Planmark Capital Management

The Markets

Like an “American Idol” contestant on a difficult night, investors were struggling to find the right pitch last week.

After a good performance on Monday, the Dow Jones Industrial Average, which had risen in 24 of 27 consecutive sessions (tying an almost 80-year-old record, according to Reuters) lost steam and fell on Tuesday. On Wednesday, the Federal Reserve’s Open Market Committee left rates unchanged, and the FOMC statement did not indicate that inflation was getting worse. As a result, the Standard & Poor’s 500 Index finished the day near an all-time high.

Thursday was a different story. News that retail sales slumped unexpectedly in April, possibly because of higher gas prices and weakness in the housing market, caused investors to worry about the strength of the economy. That triggered a sell off in the markets. On Friday, the Producer Price Index, which measures the rate of inflation when manufacturers purchase goods, suggested that inflation was under control. That eased investors’ inflation worries, and the markets rebounded. Friday’s gains also reflected investors’ belief that weakening economic growth could cause the Federal Reserve to lower rates later this year.
By the end of the week, all the up and down “noises” just about cancelled each other out.

Returns through 5/11/07	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Dow Jones Industrials	0.5	6.9	17.1	10.0	5.7	6.2
Nasdaq Composite	-0.4	6.1	14.2	9.9	9.2	6.7
Standard & Poor's 500	0.0	6.2	16.6	11.2	7.0	6.0

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.

The fastest growing economies among emerging countries are found in India and China. That’s not too surprising since these countries hold about 2.4 billion people, which is more than one-third of the world’s population. How do emerging countries stack up against more developed countries?

India’s and China’s economies, as measured by Gross Domestic Product, are not as large as those of the United States or Great Britain, but India and China have been growing much more quickly. Of course, newly developing economies generally are not as stable as developed economies. For example, China has poor disclosure regulations, which makes it difficult to know exactly what companies are doing, and India is still busy building the infrastructure (roads, energy plants, etc.) needed to support its growing economy. If you’re considering an investment in emerging countries, it’s always a good idea to diversify.

You’ve heard that old saying, “Pay yourself first.” Well, are you? If you haven’t managed to prioritize saving then you may want to consider dollar cost averaging. It’s less complicated than its name. All you do is invest a specific amount of money (say, $100), at regular intervals (say, every month), in the investment of your choice. It can be a good approach to investing because you end up purchasing more shares when the price of the investment is low and less shares when the price of the investment is high. Best of all, setting up dollar cost averaging through an automatic investment plan means you’re paying yourself first. Remember, dollar cost averaging does not assure a profit or protect against loss in declining markets.

Weekly Focus – We hope you had a wonderful Mother’s Day celebration. In 1923, one of the founders of Mother’s Day, Anna Jarvis, filed a lawsuit in an effort to stop the over-commercialization of Mother's Day. She had hoped for a day of reflection and quiet prayer, thanking God for all that mothers had done. She lost her fight, and Mother’s Day continues to generate lots of revenue for retailers. A National Retail Federation survey projected that consumers would spend nearly $16 billion on the holiday. How were they expected to spend it?

* 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.