Market Update and A Caution For The Week Ending 5/29/2009

The markets ended up for the third month in a row with a late day rally on Friday, capping one of the best (albeit volatile) months in two years. With the exception of the Dow Jones Industrial Average (of 30 stocks), all indices are positive for the year.  GM traded below $1 a share today as bankruptcy is likely to occur on Monday.

Opinions about the markets’ direction run the gamut from “drunken bulls” to “raging bears”, with everyone taking each up or down day to prove their point.  But the solid fact is that the market is in a confirmed uptrend, and no opinion can argue with that.  But that’s all they are: opinions.

Economists predict that the recession will end by the 3rd quarter of this year, but the recovery will be slow.  For states like Michigan and California, recovery will likely begin in the 1st or 2nd quarter of 2010.  In the meantime, we still have to deal with waning consumer demand and higher unemployment.  Nonetheless, consumer confidence rankings jumped nicely in April, a bullish sign for the markets and the economy.  Remember, the stock market usually leads an economic recovery by 6-9 months.

Our investment approach remains a cautious, defensive one as we closely monitor the markets for signs of sell-offs.  Over the past few months, I’ve slowly increased clients’ allocations to equities and bonds to take advantage of the markets’ rallies.  However, I continue to maintain a healthy allocation to cash as a defensive move should the markets begin to move against us.  Any move this high, this fast, is a good reason to be cautious.  Fortunately, technical indicators confirm that the bullish sentiment is higher than bearish negativity and therefore give reason to be optimistic.  As billions of dollars of economic stimulus hits the streets, it can’t help but “lift all boats.”

Many prognosticators and so called experts predict that the low on March 9 was not the bottom, and that we’re merely experiencing a bear market rally.  Some even predict that we may have a severe 35-40% drop from here before the economic recovery and the “real bull market” kicks in later this year.  That drop could begin next week, next month, or next quarter—no one really knows.  I would be remiss if I didn’t warn you about this possibility. I don’t know if they’re right or not, but everyone should nonetheless be prepared for that possibility.

For my clients, I will continue to take advantage of the upside of the markets as long as it lasts and will not simply wait on the sidelines for the bears to arrive.  If or when the bears return, I am prepared to make the necessary tactical adjustments to minimize the effects on client portfolios and lock in as much of the recent gains as possible.  If the bears decide to stay for awhile, then we’ll take advantage of those conditions and attempt to profit from such bearish conditions.

In any case, future annualized returns on equities and bonds are likely to be in the single digits for some time.  Nonetheless, there’s no substitute for regular saving and continuous financial planning.  That combination can help overcome any lower expected returns.  Remember, it’s never too late to start.

I welcome your comments and feedback and invite you to read the below articles.  If you have any questions, please feel free to get it touch with me and share this with your friends and colleagues.

Market Update For Week Ending 5/29/2009


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International index is MSCI EAFE index. Bond data reflect net change in yield, not price. Indices are unmanaged and you cannot directly invest in an index.

Market Wrap
A volatile post-holiday week ended with the bulls back in control of Wall Street and most major equity indices in positive territory for both the week and the year to date. The Dow industrials continued to lag, held back by developments at component General Motors in particular, but other benchmarks gained 3% to 5%. Foreign shares also ended in the black, while bond markets were mixed. For more on recent trading activity, please read:

Consumer Confidence Revives
The American public’s battered sense of the economy’s health revived somewhat in April. Analysts warn that while the light at the end of the recessionary tunnel may finally be in sight, it will take some time for a true recovery to begin. In fact, while the business environment seems to be improving in many parts of the country, conditions in the Midwest in particular appear to be getting worse as the auto industry lurches from crisis to crisis. For more on the latest economic indicators and what they mean for the economy, please read:

