Kevin Kroskey's Market Commentary

May 24, 2010 Weekly Commentary

The Markets

The U.S. stock market just entered its first correction of 10% since the March 2009 bear market low, according to Barron's magazine. In the paraphrased words of economist Michael Darda as reported by Barron's, are we experiencing an aftershock of the 2008 market crisis or are we having a relapse?

Catalysts for this recent correction are varied. China is clamping down on its easy money policy. Several European countries are in the midst of a liquidity/solvency problem. In the U.S., jobless claims unexpectedly rose last week and the Conference Board reported a surprising drop in its index of leading economic indicators. Both reports raised concerns that the economic rebound in the U.S. may be losing some strength, according to Bloomberg.

The case for optimism is also in plain sight. U.S. News and World Report says two new surveys out last week suggest, "We might be on the verge of experiencing the Great Shopping Comeback of 2010." Higher consumer spending could propel the economy and create jobs. In corporate America, first quarter earnings for the S&P 500 companies grew 55% from a year earlier and 77% of them beat their Wall Street estimate, according to Bloomberg. And, according to Federal Reserve Bank of New York President William Dudley as reported by Bloomberg, "The U.S. economy is recovering and we are now seeing the first signs of significant employment growth."

Economist Darda answered his own question and said we're simply having an aftershock, not a relapse. Even if he turns out to be correct, aftershocks could still generate some "scary headlines" in the near future. As always, we do our best to stay on top of these types of evolving situations.

In the 1970s, we had stagflation, oil shocks, high inflation, and a stock market that dropped 44% in 2 years.
In the 1980s, we had the collapse of Drexel Burnham Lambert and the stock market crash of October 1987, which sent the Dow Jones Industrial Average down more than 20% in one day.
In the 1990s, we had the savings and loan crisis, the bailout of hedge fund Long Term Capital Management, and the Asian financial crisis.
In the 2000s, we had two bear markets, the subprime mortgage meltdown, and the financial crisis of 2008-2009.

But, guess what? Despite these market crises, the Dow Jones Industrial Average rose from 800 at the beginning of 1970 to 10,193 at the end of last week, according to data from Yahoo! Finance. That's nearly a 13-fold increase.

It's easy for investors to let the events of the day or the "crisis du jour" cloud their thinking. However, successful investors take a wider view and realize that crises happen, crises get resolved, and while they can sometime be scary, they should not lead you to panic mode.

Weekly Focus – Think About It
"Close scrutiny will show that most 'crisis situations' are opportunities to either advance or stay where you are." --Maxwell Maltz

Best regards,

Kevin Kroskey

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* This newsletter was prepared by PEAK.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.

May 17, 2010 Weekly Commentary

The Markets

"Hot potato" is a favorite children's game. Unfortunately, as adults, we're playing an economic version that has the potential for much more serious consequences.

It started with consumers going into debt over their heads to help fund an ever-increasing lifestyle.

For example, total household debt rose from $1.1 trillion in 1978 to $13.5 trillion at the end of 2009, according to the Federal Reserve. That's more than a 12-fold increase over the past 31 years. By contrast, our economy, as measured by gross domestic product, grew from $5.3 trillion to $13.3 trillion during that same period--a more modest 2.5-fold increase, according to the Department of Commerce.

Then it moved to the financial sector racking up huge liabilities on the back of newfangled derivative securities.

Total financial sector debt, which includes various government-related enterprises and private financial institutions, rose from $0.4 trillion in 1978 to $15.6 trillion at the end of 2009, according to the Federal Reserve. That's a 39-fold increase over the past 31 years. With this high leverage, is it any surprise that our banking system nearly went kaput in 2008?

Then it moved to the local, state, and federal governments incurring unsustainable debt to keep the world economy from collapsing.

Total U.S. local, state, and federal governmental debt rose by a factor of 11 from 1978 to 2009, according to the Federal Reserve. Overseas, the picture looks bleak, too, as many of the European Union countries are sitting on huge piles of IOUs that look increasingly less likely to be paid back in full. Not surprisingly, gold prices hit a record high last week as people turn to the perceived safety of the yellow metal in times of doubt, according to the Financial Times.

