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| Shoreline Wealth & Investment Management |
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Newsletter
June 2007 |
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The Stock & Bond Markets -
With the recent record-setting prices of both the stock market (Dow 30 over 13,000) and S&P 500 Index, investors may wonder if we're at a "top" in the market. Not according to Warren Buffett, the most successful investor of the 20th century who recently said "I don't look at the stock market at all as ridiculously overpriced. If you told me I had to buy a 20-year bond or make a 20-year investment in the stock market, I'd rather buy the stock market. It's not cheap, but it's not ridiculous." Still, according to a recent survey of leading economists, a pickup in U.S. economic growth is becoming more elusive as climbing gasoline prices, falling home values and fewer jobs restrain American consumer spending.
Federal Reserve Chairman Ben Bernanke has intimated that inflation remains a concern and the Fed may be reluctant to lower the Federal Funds rate sooner rather than later. While the chief economists of Goldman Sachs, Morgan Stanley and Merrill Lynch believe the housing "crisis" will mandate rate cuts, the Fed seems to be holding out and they're the ones that decide what happens, not the experts. We recommend diversifying (aka "laddering") across the yield curve and emphasizing high quality bonds rather than higher yielding (aka "junk") ones.
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 National Association of Realtors predicted a decline in housing prices in 2007 which would mark the first drop since the group started tracking values in 1968. Their projections are for a 1 percent decline in the median price of an existing single-family home, to $219,800. The group, in a forecast made a month ago, had previously been expecting a 0.7 percent decline. Prior to that, it had expected a gain of 1.2 percent. The number of home sales is also expected to dip from 6.48 million in 2006 to 6.29 million in 2007, a drop of 2.7 percent. Prices of new homes, at a median of $246,400, are expected to remain steady. The U.S. housing slump has even hit some of the nation's wealthiest communities which had, until recently, been immune to the rest of the country's real estate woes. Housing in New York City's richest suburbs fell as much as 18.8% this year in 15 of 24 areas tracked by the multiple listing service. In some of California's wealthiest suburbs near Silicon Valley, prices declined by 18.2 percent in Los Altos Hills, where homes spent a month longer on the sale block, and by 11 percent in Woodside, where homes spent two more months on the market than they did a year ago. It appears that even real estate owned by the wealthy has stopped defying gravity and is now more representative of national trends.
| 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 Mutual Funds |
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 An alternative to trading or investing in individual stocks and bonds is mutual funds. The advantages are broad diversification, professional management, liquidity and New York Attorney Elliott Spitzer keeping the industry honest. More importantly, whether your goals are for growth or income, long or short-term or conservative or aggressive, there is a fund that meets those objectives. If only it were that easy ...
Full Story »
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| Long-Term Trusts: Disinheriting Uncle Sam |
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 We recently discussed living trusts as a way plan your estate to reduce taxes. Another kind of trust, the "long- term" trust offers other advantages worth reviewing.
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.
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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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