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Money Manager Monthly |
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June 2009 |
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MARKET COMMENTARY
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Deficit a Challenge, But Economy Should Brighten
By Gabriel F. Burczyk, President & CEO
 It's ironic that in an era of great economic uncertainty, the one bedrock certainty is that we've experienced the worst financial crisis since the 1930s.
If only the policies coming from Washington were as concrete. The perception among investors is that, fair or unfair, the federal response to the economic crisis has increased market uncertainty. That has prompted some investors to seek safe havens in more conservative assets, while others have stood paralyzed as the stock market reacts, sharply, in some instances, to the latest big economic news.
But financial markets seem to be calming down a bit and the investment landscape is shifting - for the better, as I will explain. First, though, some background data on the U.S. economy and the financial markets should be clarified.
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MONEY MANAGER COMMENTARY
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What's In Store for the 3rd Quarter
 First Trust
"This recession was different than most previous recessions because it was caused by a dramatic slowdown in monetary velocity...Now, a combination of loose monetary policy and reforms to overly strict (and inappropriate) mark-to-market accounting rules have ended the financial panic."
Click here for full Economic Commentary, June 9, 2009
 Wells Fargo Advisors
"Stock and markets performed much better than average for twenty years after inflation began falling in 1980, and valuations still appear to incorporate modest inflation expectations over the longer run. If inflation expectations continue to rise, the bond market will likely continue to struggle. One cannot wait until the inflation problem is unambiguous to protect one's portfolio against its possible reemergence."
Click here for complete Weekly Commentary, June 22, 2009
 BlackRock
"In many ways, financial markets have been following the typical pattern associated with economic recoveries. One unusual aspect of the current advance in equity prices, however, is that the rally has been remarkably smooth and fast. As a result, we would argue that there is a high likelihood of some profit-taking and some sort of near-term correction that would allow the market to catch its breath before moving noticeably higher."
Click here for full Investment Commentary, June 15, 2009
 Federated Investors
"One reason economists are becoming more bullish about this year's 2nd half - stimulus spending is just kicking in. Only 7% of the $787 billion has spent so far, but the pace is picking up. In addition, last year's unprecedented cost-cutting pushed free cash flow margins at corporations to a near-record 7.5% in this year's first quarter, according to Empirical Research. This could provide ammo for an upside surprise to second-half profits."
Click here for complete Economic and Market Update, June 19, 2009
 Wachovia Securities
Sell in May and go away? It seems every year clients ask about the performance of investments during the summer months. Either by empirical experience or heard through the grapevine, summer months are reputed to produce lower investment returns. Wachovia Securities details their research to the tale of "Sell in May and Go Away" in the following chart analysis.
Click here for full Market Analysis, April 2009
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TAX & RETIREMENT
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Roth Conversion Tips For 2010
 The $100,000 income threshold for Roth IRAs lifts in 2010, creating an ideal time to consider converting a traditional IRA to a Roth. The following are some of the advantages to converting:
- Converting to a Roth IRA eliminates the need to take unwanted taxable distributions (RMDs) and allows the account to grow tax free.
- Low-income clients benefit from reduced taxes on Social Security benefits during retirement and avoid paying higher Medicare Part B premiums.
- An IRA owner who converts in 2010 may benefit from the ability to report half of the income in 2011 and half in 2012.
- The best time to convert to a Roth is when your account value has dropped, since taxes are based on the value of the account at the time of conversion.
- You may convert just a portion of your account. IRA owners who want to hedge their tax bets in retirement may prefer to hold assets in both traditional and Roth IRAs.
- Assets in 401(k) and 403(b) plans may now be converted directly to a Roth without stopping for a traditional IRA rollover first.
For more information, please contact a WrapManager Wealth Advocate at (800) 541-7774 or email .
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FINANCIAL TIDBITS
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Concerned About Inflation? Federal Reserve Lending Not What You Think
Many investors are worried that the financial system is flooded with money because of the surge in Federal Reserve lending since the financial crisis worsened last year. However, a complete picture of the supply of funds from Fed and non-Fed sources shows that the increase in Fed lending does not even offset one-sixth of the decline in non-Fed lending since the third quarter of 2007.
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The attached report and information have been prepared or produced by WrapManager, Inc. from sources and data believed to be reliable. Information provided in this report is for educational and illustrative purposes only and should not be construed as individualized investment advice, as an offer to sell, or the solicitation of an offer to buy any security in any states where such an offer or solicitation would be prohibited by regulations. WrapManager, Inc. is not a tax advisory firm. We recommend you contact your tax attorney or CPA prior to utilizing any of the tax-related strategies mentioned or discussed. Returns and experiences will vary for each client. Each client's risk tolerance and investment objectives are unique to them. Past performance may not be indicative of future results. No assumption that future performance of any specific investment or product made reference to directly by WrapManager, Inc., on its Web site and in marketing materials, will be profitable or equal the corresponding indicated performance level(s). If performance numbers are generated gross of fees, a client's return will be reduced by investment advisory fees and any other expenses. Opinions expressed are those of WrapManager, Inc. and are subject to change without notice and are not necessarily those of Prospera Financial Services, Inc., its directors, parent company or its affiliates. Securities offered through Prospera Financial Services and cleared through First Clearing, LLC. Prospera Financial Services - Member FINRA/SIPC. © 2009 WrapManager, Inc. (800) 541-7774 |
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