With the potato of debt having passed from party to party over the past three decades, the financial markets are now saying the potato stops here. As John Mauldin, president of Millennium Wave Advisors, LLC, says, "You don't cure a debt problem with more debt unless you have a clear path to grow your way out of the debt." In the U.S., we can grow through population growth and productivity gains. That, coupled with higher taxes and lower spending, may do the trick. In Europe, structural headwinds make the growth story much more difficult and that's partly why the value of the euro is declining and street protests are rising.

How this unwinding of debt plays out with the world populace will likely affect the financial markets for years to come.

Source: Bureau of Labor Statistics

The fact that the most highly educated people in our population have a relatively low unemployment rate of 4.9% may help explain why consumer spending hit an all-time high in March, according to MarketWatch. People with a higher education tend to earn more and since 95% of that demographic is employed, that has helped reinvigorate consumer spending.

The overall unemployment rate of 9.9% is unacceptably high and understandably grabs the headlines, but looking at the composition of that number suggests the damage to the economy might not be as bad as first thought. Digging beneath the headlines like this helps us make better assessments of the current economic and investing environment.

Weekly Focus – Think About It
It's a shallow life that doesn't give a person a few scars."
--Garrison Keillor

Best regards,

Kevin Kroskey

May 10, 2010 Weekly Commentary

The Markets

Five little "PIIGS" went for a boat ride. The weather turned very stormy and "G" got tossed overboard without a life jacket. Shortly thereafter, "P" and "S" found themselves overboard and drowning in the water, too. Unable to mount an effective rescue, the other shipmates radioed for help. Fortunately, "EU" and "IMF" were available with a bigger boat and more rescue equipment. As the storm continued to rage, the "PIIGS" desperately waited for "EU" and "IMF" to arrive, hoping they would have the tools necessary to save them.

The above metaphorically describes what is happening in Europe. The "PIIGS" are Portugal, Italy, Ireland, Greece, and Spain. Water is code for government debt and largesse. "EU" is the European Union and "IMF" is the International Monetary Fund. The big question is, will the "EU" and the "IMF's" boat and tools be enough to complete the rescue, or will they be overwhelmed by the storm, too?

With the events of last week, world financial markets declared loud and clear that government debt levels in certain countries are unsustainable and have to be dealt with right now. Jolted into action by the gathering storm, the 16 euro nations and the IMF announced late Sunday evening a loan package worth nearly $1 trillion to help stem the budding crisis, according to Bloomberg. This huge show of force may be enough to convince investors that the euro nations are serious about saving the weaker members, i.e., the "PIIGS."

The good news is that the U.S. is not the epicenter of this latest problem. That, coupled with an improving economy, may help the U.S. avoid the brunt of the pain.

THE EVENTS OF LAST WEEK REMINDED INVESTORS that a significant drop in the markets can happen at any time. However, as described below, the U.S. has some positive momentum in place that may help it weather a new storm should one arise.

First quarter corporate earnings were strong as 76% of the S&P 500 companies beat the average analyst profit forecast, according to Bloomberg. Strong earnings growth may provide support for stock prices.
U.S. consumer spending hit an all-time high in March, finally surpassing the previous peak set in November 2007, according to the Commerce Department. Consumer spending accounts for 70% of gross domestic product so this could bode well for economic growth, according to Forbes.
Job growth is finally occurring as the Department of Labor said nonfarm payroll employment grew by 290,000 in April, which was well above forecast. Earlier months were revised upward, too. Employment growth is a key driver of economic growth.
Consumer borrowing posted an unexpected rise in March, which was only the second gain in 14 months, according to Associated Press. The rise may suggest consumers are feeling more confident and that could help the economy.

