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Monthly Archives: November 2008

Before the Holidays, Get Those Charitable Donations Lined Up

There’s a special sinking feeling as you approach Dec. 31 and realize you’ve done no tax planning whatsoever. That includes big issues like end-of-the-year investment decisions, and the smaller ones – like that stuff you no longer use piling up in the basement.

Charitable giving is an important part of tax planning at yearend, so let’s look at the cash and noncash aspects of giving. It makes sense to contact a tax expert or financial planner to talk about what giving makes sense for you:

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Thanksgiving Recipe for a Better TARP

As we approach Thanksgiving, I want to wish you happy holidays and offer my best wishes for you and your family.  This is a time when many take some time to think about what they have to be thankful for over the last year.  My list is certainly shorter than last year, with all the economic turmoil and financial losses. We all know it has been a very troubled time for the economy and financial markets, so I am fervently hoping to add their recovery to my list next year.

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Back to 1997

Last week the S&P 500 broke down out of the range of about 850 to 1000 that it had been in since October 10. This range appeared to be part of a classic bottoming process with a volume surge followed by mulitple retests of a range on declining volume. The slide to new lows last week – at one point taking the S&P 500 back to levels first reached in 1997 – was not on a volume surge like October 10 one. Instead, trading volume was relatively moderate, indicating many market participants had already capitulated during the selling climax on October 10. Last week’s, new low was likely the result of a lack of buyers while some forced selling by hedge funds and institutions lingers. This fading selling pressure, along with the 75% peak-to-trough decline in the S&P 500 Financials sector nearing the 81% peak-to-trough decline of the S&P 500 Information Technology sector during the bear market of 2000-2002, suggests the additional downside may be limited.

To see the rest of this article, please click on the link below: 

http://www.mwboone.com/library/Weekly_Market_Commentary_11_25_08.pdf

 

What is Priced In?

Last week’s activity illustrated once again that the S&P 500 remains in the range of about 840 to 1000 where it has been for over a month, as signs of healing credit markets were offset by the incoming tide of weak economic data. It has been reported that investors are pricing in a recession resulting from the financial crisis, begging the questions: To what extent has the market priced in a recession? And if it has, how severe does the market expect the recession to be? What inflation outlook is priced into the stock market?

To see the rest of this Market Commentary, please click in the below:

http://www.mwboone.com/library/Weekly_Market_Commentary_11_21_08.pdf

The Financial Collapse: Looking For Answers

I have been asked why I did not foresee the pattern of events that led to this sizable collapse in the financial markets. I’ve asked myself the same question. Although the troubles started with subprime debt, a relatively small part of the debt market, they snowballed; producing losses in global equity markets about thirty times the total amount of subprime debt outstanding.  My search for the answer has taken me through an examination of what we now know to be deeply flawed parts of the financial system, very, very poor decision making by Wall Street and other financial institutions, poor security selection and extremely high leverage in these firms’ balance sheets, along with lax regulatory oversight, rating agency failures, serious market design failures and the like.

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Michael Boone in Bloomberg

…GMAC and underwriters of its debt were sued in a 2005 class action that claimed the lender misrepresented SmartNotes in financial statements. A federal judge in eastern Michigan dismissed the case in February 2007, and the plaintiffs are appealing.

"In corporate bonds, time has shown that volatility, credit ratings and potential deterioration in credit means you may own something very different than what you thought you owned," said Michael W. Boone, founder of MWBoone & Associates, an investment advisory and money management firm in Bellevue, Washington.

To see this article in its entirety, please click on the link below:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_AUFalIF.Dg

Markets Still Trying to Assess the Severity and Length of the Recession

Over the past two weeks, financial markets have absorbed some absolutely horrible data on the U.S. economy for October and early November, as market participants attempted to get a handle on just how much damage has been done to the U.S. and global economies by the global credit crunch that intensified in mid-September.

To see the rest of this article, please click on the link below:

http://www.mwboone.com/library/Weekly_Economic_Commentary_11_17_08.pdf

When it Rains it Pours

Down markets are not easy to swallow. The good news, however, is that active mutual fund managers tend to outperform in down markets, due in part to their more risk-averse portfolio management. However, 2008 has been an anomaly thus far; despite the fact that markets are down, active managers are, on average, down further. We can take solace from the fact that history shows that both markets and fund managers are resilient. In fact, past trends illustrate that the best times to own mutual funds have been after a year when active fund managers trailed benchmarks by a wide degree, like what has transpired so far in 2008.

To see the rest of this article, pleace click on the link below:

http://www.mwboone.com/library/When_it_Rains_it_Pours.pdf

Investing Through Recessions

Investors may be feeling anxious amid increasing signs the economy is in or near a recession, but a look at the past 10 downturns suggests there’s reason to stay the course. Please click on the link below to view the last 10 downturns and what the market did in the following months:

http://www.mwboone.com/library/InvestingThroughRecessions.pdf

Bubbles

The formation and bursting of bubbles are regular events in the financial markets. Answering key questions about financial bubbles is important to effective investment decision making. These questions include: What does the financial bubble pattern look like? What bubbles are bursting now? And what bubbles may be forming?

To see the rest of the Weekly Market Commentary, please click on the link below:

http://www.mwboone.com/library/articles/Weekly_Market_Commentary_11_10_08.pdf