The Stock & Bond Markets
If I was the Music Man, I would say "we've got trouble" and I'm the one to rely on to solve that trouble. I'm not, however, the Music Man. The perspective and discipline I recommend doesn't address the trouble "de jour" but an approach to implement regardless of the trouble or opportunity. Namely, a portfolio balanced among asset classes (stocks, bonds, cash equivalents, real estate, collectibles) which is re-balanced regularly to account for market fluctuations and diversified domestically and internationally. Today's trouble includes the economic uncertainty in a variety of countries including Greece, Ireland, Iceland, Spain & Portugal. Additionally, we have an unemployment problem in the U.S. which threatens sustained and lasting economic recovery as well as domestic tranquility and consumer confidence. The other side of trouble is opportunity and we are clearly past the worst of the economic peril in which the world found itself just 18 months ago but it remains unclear what/who the primary beneficiaries of that rebound will be in the next year. And so, as I regularly recommend; balance, re-balance and diversify.

Bond prices rallied after 4 consecutive months of declines. This reflects concern the economic recovery may be running out of steam as investors return to the safety of bonds. The yield for 1-year Treasuries is only about .5%, for 5-year notes about 2.7%, for 10-year bonds about 3.6% and around 4.4% for 30-year bonds. Investment-grade municipals yield tax free income and are paying about .8%, 1.8%, 3.1%, and 5.1% for the same time periods. Similarly, investment-grade corporate bonds are yielding 1.5%, 2.9%, 3.9% and 5.6%. Given the yield spread between Treasuries vs. alternative bond choices, I believe those other options (AAA-rated of course) are a better choice.

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Real Estate
New home sales rebounded in June from May's record low numbers but the June sales pace remained the second slowest since the Commerce Department began keeping records in 1963. While the inventory of new homes declined, the same was not true for existing homes where inventories remain very high. Additionally, existing home sales didn't fare as well as new home sales which declined 5.1% in June according to the National Association of Realtors. June sales still reflect the impact of the $8,000 tax credit due to expire in September but many analysts expect a more deterioration in the market as the tax credit expires and unemployment remains high. Robert Shiller, Yale economics professor and co-founder of the S&P/Case-Shiller home price index said "the probability of a double-dip recession [in housing] is more than 50% ... I actually expect it." If so, that means bargain prices are likely to be available for a while and the buyer's market remains in force.