Is The Recession Nearing An End?
Some economists now say the longest and most savage economic contraction in six decades may finally be winding down. But while consumers are in relatively high spirits, both labor markets and home prices remain fragile at best as layoffs and foreclosures continue. Where are the “green shoots” that some see heralding a new cycle of economic growth? And where are the storm clouds ahead? For more, please read:

Sam H. Fawaz CFP®, CPA is president of YDream Financial Services, Inc., a registered investment advisor. All material presented herein is believed to be reliable, but we cannot attest to its accuracy.  Investment recommendations may change and readers are urged to check with their investment advisors before making any investment decisions. Opinions expressed in this writing by Sam H. Fawaz are his own, may change without prior notice and should not be relied upon as a basis for making investment or planning decisions.  No person can accurately forecast or call a market top or bottom, so forward looking statements should be discounted and not relied upon as a basis for investing or trading decisions.

Fake Malware Warning Traps

There’s an increasingly common method that hackers use to install malware (e.g., virus, Trojan Horse, adware, key logger, etc.) onto your PC, with your help.  Malware distributors hack commonly accessed and unsecure websites and plant a hidden script on the site, which is subsequently downloaded by your browser (mostly Internet Explorer, sometimes Firefox) without your knowledge.  When you open your browser, you see a warning that your PC is infected with malware.  Most people think that their PC’s own anti-malware software is giving the warning, but it’s actually a website created by the hackers.

When the website opens – it gives you one or more warning messages that your PC has been infected, and then tells you to run the software which supposedly removes the malware.  If you click on it, the opposite of removal occurs.  The file that you are tricked into installing and running is the malware itself.  By clicking on it, you are giving it permission to install it on your PC.  In some cases, the hackers are peddling anti-malware software themselves so they trick you into believing that their software is the only one that can remove the bogus malware.  Never buy from these people.

Your best defense is to have good anti-malware software installed on your computer and keep it up to date.  Also, it is essential that you run regular Microsoft Windows security updates.   If you receive an unfamiliar malware message on your PC or in your browser, just close all your browser windows and run a full system scan using your anti-malware software.

You should know exactly what kind or brand of anti-malware software your PC is running, so you can recognize whether the warning message is legitimate or not.   If you don’t know what anti-malware software you are running, or don’t know if your computer is being kept up to date, then ask your information technology person.  Most importantly, be skeptical of any unfamiliar malware warning; merely clicking on it could trigger installation of the malware.  Don’t be afraid to ask someone more knowledgeable about these things if you’re not sure what to do.

Google Voice is a Game Changer

How many phone numbers are you currently reachable at?  Two? Three? Four? Maybe even five?  Let’s see: you’ve got the home, office, mobile, and home office phone lines where you’re reachable.  So if it’s any more than one number, that can make phone communications with clients, friends and family less than 100% efficient.  Add multiple voicemail boxes to check and it becomes even less efficient.

While we’d all like to think that one day we’ll only need our mobile phones as our single point of contact, that reality is still several years away.  A study by the Center for Disease Control and Prevention (CDC) showed that a mere 15.8% of U.S households have cut the landline cord and switched to mobile service exclusively.  Spotty coverage, sometimes poor voice quality and lack of consistent 911 emergency services are among a few of the reasons we still rely on a land line.  For many of us, this means at least two phone lines to answer.

So wouldn’t it be great to be able to give out a single number to everyone to reach you without having to worry about where you might be?  That single number would ring all of your phones simultaneously and you could pick up the call from any phone that’s handy.  And if a caller left a voicemail, you’d only have one box to check.  That’s the idea (and much more) behind GV, a web-based telecommunication service.

To continue reading this article, which is posted on the FPA of Michigan web site, please click on this link:

Cool Tools, Part 1 of 2

Every day I use tools that save me time, keystrokes and secure my data.  In this article, I will share some of my favorite cool tools. You will find them easy to use and big efficiency boosters. The best part is most of them are free or cost very little and are free of spyware.

To continue reading, please click on the following link to the full article on NAIFA’s Advisor Today web site: