The Stock & Bond Markets Is gold the new "real estate/energy/dot.com/..." can't lose investment? A strange question for a stock and bond commentary to begin with but it seems as though every other commercial and business TV and radio stations implies that because prices have tripled in the past 3 years, they will continue to triple into the future forever. I don't claim expertise about gold (I remember when it went to $880 before dipping below $300 and now priced a little below $1,200) is that the price of gold (stocks, bonds, commodities, real estate, art) doesn't just go in one direction. Because investment asset class goes up and down, it seems to make more sense to diversify among them to limit risk and avoid trying to predict the future (predicting the past isn't much use).

Was 2010 a lost decade for stock investors? The answer is "it depends." If you had bought the S&P 500 10 years ago at about 1,460, the value would have declined to about 1,100. Similarly, if you had bought the NASDAQ 100 10 years ago at about 4.060, the value would have declined to about 2,140. Those are bad numbers for those trying to build wealth so they can retire in comfort or leave fortunes to heirs or charities. By comparison, clients invested in our conservative, moderate and aggressive portfolios over the same time period would have had a net increase of 50-70% from their original investment. I welcome the opportunity to compete for your business - our performance certainly deserves consideration.

There was not a lot of movement in terms of bond yields this past month, largely because there was a lot of conflicting economic news in which good news cancelled out the bad (and vice versa). The bond markets are trying to determine whether the economy is bouncing off a bottom or resting before declining further due to a continuation of economic troubles. The yield for 1-year Treasuries is only about .3%, for 5-year notes about 2.3%, for 10-year bonds about 3.6% and around 4.5% for 30-year bonds. Investment-grade municipals yield tax free income and are paying about .5%, 1.5%, 3.0%, and 4.5% for the same time periods. Similarly, investment-grade corporate bonds are yielding 1.3%, 2.9%, 3.5% and 6.1%. For those worried that inflation make negatively impact bond values but still prefer the safety and income offered by bonds, this may be a time to consider "inflation-protected" Treasuries.

CELEBRATING 29 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 Foreclosures declined for the 4th consecutive month in November after declines of 3% in October, 4% in September and 1% in August. While this is encouraging news, foreclosures are still up 18% from November 2008 levels and the industry in general has excess inventory keeping prices low along with record low mortgage rates and government tax incentives supporting the market above where it be would otherwise. The states of Nevada, Florida, California & Arizona have been hardest hit by foreclosures with Nevada having 1 of every 119 homes in foreclosure compared with the national average of 1 out of every 417. Prices, while much lower than a few years ago, have risen for 5 consecutive months according to the S&P/Case-Shiller Home Price Index. As a result, the number of homeowners "underwater" with their mortgages fell from 23% to 21%.