Market Commentary
For the week of October 26, 2009

The Market
After reaching their highest levels in a year on Monday, the major stock markets bounced around the rest
of the week, ending with losses on Friday as investors locked in profits. While more than half of the S&P-
listed companies have yet to report third-quarter earnings, eight of the 10 that have reported have
exceeded forecasts, according to Thomson Reuters. The National Association of Realtors report for
September showed the largest increase in existing home sales in 26 years, but the Nov. 30 deadline for
the first-time home buyer tax credit may be temporarily fueling demand. For the week, the Dow ended
down 0.17 percent to close at 9,972.18. The S&P fell 0.72 percent to finish the week at 1,079.60, while
the NASDAQ dropped 0.11 percent to end the week at 2,154.47.

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.

Cost of Health Insurance Premiums for employer-sponsored health insurance for a family have gone
up 131 percent over the last decade, an increase of 8.7 percent per year (Source: Kaiser Family
Foundation, BTN Research).  

Receiving Benefits Before 1960, the Social Security Administration would not approve disability
benefits for any individual younger than age 50. The average age of the 7.4 million disabled American
workers receiving
Social Security disability benefits today is 52.6 (Source: Social Security, BTN

Back To Higher Levels The current U.S. recession began in December 2007. Just 29 percent of
Americans anticipate that they will eventually return their spending and savings habits to their pre-
recession levels (Source: Hart Research Associates, BTN Research).  

Taxes The last time the IRS raised its top marginal tax bracket paid by individual taxpayers was in
1993. The top marginal
tax bracket of 31 percent from 1992 was raised to 39.6 percent in 1993. The top
bracket has been 35 percent since 2003 (Source: Internal Revenue Service, BTN Research).  

Down Or Flat Since ThenThe last time the Federal Reserve raised short-term interest rates was
June 29, 2006 or more than three and a quarter years ago (Source: Federal Reserve, BTN Research).  

WEEKLY FOCUS – More Affects of Flat Inflation

In our last issue, we discussed the impact of the U.S.’s
inflation rate on the annual cost of living adjustment
(COLA) for those receiving Social Security benefits.
Many of the laws related to income tax – including
deductions, credits and adjustments – key off inflation so
lawmakers don’t have to continually amend the laws as
the economy changes. Because the Federal Reserve
has closely monitored inflation and acted to keep it in
check during the recent economic downturn, U.S. prices
for good and services have remained relatively flat
overall. No inflation means no increases like the
Social Security COLA.

The same factors led to the recent announcement by the
Internal Revenue Service that there would be no changes for 2010 in nearly 40 tax benefits keyed to
inflation. Among those items remaining at 2009 levels are the contribution and income limits on
Roth IRAs and
401(k) plans.

Traditional IRA: The maximum contribution limit for 2010 is $5,000 for those age 49 and under, with an
extra $1,000 catch-up contribution for individuals age 50 or older.

Roth IRA: The maximum contribution for 2010 is the same as a traditional IRA – $5,000 for those age
49 and under, plus a $1,000 catch-up contribution for those 50 and older. The ability to contribute to a
Roth IRA is subject to income limits, however. For those single tax filers, the contribution limit begins to
decrease at $105,000 in income and phases out completely at $120,000. For married taxpayers filing
jointly, the phase-out begins at $167,000 in income and disappears at $177,000. The exception to the
income cap is for
rollovers from a traditional IRA to a Roth IRA. Previously, only those with less than
$100,000 in income were eligible for this type of rollover. That requirement has been removed
completely for 2010.

401(k) Plan: The maximum contribution limit for 2010 is $16,500 for those age 49 and under, with an
extra $5,500 catch-up contribution ($22,000 total) for individuals age 50 or older.

Although the retirement account contribution limits remain the same for 2010 as they were in 2009, that
doesn’t mean your personal plan for retirement saving should remain the same. Individual factors – such
as your current income, asset allocation and tax strategies – should be reviewed at least annually to
ensure you are maximizing the benefits the IRS allows. We are happy to work with your tax professional
to help review your situation and recommend a course of action for 2010. 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# 301023
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Returns through 10/23/09
1 Week  
Dow Jones Industrials  
NASDAQ Composite
S&P 500  
BarCap US Agg Bond (TR)