Week of May 7, 2007

The Markets
 
Fair winds blew through Wall Street last week.

The markets continued to accelerate, even as economic growth—as measured by gross domestic product—slowed to 1.3% for first quarter.  The Dow Jones Industrial Average closed at its 18th record high for the year and, on Thursday, the Standard & Poor’s 500 Index moved above 1,500 for the first time in nearly seven years.  What is propelling markets higher?  To date, reported earnings have been up 7% to 8%, according to Barron’s Online, which is nearly twice as high as analysts had expected.

Why are earnings so high?  Large international companies that trade on the U.S. stock markets are benefiting from the weaker U.S. dollar.  The dollar fell to an all-time low against the Euro last Friday.  When companies report profits earned in European nations—profits earned in Euros—they are translated into U.S. dollars and that gives the companies’ bottom lines a significant boost.  The dollar has also been weak against Latin American and Asian currencies so American companies with operations in those parts of the world had an opportunity for unanticipated increases in earnings, too.

The markets also were encouraged by news of mergers and acquisitions.  Microsoft was reportedly interested in Yahoo! (which pushed Yahoo! shares up by 9.9% last Friday, according to Barron’s Online).  Investors like mergers and acquisitions because they interpret such activity as a sign that the bidding company is bullish about the health of the 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.

If you’re considering making home improvements, be sure you know which projects may pay off and which may not.  Remodeling Magazine’s 19th annual ‘Cost vs. Value Report’ found that the price of remodeling increased during 2006 while the value of improvements at resale fell to 2002 levels.  How much will a home improvement add to the value of your home?  It varies by region—a new deck is worth more in some parts of the country than in others.  In general, the most valuable remodeling projects—for both mid-range and upscale projects—were replacing siding and windows, making minor kitchen changes, and overhauling bathrooms.

Some renovations may actually hurt the value of your home, according to CNNMoney.com.  These include swimming pools and Jacuzzis (in some parts of the country), poorly designed home additions, and trendy finishes.  Of course, if you plan to stay in your home for the foreseeable future, you may decide to make improvements that will brighten your quality of life without regard for the effect of the change on your home’s resale value.

And here’s the pitch:  According to Forbes, if you’re a small business owner who is trying to raise money for a new or growing business, it’s important to give the right pitch to potential investors.  They suggest that the first pitch should be short and to-the-point.  You need to tell your potential investors who you are, what your business does, the problems your business is facing, and the solutions you’re pursuing.
In all, you should be prepared with three pitches (and none of them should be curveballs):

• A 30 second teaser that captures the attention of your audience.
• A 5 minute version that provides an overview of your idea.
• A one hour pitch that describes your plans in detail.

Whether you are an accomplished speaker or not, pitch with confidence.  Let your passion show.  And, no matter what else you do, make sure you let your audience know how to contact you.  It is a good idea to have the information on your business card, as well as the presentation materials you plan to leave behind.

Weekly Focus – According to the American Pet Products Manufacturers Association, Americans will spend nearly $41 billion on their pets during 2007.  That is an increase of almost 39% over five years.  Where does the money go?

Food                                                    $16 billion
Veterinarian services                            $10 billion
Supplies/OTC medicine                         $10 billion
Grooming and boarding                         $ 3 billion
Buying a pet                                        $ 2 billion

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.