Week of April 23, 2007

The Markets
 
It was a very good week for the markets.

All three major indices closed higher for the third week in a row, and the Dow Jones Industrial Average closed within 50 points of 13,000—potentially a new milestone for the index. What pushed markets higher? Investors had muted expectations for first quarter earnings reports. These proved ill-founded as early earnings releases reported better than expected results. Sixteen companies in the Dow Jones Industrials Index had reported earnings by late last week and 10 had exceeded analysts’ expectations.

While the markets have been moving higher, the United States dollar has been moving lower. The U.S. Dollar Index, which measures the dollar’s value against a basket of major currencies, closed at a two-year low last week. According to Bloomberg.com, currency traders have priced in an expected U.S. rate cut for 2007, as well as an anticipated rate hike for Europe. Some analysts now expect the Euro to hit all time highs relative to the dollar in the near future.

A weaker dollar means that, if you’re planning a trip to Europe this summer, you should be prepared to experience a bit of sticker shock. According to TripAdvisor.com, the average price for a three-star hotel in London is in the $200-$300 range. On the positive side, you may also see a large number of European tourists visiting the United States this summer, which could boost our economy.

Source: Yahoo! Finance, Barrons Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, 5-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

ask your spouse what life will be like after retirement and you may be in for a surprise. A recent survey asked 500 married couples, who were within ten years of retirement, what their retirement lifestyles would be like. According to RegisteredRep.com, a staggering 37% of the couples disagreed about their basic retirement goals and their primary sources for retirement income! Almost one-half of couples interviewed had differing opinions about whether one or both of them would continue to work during retirement. In general, the survey found that men had a rosier outlook than women. Husbands expected to retire earlier, and were more optimistic about the standard of living they could expect to enjoy after retirement.

Most couples agreed about the income sources they would rely on during retirement, which included employer-sponsored retirement plans, pensions, and Social Security. Unfortunately, a majority disagreed about which of these would be their primary source of income during retirement. Neither husbands nor wives were knowledgeable about the income their personal investments and annuities would generate. Only about one-half of husbands and one-half of wives knew when they could begin taking income from their annuities, and less than one-fourth knew the dollar amount that would be generated by their annuities.
Many couples, in which one or both spouses could expect to receive income from a pension, had not shared information adequately. Seventy percent of husbands and wives knew the age at which they could start taking income from their own pension; however, just 37% of the women and 60% of the men knew when they could expect to receive income from a spouse’s pension.

According to the survey, couples who share household financial responsibilities are more optimistic about their retirements, and may be better prepared to meet unexpected problems that could arise during retirement. If you have any questions about your retirement or sources of retirement income, please call us. We will be happy to provide any information you need.

Weekly Focus – What do you know about the markets? Test your knowledge on these trivia questions.

1. In what year did the Dow Jones Industrial Average make its debut?  (1880; 1896, 1901, 1915 or 1928)
2. Name the one company on the original Dow Jones Industrial Average, still in business today?
3. What were the first publicly traded securities in the U.S.?
4. What was the first listed company on the New York Stock Exchange?

Best regards,

Fredrick J. Livingston, CLU, CFP

Securities offered through LPL Financial, Member NASD/SIPC

* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.