The Stock & Bond Markets -
For my 2nd annual Warren Buffet Works for Me commentary in which I take advantage of the remarks produced by the "Oracle of Omaha" in his annual letter to shareholders released on Saturday, I paraphrase some of his folksy but accurate observations for your consideration. While optimistic about America over the long-term, he stated "the economy is in shambles" and that by 2008's year end, "investors were bloodied and confused, much as if they were small birds that had strayed into a badminton game." This resulted in producing a "paralyzing fear that engulfed the country at a pace that [he had] never before witnessed."

And so, the question is are things getting better, worse or less worse? That's what the numbers (rather than opinions) seem to indicate. There are fewer and fewer new lows on the New York Stock Exchange. On October 10th, there were 2901 new lows; on November 20th, there were 1894 new lows; and on February 20th, there were only 555 new lows. While not definitive, it is certainly comforting to see the pace of the decline slowing.

As I stated previously, 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. The yield for 1 year Treasuries is only about .4%, for 5-year notes about 1.75%, for 10 year bonds about 2.75% and around 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 passage of the stimulus package, the higher yields outside of the Treasury market are compelling.

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Real Estate -
The U.S. Census Bureau reported that new home sales fell 10% to a seasonally adjusted annual rate of 309,000 in January from a revised 344,000 in December. It was the lowest level since the Census Bureau began keeping records in 1963. The report also showed that the median sales price of new houses sold in January was $201,000, down 15% from $232,400 a year ago. One bright spot: the number of homes for sale at the end of January was 340,000, down from 357,000 at the end of December, according to the report. Sales fell 28% in the West, where the market was drastically overbuilt during the housing boom. In the Northeast, sales rose 12%. California home sales doubled from a year ago in January, even as median prices plummeted more than 40 percent, according to a report by the California Association of Realtors. More than 600,000 homes traded hands last month, crossing that threshold for the first time since October 2005 as buyers took advantage of the best bargains of the decade. High foreclosures, frozen credit markets and the economic downturn drove down the statewide median price to $254,350.