Today, the economy is on its way up from a devastating decline. With the layoffs in the past couple years, significant excess in the economy has been wrung out, which may set the stage for sustainable growth. As described above, many key economic indicators are pointing toward a strengthening economy. And, while it's true that the economy and the stock market can fall out of sync for periods of time, the fact that our economy seems to be heading in the right direction may help provide some underlying support for the stock market in the short term.

Weekly Focus – Think About It
"Worry gives a small thing a big shadow."
-- Swedish Proverb

Best regards,

Kevin Kroskey, CFP, MBA

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* This newsletter was prepared by PEAK.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.

May 3, 2010 Weekly Commentary

The Markets

Two tragedies, worlds apart, reached a boil last week and affected the financial markets in a not so pleasant way.

Greece, which is an ocean away and no stranger to tragedy, (think Aeschylus, Sophocles, and Euripides), nearly imploded last week on fears that its government was bankrupt. With huge budget deficits and no credible way to pay them, Greece saw its short-term government bond yields soar past 20%, according to Barron's. By contrast, the comparable bond in the U.S. yielded about 1% last week, according to the Treasury Department. As a euro country, Greece has limited tools to deal with the crisis on its own (e.g., it cannot devalue its currency or adjust its interest rates) so it has to rely on the kindness of neighbors to bail it out. This past weekend, the European Union and the International Monetary Fund announced that they will support Greece with a $146 billion multi-year aid package, according to Bloomberg. Now comes the hard part for Greece--implementing the austerity measures that accompany the bailout.

The concern that this debt problem could spread and undermine the euro countries helped undercut many world stock markets last week.

Closer to home, the uncapped oil leak in the Gulf of Mexico has states bordering the Gulf bracing for an environmental and economic disaster. The Gulf is a major oil-producing region and this spill could deter new drilling, a thought which helped send oil prices up more than 1% last week. Unfortunately, fishermen, the tourism industry, and the environment itself all stand to lose, too, as the spill worsens.

While the twin tragedies captured many of the headlines last week, much of the economic news was bullish. For example, first quarter gross domestic product grew at a respectable 3.2 percent annual rate, household spending increased at the fastest rate in three years, and The Institute for Supply Management-Chicago Inc. said its business barometer rose to 63.8 in April, the highest level in five years, according to Barron's. On top of that, The Economist magazine said, "global output is now back to where it was before the downturn…(and) there is growing optimism that the recovery is becoming self-sustaining."

Although the twin tragedies are still developing, recent solid economic news has helped limit their financial market impact.

April 26, 2010 Weekly Commentary

The Markets

A trillion here, a trillion there, pretty soon we're talking serious money.

Between the October 2007 all-time high and the February 2009 low, world stock market valuation declined from $63.0 trillion to $28.6 trillion, according to the World Federation of Exchanges. That's a drop of $34.4 trillion or 54.6% in just 16 months--serious money, indeed. Almost as remarkable, world stock markets started rebounding in March 2009 and by March 2010, they had climbed back to $49.1 trillion in valuation, which represents a 71.7% increase from the low. That's a rise of $20.5 trillion in 13 months and leaves us "just" $13.9 trillion short of the October 2007 all-time high.

Many pundits in print, TV, and online have wondered how the economy is showing surprising strength in the face of near double-digit unemployment. One simple answer is that our world still has tremendous wealth in the form of equity investments. As described above, world stock market valuation has risen $20.5 trillion since the low and this has helped investors/consumers feel wealthier. And, in a little known fact, world stock market valuation at the end of last month was $12.7 trillion higher than it was five years ago. According to a concept called the "wealth effect," as investment wealth increases, consumers feel more secure and they start spending more.

So, even though the U.S. unemployment rate is high, overall world wealth in the form of equity investments is in decent shape and the trend over the past year has been up. This "equity wealth" is helping support worldwide economic activity.

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.

ONE THING THAT SPORTS AND THE STOCK MARKET HAVE IN COMMON is that momentum frequently determines who wins or loses. Athletic teams that get on a roll often end up winning because "momentum" is on their side. Likewise, similar to Newton's first law of motion, the stock market can stay in a trend for a long time until something substantial comes along to knock it off course.

