To convert or not convert: that is the question for investors
previously prevented from converting their Traditional
Individual Retirement Accounts (
IRA) to Roth IRAs by the
$100,000 income cap.

Beginning in 2010,
Roth IRA conversions no longer have
an income limitation, although new Roth IRA contributions
are still limited to those with modified adjusted gross
income less than $169,000 for married filing jointly and
$116,000 for single, according to www.irs.gov. For
Traditional IRAs, any distributions you take prior to age
59½ are subject to income tax as well as a 10 percent
penalty, with some exceptions for disability and higher
education expenses. Roth IRA distributions prior to age
59½ are also subject to a 10 percent penalty, but not to the regular income tax, and cannot be taken
within five years of establishing the Roth IRA. Exceptions to the Roth IRA penalty include disability and
distributions for a first-time home purchase that meet IRS requirements.

So now that you can convert, the new question becomes should you convert. The answer depends on a
number of factors that can vary greatly depending on your personal situation, including:

  • Your anticipated tax bracket after retirement.
  • The impact the recent market decline has had on your portfolio value.
  • Whether your Traditional IRA has been funded with nondeductible or deductible contributions, or
    both.
  • The pros and cons of a partial conversion versus a full conversion for your situation.
  • Whether the conversion, because it is considered income, will push you into a higher tax bracket or
    make you subject to the Alternative Minimum Tax.
  • Your ability to pay the taxes that would be due on conversion. The law does allow you to spread the
    income over 2011 and 2012, but only for the 2010 tax year.
  • The number of years until you retire.

Your decision to convert or not convert will depend on the many factors of your individual situation today
and your beliefs about your situation in the future. Careful analysis should be undertaken before making a
conversion from a Traditional IRA to a Roth IRA. We can work with you and your tax professionals to
provide guidance and analysis. Call our office to schedule a joint 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. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment grade,
fixed rate bond market securities, including government, government agency, corporate and mortgage-backed
securities between one and 10 years. Written by Securities America. SAI# 300283
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Returns through 9/18/09
1 Week  
YTD
1-Year  
3-Year
5-Year
Dow Jones Industrials  
2.25
14.71
-7.80
-2.64
1.66
NASDAQ Composite
2.50
35.25
-3.01
-1.56
2.23
S&P 500  
2.47
20.47
-9.06
-4.75
0.98
MSCI EAFE
1.21
30.30
2.13
-2.82
6.40
BarCap US Agg Bond (TR)
-0.19
5.03
7.87
6.51
5.00