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| Shoreline Wealth & Investment Management |
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Newsletter
April 2005 |
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The Stock & Bond Markets -
Stocks ended down the first quarter given the rising price of oil and continued increases in interest rates. For the quarter, the S&P 500 was down about 3% and the NASDAQ down about 8%. The best performing industries included oil & gas, hospitals and department stores with those industries rising 12-24%. The worst performing industries were auto parts, paper and online retail with those industries declining 17-30%.
The dollar rose in March but the signs are still mixed. Interest rates, meanwhile, continue to climb and squeeze profits. And corporate scandals continue to rock the street while executives receive greater and greater compensation. Despite this, the outlook is cautiously optimistic.
CELEBRATING 25 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? -
"We're going through something very similar in real estate that we did with stocks," said Robert J. Shiller - a professor of economics at Yale, whose prescient book on stocks, "Irrational Exuberance" (Princeton University Press, 2000), appeared just a few months before technology stocks began their slide. "It's driven by the same forces: that investments can't go bad; that it has the potential to make you rich; that you'll regret it if you don't do it; that it looks expensive but is really not."
There are certainly serious reasons to believe that house prices will not suffer the fate of technology stocks. Not only are houses more tangible, but people do not sell their homes as quickly as stocks, making a panic much less likely. Because of tax advantages, few owners are likely to sell and rent something else simply because local house prices start to decline.
As high as they might seem now on the coasts, home prices nationally have not quite doubled over the last decade; during the 1990's, the Standard & Poor's 500- stock index more than quadrupled.
It's still worth considering that houses in at least a few metropolitan areas are as expensive as telecommunications stocks were in 1999, relative to their underlying value. The average house in San Jose, CA, for example, costs 35 times what it would cost to rent for a year. In New York and West Palm Beach, this ratio - a rough equivalent of the price-earnings ratio for stocks - is almost 25.
At the stock market peak in March 2000, the price- earnings ratio of the Standard & Poor's 500 - the combined price of the stocks, divided by their profits per share - peaked around 32, and it was briefly even higher for telecommunications stocks. The S.& P.'s P.E. ratio has since fallen to around 20 or about 35%. Buyer beware!
| 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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| Retirement Investing |
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 Investing for retirement is a science of principles. Once understood, these principles can be applied, implemented and monitored regularly to enhance ...
Full Story »
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| Family Limited Partnerships: Disinheriting Uncle Sam |
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 Creating or updating a will and establishing a living trust will likely reduce probate time and costs after death. One way business owners can protect assets while alive is the establishment of a family limited partnership.
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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