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| Shoreline Wealth & Investment Management |
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Newsletter
February 2007 |
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The Stock & Bond Markets -
The stock market continues to provide a lot of mixed signals. Gross Domestic Product (GDP) grew at 3.5% in the 4th quarter of 2006, faster than the 2% rate in the 3rd quarter and more than the 3% expected rate of growth most analysts expected. Another positive was the decision by the Federal Reserve to keep rates constant for the foreseeable future which removed a lot of uncertainty regarding their efforts to contain inflation. Still, earnings have been growing at double-digit rates for the past 4 years and are now slowing to single-digit increases. The Institute for Supply Management's Manufacturing Index was 49.3 in January, down from 51.4% in December. A number less than 50% indicates the manufacturing activity is contracting rather than expanding. Profitability for U.S. companies slowed as wages rose at the fastest pace in 6 years with profit margins at almost half of the S&P 500 lower or unchanged (on 5 of the 6 occasions this occurred since 1979, the S&P 500 fell by at least 16% over the following 12 months). And just when we thought the 78 million baby boomers approaching retirement weren't saving enough, it appears that the savings rate in the U.S. has hit a 74-year low with savings at -1% (no typo). Whether you're a conservative, moderate or aggressive investor, diversification (which we preach and preach and ...) continues to be the logical strategy.
As for bonds, indicators are also contradictory (growth and inflation concerns combined with a slowing economy and the need for lower rates as a stimulus). We recommend spreading your bond allocation along the yield curve with short, intermediate and long-term bonds having an equal weighting.
CELEBRATING 27 YEARS
Since 1980, I have been providing financial advice to investors and I'm proud to say that our service and performance (see "Bottom Line" section on the right) continue to be superior to the market and our peers. Thanks for your support.
Real Estate Bubble? -
The number of homes in the United States foreclosed by lenders rose 42 percent in 2006 from a year earlier in a sign that many homeowners have became overextended in mortgage debt. More than 1.2 million foreclosure filings were reported nationwide during 2006, which is a rate of one foreclosure filing for every 92 households, according to RealtyTrac, Inc. As much as $1.5 trillion in adjustable-rate mortgages are due to have their rates reset this year, according to the Mortgage Bankers Association (MBA), with the fourth quarter producing more foreclosure filings than any of the three previous quarters which could add to the glut in the housing market. The MBA also said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, for the week ended Jan. 19 skidded 8.4%. Since real estate like all other asset categories rises and falls, the key question now is when prices have declined enough to take advantage of the situation and buy low in order to sell high in the future.
| Selecting an Advisor |
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 Warren Buffet, the most successful investor of the 20th century learned his craft from Benjamin Graham, author of several books including the legendary "Intelligent Investor." This has been recently updated by Jason Zweig who includes 16 key questions to ask your advisor and 11 an advisor might ask ...
Read on... »
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| Understanding 529 Plans |
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 Learn the basics about these state-sponsored plans and how they can help finance increasing college tuitions ...
Full Story »
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| Living Trusts: Disinheriting Uncle Sam |
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 While having a will is the first line of defense in protecting your assets in upon death, a more sophisticated strategy includes establishing a living trust ...
Learn More »
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| Looking for a Speaker for Your Event? |
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 Shoreline Wealth & Investment Management has given presentations to Fortune 500 companies as well as many local groups and organizations. If you are looking for a professional presentation on topics ranging from investments to estate taxes to business or tax law, please contact us.
Click here for more details »
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| The Bottom Line |
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| This is where we provide the performance of our conservative, moderate and aggressive portfolios and compare these to the S&P 500 and NASDAQ Indexes. While they are an important consideration, performance is only a portion of the evaluation investors should consider when evaluating investment management. Other considerations include the risk taken to generate the returns, the quality of the service, the reasonableness of the fees and, more important now than ever, the integrity of the investment manager.
Find out more.... |
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email: cbloom@cfiemail.com
voice: 805.886.3624
web: http://www.swimllc.com/
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Shoreline Wealth & Investment Management · 3905 State Street Suite 7173 · Santa Barbara · CA · 93105
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