4th Quarter Newsletter by shitingting


									Minert Financial Presents
                     Year-End Financial Update
IMPORTANT: If you have not already done so,                 residential resales were down 23% and 21% from
please call/email to setup the MONTH for your               levels 12 months before, while RealtyTrac reported
Annual Planning Review.                                     foreclosures up 94% from a year ago.2,3 New home
                                                            sales fell 9% in November, to a pace not seen since
2008 Retirement Plan Limits &                               1995.4
Reminders. This is the time to make sure you are
contributing the maximum the IRS allows to your             In November, the Federal Reserve forecast that the
retirement plans. Please let us know if you need to         economy would grow only 1.6-2.6% in 2008. America
increase your monthly automatic contributions to            had enjoyed 4.9% growth in 3Q 2007 (revised upward
meet the 2008 limits, as this will not happen               from 3.9% in December) and 3.8% growth in 2Q 2007.5
automatically. We are happy to check for you to let
                                                            Economists anticipated 4Q 2007 GDP of 1.5% or
you know if you have contributed the maximum
and/or assist you with changing the monthly                 lower, and former Fed chairman Alan Greenspan saw
automatic investment. The deadline for IRA & Roth           the chances of recession “clearly rising.”6 The dollar
IRA contributions is April 15. The deadline for Simple      weakened and commodities prices rose, and even with
IRAs is the tax filine deadline, including extensions. If   the Fed cutting interest rates, hints of increasing
you have any questions whatsoever, please call and          inflation and diminishing manufacturing surfaced.
make an appointment to speak with us.
                                                            Domestic economic health. It was not just a
New Limits for 2008. IRA & Roth IRA: Maximum                possibility, it was a certainty: America was in its
contribution increases to $5,000 from $4,000 per
person (Roth-IRA phases out at $10k - $116k single or       biggest financial quandary in a decade. The credit
$159k - $169k joint). Additional over 50 amount stays       crisis that started with subprime mortgages had
at $1,000. IRA Deductibility: Single – phase out            rippled out through the entire banking system and
begins over $53k AGI. Joint - phase out begins over         was now a drag factor on the economy at large. (We
$85k AGI. Roth IRA Conversion Limit: Before 2010 –          learned from the Commerce Department that net
AGI < $100k. 2010 and Later: Unlimited AGI. Simple          exports had added 0.9% to U.S. economic growth in
IRA: Employee contribution limit stays at $10,500.          the third quarter, the biggest such influence since
Additional over 50 amount stays at $5,000. 401k,
403b, & 457 Plans: Employee contribution limit stays        1980 – a sign that other economies were partly bailing
at $15,000. Additional over 50 amount stays at              out ours.)7
$5,000. Defined Contribution Plan Limits: Increased
from $45,000 to $46,000. Annual compensation limit          The Fed’s fall snapshot revised expectations
increased from $225,000 to $230,000. Self-employed          downward. While the Labor Department reported
& Business Owners: It is always good for us to review       166,000 new jobs for October (double economists’
your plan to determine if you still have the best plan to   expectations)8, Federal Reserve data showed the pace
fit your needs each year. We can change this mid-year.      of manufacturing slowing 0.4% for the month. 9 The
For example, if you currently have a SEP, a Simple          Commerce Department reported just a 0.2% rise in
IRA may be better depending on the situation.
                                                            consumer spending for October, while construction
Quote for 4th quarter 2007. “Never go to                    spending fell 0.8%.10 In November, inflation went up
excess, but let moderation be your guide.” – Cicero         3.2%, the biggest monthly jump since 1973, fueled by a
                                                            34.8% jump in gasoline prices; the Consumer Price
4th quarter in brief. It was a quarter that                 Index was up 0.8%, one-third higher than what
many investors (and homeowners) would like to               economists had forecast.11 The weak dollar lingered to
forget. The Dow Jones Industrial Average had its            new lows.
worst fourth quarter since 1987.1 It dropped 367
points on October 19, and despite its best two-day rally    And through it all, the American consumer persisted.
in five years in late November, it concluded the year at    Consumer spending somehow rose by 1.1% in
13,264.82 – 900 points below the October 9 record           November, the best monthly increase since fall 2005.12
close of 14,164.53. For October, new home sales and         The Conference Board reported a rise in its consumer
confidence index to 88.6 for December, up from 87.8 in                              Of course, the other big news was the ECB acting in
November.13                                                                         tandem with the Federal Reserve to pump money into
                                                                                    the banking systems of, respectively, the EU countries
           % Change             4Q 2007               2007                          and the U.S. Banking giants also turned abroad to
                                                                                    soothe liquidity problems. In December, China
           S&P 500                 -0.38             +3.53                          Investment Corp. notably bought nearly a 10% stake
                                                                                    in Morgan Stanley for $5 billion, and Citigroup Inc.,
        Source: CNNMoney.com, USAToday.com, 12/31/07                                UBS AG and Bear Stearns Cos. turned to sources in
                           *Without dividends
                                                                                    Singapore, Abu Dhabi and China for capital
Global economic health. The question
became, would the American economy hold up or fall                                  Housing & interest rates. Was it the worst
into recession? Would other economies consequently                                  housing market in 12 years? Or 20 years? How about
suffer? Major Asian economies (excepting Japan)                                     34 years? It depended on the statistic, but one thing
enjoyed strong growth in the quarter, only mildly                                   was certain in the fourth quarter: the housing slump
affected by U.S. woes. The Asian Development Bank                                   had not bottomed out.
estimated that China’s economy grew 11.4% in 2007,
and Southeast Asia economies 6.3%15 … but GDP data                                  Here was the lone positive statistic: the Commerce
released late in the 4Q showed the economies of                                     Department reported that new home sales went up
Singapore and Korea weakening.16                                                    1.7% in October. (But even so, they were still 23.5%
                                                                                    below October 2006 levels.)2
In Europe, many economies were slowing. European
retail sales fell in October, November, and December,                               And now, the negatives. RealtyTrac noted that
and business confidence in the region’s #1 economy –                                October foreclosures were up 94% from October of
Germany – fell to the lowest level in almost two years                              2006,2 and the Mortgage Bankers Association
in December.17 Rising credit costs pinched European                                 announced the highest foreclosure rate it has recorded
economies, as did the rising value of the euro, which                               in its history in December: 0.78% of U.S. homeowners
made European exports less attractive to Americans.                                 somewhere in foreclosure in 3Q 2007.26 The Federal
                                                                                    Reserve determined that home equity levels were at
World financial markets. It wasn’t the                                              record lows in the third quarter. 27 New home sales hit
greatest quarter for global indexes. Signs of trouble                               a 12-year low in November.28
emerged: financial stocks on a key MSCI Asia index
                                                                                    Mortgage rates necessarily descended. By mid-
fell 1.4% in the 4Q, the first negative quarter for such
                                                                                    December, average rates on the four popular FRMs and
stocks since 1Q 2005.18 European stock indexes
                                                                                    ARMs had all dropped below 6%. Rates climbed slightly
declined across the quarter; England’s Dow Jones
                                                                                    over the rest of the month.29
Stoxx 600 Index actually declined for the year, losing
0.1% for 2007.19

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Advisor Representative, Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor.

Registered Representative, Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, Member NASD/SIPC. Investment
Advisor Representative, Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor.

Minert Financial and Cambridge Investment Research, Inc. are not affiliated.

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