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Monthly Archives: January 2009

Whether You Call It a Budget or a Spending Plan, It’s a Good Way to Start 2009

Granted, the New Year is a time for best intentions. People vow to stick to a diet, knuckle down at work, spend more quality time with people they care about, start scratching off that long list of key chores around the house, and of course, keep a closer watch on their pocketbook.


Bracing For More Bad News

The U.S. government’s number mills were unusually silent last week, due in part to the Inauguration ceremonies in Washington D.C. The data that was released – housing data for December and January, and the weekly jobless claims data for the week ending January 17th – was unfortunately of little comfort for market participants looking for signs of a bottom in the U.S. economy.

Despite the bad news on the economy, the healing in the credit markets more or less contnued last week, albeit at a much slower pace than in prior weeks, keeping our base case for 2009 the U.S. economy and financial markets largely intact. Our base case for the economy – as detailed in the 2009 outlook, published in December 2008 – is for financial market panic that began in the Fall of 2008 – to subside in early 2009 allowing the U.S. recession to end by mid-year 2009, but not before the unemployment rate rises to between 8.0 and 9.0% (from 7.2% now) and housing prices fall another 5.0% before stablizing.

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Tracking the Progress


Our outlook for 2009 inclides a base case, bear case, and bull case dependent upon the path of key measures of healing in the financial markets. For our base case (or bullishcase) to unfold in 2009 and result in gains for the financial markets, key barometers of financial stress must reflect further improvement. Those key measures we are most closely watching include the spreads of LIBOR (known as the TED spread), mortgage-backed bonds, high grade corporate bonds, and high yield corporate bonds to their Treasury equivalents. A related measure of credit default swaps, which can be defined as the premium charged for insurance against the default of an issuer. Also, the VIX, a measure of the expected degree of future volatility in the S&P 500, is a gauge of financial stress that merits observation.

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It’s a Nominal World, But It’s Really Not That Bad

For much of 2008, the daily, weekly and monthly drumbeat of economic data was largely ignored by financial market participants, who were more focused on the health and survival of the global financial system. That dynamic was in place again last week, as markets pretty much brushed aside a mixed batch of economic data for November, December and early January, and focused instead on another round of bad news from U.S. banks and financial institutions. The data that was released revealed an economy that continued to decelerate to the downside in nominal terms as the fourth quarter drew to a close, but adjusted for rapidly falling prices, economic growth in "real" terms and Q4 2008 is on track to be better than current expectations.

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LPL Independent Investor: Market Volatility, Can Timing Alter Your Plans?

Investors saving for long-term goals can usually overlook short-term market volatility in the interest of long-term gain. But for retirees, who increasingly rely on their investments to fund their living costs, market volatility can mean the difference between living comfortably and just scraping by. In fact, retirees are particularly vulnerable to market downturns, especially in the early years of retirement, because of their dependence on portfolio income, their limited investment horizon and their need to make sure their savings last throughout their retirement.


When Recession Fears Surface, Check Your Plan – Or Make One

If questions of "what about tomorrow? what about the next week? what about the weeks after that?" fill you with worry, then you might be operating without a plan, or at least one you haven’t recently checked. That’s OK. When worldwide market worries surface, it’s easy to get scared. It’s particularly easy when we’ve had such major market calamities as the U.S. mortgage debacle and the lingering disarray in the banking and investment industries. 


Helping Your Kids Recover after a Major Money Mistake

The average college graduate is $20,000 in debt, and today’s young adults are clearly exposed to more opportunities for self-directed financial disaster than any group in history.

Despite the current credit crunch, credit cards are still a common way most young people afford their new adult lifestyle, and rising costs on everything from rent to gasoline presents deeper challenges.


Assessing the Damage, Repairs in Progress

We start the New Year deep in the debris of the economic and market collapse of 2008. News coming in from the last quarter is still very gloomy, as consumers, businesses and government alike work to assess the damage, incorporate the right adjustments to carry on through this recession, and create the plan for clearing the fallout and rebuilding. 


LPL 2009 Outlook: What’s on the Horizon

Every year LPL Financial Research compiles its Outlook for the following year to let investors know where we believe the markets are heading and how to best position portfolios. The heightened uncertainty and conditional nature of the current macroeconomic and policy backdrop generated a wider range of possibilities for 2009 than for most years. As a result, we present three scenerios for 2009, our base case, a bear case, and a bull case.

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Estate Planning for the Worst Possible Scenario –

The reason why some parents hesitate to make an estate plan is understandable.  It calls into consideration your worst fears – the possibility of your death or your kids facing life without one or the other parent.

But what about an even worse scenario – the possibility that you and your spouse could die at the same time or in close succession by accident or illness.  One might be reminded of the situation of actor Christopher Reeve and his wife Dana; Dana died of cancer within two years of her husband’s death and they left a teenaged son behind.