Recent upward momentum in the stock market has been very strong. In fact, the 14-day relative strength index (RSI) on the S&P 500 closed above 65 for 29 consecutive days ending April 15--its longest such streak above 65 in 24 years, according to Bloomberg. The RSI is a technical indicator that measures the speed and change of price movements (i.e., momentum) and it fluctuates between 0 and 100, according to StockCharts.com. Readings in the 65 area indicate solid upward price momentum.

Why should you care about this idea of momentum?

It's important because momentum can help determine the underlying strength of the market. When the market is showing broad-based momentum, it often takes something significant to change its course.

This does not mean the market will go up in a straight line during periods of strong momentum. For example, the S&P 500 dropped 1.6% on April 16 when the government announced it was charging Goldman Sachs with fraud. But, it turns out that there was enough underlying strength in the market that it only took five trading days for the S&P 500 to recoup all of its Goldman-led losses, according to data from Yahoo! Finance.

Technical indicators like the RSI are certainly not foolproof. However, they may be helpful in assessing the near-term strength of the market and its susceptibility to corrections.

Weekly Focus – Think About It
"I never predict. I just look out the window and see what is visible--but not yet seen."
-- Peter Drucker

Best regards,

Kevin Kroskey

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* This newsletter was prepared by PEAK.
* You cannot invest directly in an index.

April 19, 2010 Weekly Commentary

The Markets

Lloyd Blankfein, the chief executive of Goldman Sachs, described himself as "doing God's work," in a profile last year in London's Sunday Times. Last Friday, the SEC charged Blankfein's firm with defrauding investors in connection with securities linked to subprime mortgages. Investor reaction was swift as Goldman's stock dropped more than 12% on the day and the Dow Jones Industrial Average lost 125 points, according to Associated Press.

A volcano in southern Iceland erupted last week and sent a massive ash plume across Europe, which caused the cancellation of tens of thousands of flights over a several day period and created unexpected hardship for millions of travelers, according to CNN. This floating ash plume is costing the airline industry at least $200 million a day, according to the International Air Transport Association.

So, what's the connection between the Goldman Sachs fraud case and the Icelandic ash plume? Nothing! Yet, in the world of investing, seemingly random and unpredictable events like these can materially affect financial markets and specific stocks.

The fact that random and unpredictable events can trigger financial disturbances is one reason why it is important to keep an eye on capital preservation and not just focus on capital appreciation.

Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.

WHICH IS MORE IMPORTANT--making sure you participate in the market's 10-best performing days or avoiding the market's 10-worst performing days over any given period? Based on the 81 years between January 3, 1928 and March 31, 2009, here are some numbers to help us answer this question, according to data from Invesco Aim:

 The 10-best performing days in the S&P 500 index yielded a daily average return of 11.7%. The 10-worst performing days yielded a daily average return of -10.8%.
 If you missed the 10-best performing days, $1 would have grown to just $14.99.
 If you missed the 10-worst performing days, $1 would have multiplied to $143.47.
 If you missed the 10-best and the 10-worst days, $1 would have grown to $47.59.
 On a buy and hold basis, one dollar invested at the beginning of this 81-year period would have grown to $45.18 by March 31, 2009.
 All 10 of the worst performing days occurred during bear markets as did seven of the 10 best-performing days.

Here are a few thoughts on interpreting this data:

 First, missing the 10-best performing days reduced your growth over the entire 81-year period by about two-thirds compared to staying fully invested during that period. This makes a case for staying fully invested so you don't miss these big up days.

 Second, missing the 10-worst performing days more than tripled your results compared to staying fully invested. This suggests that historically, if you had magical powers to foresee the future and were out of the market on the 10-worst performing days, your return would have more than tripled the return of the fully invested buy-and-hold strategy. This makes a case for market timing.

