I hate to say I was right

For the first half of 2008, the Dow has fallen 14.4% and is down 19.8% from the high in October 2007. An official technical bear market is when the market is down 20%. The S&P is down 12.9% for the first half of this year. For the quarter, the Dow lost 7.4%, the S&P lost 3.3% and the Nasdaq gained 0.6%. In the March 2008 newsletter, I made my prediction that the Dow would retest the low level of 11,500. When I wrote that, the Dow stood at 12,500. Sadly, the market has fallen, and true to my prediction, the Dow closed on June 30th, at 11,350. This is one time I hate being right. I have been fairly realistic in my views of the economy, the falling home prices and my worry over the subprime market.

Optimism is the one quality more associated with success and happiness than any other.
Brian Tracy

Wealth Manger’s Top Dogs

We are proud to announce that we have again been selected as one of the top Wealth Mangers in the nation. Our listing will appear in the July/August issue of Wealth Manager Magazine. My sincere thanks go to you, our client, for your trust and loyalty in our decisions and management of your portfolios.

Dollar gains, then falls, and will gain again

The dollar fell to a record low against the Euro in April and then began to slowly gain some strength. I think the dollar will strengthen by the end of the year. The Federal Reserve board is beginning to comment on the weak dollar. If the dollar gains, it will help offset the high commodity prices and oil.
China is letting its currency escalate faster against the dollar to contain inflation from commodity imports. A stronger yuan will help stabilize the trade deficit between our nations. This will make US exports more competitive with Chinese goods in their home market. This gives the US an edge against goods from Europe and Japan.

A dream is your creative vision for your life in the future. You must break out of your current comfort zone and become comfortable with the unfamiliar and the unknown.
Denis Waitley

Summer is here! The Olympics will begin 8-8-08
I did the Danskin Triathlon inside Disneyland Adventure. Swimming in the dirty lagoon water is something I never want to do again but it was a blast biking the closed streets all around Disneyland. The run went “behind the scenes” of the attractions and through Bugs Life, etc. I also swam the one mile Long Beach Ocean Festival swim. The problem was the buoys drifted away from us and we kept swimming and swimming, trying to round them. The swim ended up being twice as far as we all expected. I felt like Dory in the movie Nemo: “Just keep swimming, just keep swimming”. With sore shoulders, I finally saw the finish line and took 2nd place.


Notes from Carol

0% Capital Gains Rule

In 2008, the tax law allows for 0% capital gains rate for those in the 10% and 15% tax brackets from now until 2010. The cutoff for the 15% tax bracket is $65,100 for joint filers and $32,550 for single filers. While many of you will not be able to meet this income limit, there are some opportunities that your family members could benefit from. For example, you can transfer stock or other appreciated assets to a child or grandchild fresh out of school to help them payoff their student loans. Then they can sell the shares and pay 0% capital gains if they are under the income limits and not a dependent of anyone. This is considered a taxable gift to the donor but the tax law allows you to give $12,000 annually (or $24,000 from both spouses) to any individual without paying any gift tax. Please consult with us or your CPA if you think this applies to you.

Variable Rate loans

If you currently hold a variable rate loan, you should seriously look into converting into a fixed rate. The Fed is concerned about the weak dollar and will start to raise rates in order to strengthen it.

Asset Management Clients: We are following the market closely and strategically managing your portfolio based on your risk tolerance, long-term objectives, and market fundamentals. If there is a change in your cash flow needs, risk tolerance or long term goals, please let us know so that we can adjust the portfolio accordingly.

Financial Planning Clients: If you would like a review or update, please call to schedule.
Enjoy your summer!