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Money Manager Monthly |
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December 2009 |
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Special Message
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Best Wishes for a Wonderful Holiday Season from all of us at WrapManager! |
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MARKET COMMENTARY
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Changing Dynamics: Three Factors That Are Influencing the Municipal Bond Market
By Gabriel F. Burczyk, President & CEO
 Municipal bonds sold off in 2008, then staged a comeback in the first three quarters of 2009--but lately they've been more volatile than municipal bond investors generally expect or want. What's creating the volatility--and what are the potential implications for municipal bond investors?
Municipal budgets are under pressure
Let's start with the most basic explanation for the municipal bond market's recent volatility: reduced tax revenues.
State and local tax revenues have significantly decreased during the recession, according to the Nelson A. Rockefeller Institute of Government's State Revenue Report issued in October 2009. In fact, according to the report, state tax revenue declined 9.2% year-over-year in June 2009.
As a result, at least 36 states are anticipating budget deficits in 2011, according to a September 2009 report from the Center on Budget and Policy Priorities ("New Fiscal Year Brings No Relief From Unprecedented State Budget Problems").
Moreover, these shortfalls are significant. Of the 30 states that offered estimates, the shortfalls represent $74 billion-equivalent to 15% of their budgets. Ouch!
If the economic recovery is slow, with the labor market lagging, as many economists expect, this pressure on municipalities could continue.
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MONEY MANAGER COMMENTARY
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Moving From Stabilization to Growth
 Avatar Associates
The strong global recovery has caused a rise in corporate profits to accelerate. Profit margins have been increasing and businesses are not only getting healthier, but more prosperous, and Avatar believes this will translate into more companies starting to hire workers.
Click here for full Market Commentary, December 2009
 Lord Abbett & Company
The markets are continuing to rebound and the economy looks to be on a more solid stance. Equities have rebounded strongly from the market lows, but Lord Abbett thinks that cautious consumer spending habits could mean slower economic growth and lower corporate earnings.
Click here for complete Market View, November 2009
 Lateef Investment Management
Dissecting the current state of the market, economy, as well as their All Cap Growth strategy, Lateef believes there are opportunities to be found. Although tight consumer credit and potential higher taxes are threats to growth in the near to intermediate term, they will also produce opportunities for firms to capture market share from weakened competitors.
Click here for full Market Commentary, 3rd Quarter 2009
 Roosevelt Investment Group
The majority of the companies in the S&P 500 have reported their third quarter earnings, and of these, more than 80% have surprised to the upside. Roosevelt believes this is a positive indicator, and that the economy is moving from a stabilization phase to a growth stage.
Click here for complete Current Views, December 2009
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FINANCIAL TIDBITS
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December a Solid Month For Stocks?
 According to the latest Stock Trader's Almanac Investor Newsletter (December 2009), the month of December has a solid reputation for making stock investors money. Many times investors try to get a head start on the "January Effect" during the holidays; other times buyers can trigger a "Santa Claus" rally, and sometimes you get both. No wonder December ranks as the second best month of the year for the S&P 500 since 1950! And it's ranked #1 for the small-cap Russell 2000 Index since 1987, due to early starts for the January Effect, a time when small caps typically lead the market.
Here's more from the Stock Trader's Almanac Investor Newsletter:
"Even though small caps may begin to underperform as this bull market matures, the so-called January Effect of small caps beating large caps is set to commence in mid-December as it has for the past 30 years. But the early part of December is prone to a few bumps. After a stronger first and third day, stocks often languish into week three as tax-loss selling heats up and yearend profit-taking climaxes before the end of the month.
Don't forget to keep your eye out for the Santa Claus Rally, the 7-day period is scheduled to commence on December 23. The absence of this rally, especially in conjunction with other negative indicators, has been an ominous portent in recent years." |
TAX & RETIREMENT
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2010 Presents Opportunity For Roth IRA Conversions
 There are important rule changes for 2010 regarding Roth IRAs and Roth IRA conversions of which we feel all IRA owners should be aware. WrapManager has released a comprehensive kit in which we cover the basics of a Roth IRA and Roth IRA Conversion, the rule changes for 2010, and most importantly why a Roth IRA conversion during 2010 may be in your best interest. We also present several different scenarios to illustrate how you may be able to take advantage of the benefits of a Roth IRA Conversion.
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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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