 Third, missing both the 10-best and 10-worst days in the market had very little impact on your results compared to just staying fully invested during the entire period. Score another one for buy-and-hold.

But, let's be realistic. The above numbers are based on historical data, you cannot invest directly in an index, and few people have an 81-year investment horizon. And, by the way, nobody we know has the ability to perfectly time the market and pinpoint the 10-best and 10-worst performing days before they happen.

This data helps support two of my beliefs. First, the historical data shows the importance of risk management relative to return maximization. Second, your investment plan must be designed to meet your financial goals, not simply to capture or avoid the best and worst days in the market. Ultimately, it's your number that we are trying to achieve.

Weekly Focus – Think About It
"You only have to do a very few things right in your life so long as you don’t do too many things wrong." --Warren Buffett

Best regards,

Kevin Kroskey

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* This newsletter was prepared by PEAK.* Consult your financial professional before making any investment decision.

April 12, 2010 Weekly Commentary

The Markets
The U.S. stock market continued grinding its way higher last week as the Dow Jones Industrial Average briefly pierced the 11,000 level for the first time since September 2008, according to The Wall Street Journal. Back then, the Dow was piercing 11,000 on its way down to below 7,000 in March 2009. This time, it's on its way up from the March 2009 low. Same number, but clearly a much different feel.

The main difference between then and now is the economy--it was bad then and getting worse, now, it is still weak but clearly improving.

On the improvement side, Thomson Reuters says analysts are looking for a 37% rise in first-quarter 2010 corporate earnings. Retailers reported a whopping 9.1% jump in March same-store sales, according to Barron's. On top of that, "The service sector is growing at the fastest pace since May 2006, and manufacturing the most since 2004. Employers are hiring again, and sales of existing homes rose 8.2% in February," according to Barron's. Stats like that are keeping investors interested in owning stocks even at ever-increasing prices.

Of course, the problems of the Great Recession are still here such as high unemployment, unsustainable budget deficits, tight credit, and weak housing. However, there is a potential solution to working our way out of this hole. The Economist magazine calls it a "re-balancing" of the world economy. Put succinctly, the magazine said, "If Americans save more and spend less while other big countries do the opposite, the world economy will prosper." In effect, the U.S. will need to export more to other countries who gobble up our goods and services. A weaker dollar could speed up this re-balancing; and, word that China might let its currency appreciate against the dollar in the near future supports this re-balancing theory, according to MarketWatch.

Notes: S&;P 500, DJ Global ex US, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable or not available.

U.S. COMPANIES ARE SITTING ON A RECORD PILE OF CASH and that could buy stock prices as companies use their cash to repurchase stock, according to Bloomberg. At the end of 2009, S&P 500 companies were sitting on a record $831 billion in cash, according to Standard and Poor’s. This cash hoard grew as companies spent only 28% of their operating profits on stock buybacks in 2009, according to Standard and Poor’s as reported by Bloomberg. Further, Bloomberg said, "The last time the ratio dropped to that level, the S&P500 subsequently climbed for four years."

Prominent money manager and Forbes columnist Ken Fisher said in a Bloomberg television interview in early April, “There’s cash sitting there, waiting to come in later, which will then later help buoy both businesses and stocks. This bull market will carry on for several years.” Yes, it is getting easier to find reasons for the stock market's year-long rise. But, just like in the late 1990s, a good fundamental story can get taken to an extreme and end in major disappointment.

One of the hallmarks of great investors is their ability to manage their enthusiasm. Rather than succumbing to euphoria, they try to maintain perspective. They aim to balance the positive with the potential negatives and not get carried away with an untamed crowd.

With the S&P 500 still down more than 20% from its all-time high and trading volume relatively low, we are likely not in danger (yet) of a new wave of market hysteria. However, we are always mindful of what could go wrong and, if this market keeps rising, so will our concern about the danger of getting caught in an "untamed crowd."

Weekly Focus – Think About It
"Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected." -- George Soros

Best regards,

Kevin Kroskey

* 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 DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* This newsletter was prepared by PEAK.