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| Shoreline Wealth & Investment Management |
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Newsletter
March 2007 |
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The Stock & Bond Markets -
The first two months of 2007 enjoyed relatively large gains with the S&P up close to 3% and NASDAQ up approximately 4%. And yet, in one day, it was all taken away with the market declining by more points in one session than at any time since 9/11. Potential problems include the recent rumors from China that regulators may attempt to limit and/or more vigorously regulate trading and investing which would impact markets worldwide since it could have a global impact on liquidity. Additionally, the housing sector continues to be a drag on the economy which effects all related businesses as well as the free spending habits of homeowners who only thought the value of their properties could go up. Finally, as mentioned below, inventories of unsold goods are rising which results in discount pricing, lower margins/profits and economic growth in general. We're encouraging clients to be diversified among small, medium and large-cap stocks as well as maintaining a reasonable exposure to the international sector.
Bonds are likely to be less at risk of the Federal Reserve increasing rates sooner rather than later. Not only has the housing slump put a damper on the economy, but orders placed with U.S. factories for durable goods fell more than forecast (7.8%) in January as excess inventories prompted companies to limit spending. While these indicators indicate a slowing economy and a variety of concerns, it does provide evidence that rates are relatively stable for now. 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 slump in home prices from the end of 2005 to the end of 2006 was the biggest year-over-year drop since the National Association of Realtors started keeping track in 1982. There are no reasons to believe that's the worst of it. Prices fell in 73 of the nation's 149 major markets in the last quarter of 2006, compared with 45 declining markets in the third quarter, revealing a downturn that is not only deep but wide. At the same time, the number of existing-home sales declined in 40 states, with precipitous drops in previously red-hot markets like Arizona, Florida, Nevada, California and Virginia. On top of that, a glut of unsold homes virtually ensures that prices will fall further before sales pick up. At the end of 2006, the vacancy rate for family homes was the highest it has been since the Commerce Department started keeping records in 1956. Squarely in harm's way, however, are low- and middle-income homeowners, many of whom have mortgages with rates that are due to adjust upward this year and next. With delinquencies already surging, it is inevitable that a combination of higher mortgage payments and weakening home prices will cause many homeowners to default.
| 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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| Retirement Investing |
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 Investing for retirement is a science of principles. Once understood, these principles can be applied, implemented and monitored regularly to enhance ...
Full Story »
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| Fiduciary Investing: Disinheriting Uncle Sam |
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 If you have direct (or indirect) responsibility for beneficiaries of a trust or your company's retirement plan oversight, you need to be aware of the increasing enforcement of accountability by the Department of Labor and the IRS. We offer several solutions to bring your plan into compliance and reduce your liability.
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.
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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.
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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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