Planmark Capital Management

The Markets

After a 10% rally in the Dow Jones Industrial Average between August 16th and October 9th, the Dow lopped off some of its frothiness last week.

By coincidence, last Friday marked the 20th anniversary of Black Monday, the day the Dow recorded its largest one-day decline in history. As you may remember, the Dow dropped a stunning 22% that day as nervous investors sold stocks indiscriminately. Now that we have 20 years behind us, was October 19, 1987, a good time to buy stocks?

Here’s how the Dow Jones Industrial Average has performed over the 5, 10, 15, and 20-year periods following the October 19, 1987, market decline:

Source: Yahoo! Finance. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Assumes dividends are not reinvested.

With those juicy double-digit returns, it turns out that “buying the dip” may have been a good strategy coming out of the 1987 crash. The above returns would be even more attractive if we added reinvested dividends.

The point here is simple. The old Wall Street adage, “Buy low and sell high” tends to be a good one.

Returns through 10/19/07	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Dow Jones Industrials	-4.1	8.5	12.7	11.0	9.6	5.5
Nasdaq Composite	-2.9	12.8	16.4	12.3	15.8	4.9
Standard & Poor's 500	-3.9	5.8	9.7	10.8	10.8	4.6

Sources: Yahoo! Finance, Barron’s. 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.

YOU DON’T NEED A PEW RESEARCH CENTER SURVEY to tell you that the way you pay your monthly bills is very different from the way your parents did, but a new Pew study does uncover some interesting statistics. Not surprisingly, a sizable minority of Americans do most of their transactions online. Nearly three-in-ten adults (28%) say the most common way they take care of their regular monthly bills is online or by electronic payment. Just more than half, 54%, use checks, and 15% of respondents deal in cash.

Interestingly, the survey also found bill-payers focused on line items that didn’t exist a generation ago. At or near the top of the public’s list of regular expenses were cable or satellite television service (78% say they pay such bills every month), cell phone service (74%), and internet connections (65%). When survey respondents were given a list of common household expenses, the only one they cited as often as these three information age expenses was housing (76%).

Another regular expense for most Americans? Credit card bills. Among the 58% of adults who say a credit card payment is a regular household expense, about four-in-ten (41%) report that they generally pay their credit card bills in full each month while 53% usually make just a partial payment.

Finally, in interviews with married people, the Pew survey tried to determine which spouse spends more time each month paying the bills. Most wives say they do and most husbands agree that their wives do more of the bill paying. But, here’s where it gets interesting – while 63% of all wives say they pay the bills, just 51% of all husbands say their wives pay the bills. Hopefully, that lack of precision doesn’t carry over into other financial matters.

THE NUMBER OF WORKERS WITH RETIREMENT SAVINGS PLANS, such as 401(k) plans and individual retirement accounts (IRAs), grew significantly in the late 1990s into the early 2000s. According to the Employee Benefit Research Institute (EBRI), 401(k)-type plans reached just over 30% of workers ages 21 to 64 in 2004, up from 24% in 1996. At the same time, the average contribution for those participating in a plan increased from about $3,600 to just over $4,000 in 2004 dollars. What’s more, the percentage of those making a contribution at the maximum dollar amount allowed under Internal Revenue Service (IRS) regulations also increased, from 3.2% in 1996 to 6.3% in 2004.

According to EBRI, as of 2006, about $7.5 trillion in assets were held in IRAs and private-sector defined contribution plans such as 401(k)s, up from about $4.8 trillion in 2000. The good news is American workers are taking more responsibility in saving for retirement.

Close to 16% of Americans using the Internet watch television broadcasts online. In fact, according to research organizations the Conference Board and TNS, the number of us who view entire episodes on the Internet has doubled from a year ago. What’s driving online viewership? Personal convenience and the ability to avoid commercials. The research firms found nearly 73% of online households use the Internet for entertainment purposes on a daily basis and an additional 15% search for entertainment several times a week.

* 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.

Brain Teaser Answer: It contains the numbers one to nine, in alphabetical order.