The Stock & Bond Markets -
The S&P 500 just had the worst January ever with the index down almost 9%. This is when the term "relative performance" (the reason people pay me to manage their money) loses a bit of it's cache. Being down 30% less than the market is admirable but not inspiring. And outperforming over 3, 5 and 10-year periods similarly brings up the inevitable "what's next" inquiry. More of the same? When will it end? The answer is in the Wall Street adage that they "don't ring a bell at the bottom or top" of market cycles. That said, we are left with what we do know and that's that markets go up and down and, over the long-term (in addition to being dead), those who maintain balanced accounts and disciplined, consistent savings/investing plans (aka regular contributions) make money. My advise is to dollar-cost-average into the market through your retirement or other plan and maintain balanced portfolios which you continue to rebalance regularly as markets do whatever it is they're going to do.

Corporate and municipal bonds are finally looking attractive relative to Treasury bills, notes and bonds which many invested in due to the inherent safety of Treasuries. However, the yield for 1 year Treasuries is only about 1.75% for 5-year notes, 2.75% for 10 year bonds and 3.50% for 30 year bonds. Investment- grade municipals yield tax free income and are paying about 2.5%, 4.5% and 5% for the same time periods. Similarly, investment-grade corporate bonds are yielding 5%, 5.25% and 5.5%. Given the likelihood of a stimulus package and relief, the higher yields outside of the Treasury market are compelling.

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Real Estate -
A successive monthly record decline of 19% was reported in the recent Standard & Poor's/Case-Schiller 10-City Composite Index. One of the cities, the San Francisco metropolitan region, dropped almost 30% from the same period last year for the second consecutive month. Phoenix was the only region worse that the Bay Area with a decline of 33%. RealtyTrac reported foreclosure filings in the U.S. which included default notices, auctions sale notices and bank repossessions rose 40% from last year. The proverbial "light at the end of the tunnel" appears to be a train with the majority of "experts" predicting a bottom in 2010. There are some indications that any stimulus package passed by congress will include some relief for homeowners with mortgages which might stem the slope of the slide in prices that have been happening since the peak in 2005. For those who don't need to sell, don't. For those who are waiting for a bottom to buy, it appears that waiting a little longer would be profitable.