Weekly Commentary by liuqingyan


									                                   Weekly Commentary
                                    August 21, 2006

It’s summertime, and the living was easier than many stock investors might have
expected last week.

According to the Stock Trader’s Almanac, August has been the worst year for the
Standard & Poor’s 500 during the past 15 years. Fortunately, we may be seeing a new
trend in the making this year. Last Thursday, the S&P 500 reached a three-month high
and, if markets remain as positive as they were last week, August of 2006 may prove to
be a very good month indeed.

Anyone who has taken a wine tour knows that the right combination of factors can
produce a remarkable bottle of wine. In the same way, the right combination of
economic news and investor optimism can produce a market rally—and that’s what
happened last week. We saw good economic news.

       Wholesale and consumer price increases were lower than expected, which may
        indicate inflation is under control. (I’m sure we’ll revisit this soon.)
       There was positive consumer spending data and news of improved manufacturing
        activity, which may indicate strength in the economy.
       There was a brief decline in the price of oil as tensions in the Middle East eased.

All of this was coupled with optimism that the new Federal Reserve Chairman, Ben
Bernanke, may have guided the economy successfully through the dual dangers of
inflation and recession. The end result? You’ve got it—a multi-day rally during the dog
days of summer.

The Markets
    Returns through 8/18/06            1-Week        Y-T-D     1-Year    3-Year       5-Year    10-Year
 Dow Jones Industrials                       2.7         6.2       7.8        6.5         2.0         7.2
 Nasdaq Composite                            5.2        -1.9       1.3        7.6         2.8         6.7
 Standard & Poor's 500                       2.8         4.3       6.8        9.2         2.1         6.9
Source: Yahoo! Finance, Barrons
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.
DO BONDS BELONG IN YOUR PORTFOLIO? In good times, when stock market
returns are strong, bonds may not seem very appealing. However, when the worm turns
and the stock market heads south, bonds often become attractive to investors. That’s
because bonds not only generate income, they can also reduce the volatility of a portfolio
that is primarily invested in stocks. Bond income can help reduce portfolio volatility
because it is always positive. When bond income is included in your overall
portfolio return, it may offset declines in the value of other assets. Here are two
concepts bond investors should become familiar with:

      1. Yield. The amount of income a bond pays each year, divided by the price you paid for it,
         is its yield. For example, if you bought a bond that offered $60 in income each year and
         paid $1,000 for it, your yield would be 6%. If you sell the bond to someone else, and they
         pay more for it, their yield would be lower (and vice versa).
      2. Duration. Duration measures a bond’s sensitivity to changes in interest rates. The
         greater a bond’s duration, the more volatile it will be. For example, a bond with duration
         of two years will move about 2% in price for every 1% change in interest rates, while a
         bond with a duration of five will move about 5% for every 1% change in interest rates.

During the next few years, more employer-sponsored retirement plans are expected to
offer Roth contributions, which allow participants to make after-tax contributions to
401(k) plan accounts. While Roth contributions won’t provide you with a tax-deduction
today, any earnings compound tax-free, and qualified withdrawals can be made tax-free.
(It’s similar to a Roth IRA without the income restrictions.)

Who should make a Roth contribution? Anyone who may be in a lower bracket today
than they will be once they retire could benefit from Roth contributions. If your plan
adds a Roth 401(k) option and you’re not sure whether Roth or traditional 401(k)
contributions make sense for you, give us a call. We can help you decide which option
meets your needs.

Weekly Focus – We all use acronyms. Some have become so ingrained in our
language that we no longer remember the phrase or saying that they originally
represented. Some are so new that we may only encounter them when text messaging.
Test your knowledge on these common acronyms. If you go to the very bottom of this
email, I’ve offered you the answers.

TIP               SONAR               POSH                AFAIK             LOL

Best regards,

Barbara C. Archer, CFP®, CLU
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you
would like us to add them to the list, please reply to this e-mail with their e-mail address
and we will ask for their permission to be added.
                    Securities and Investment Advisory Services offered through NFP Securities, Inc.
                     A Broker/ Dealer, Member NASD/SIPC and Federally Registered Investment Advisor
                     Archer Wealth Management, LLC is an affiliate of National Financial Partners Corp.,
                                         The parent company of NFP Securities, Inc.

This material is written by Peak Productions with Barbara Archer. The information contained herein is based on data
gathered from what we believe are reliable sources. However, NFP Securities, Inc. does not attest to its accuracy and is
not responsible for errors and/or omissions. The opinions expressed in the enclosed articles are those of the author and
are not necessarily the same as those of NFP Securities, Inc. It is not intended to be used as a primary basis for
investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.
Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any

* 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

* 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

* Yahoo! Finance is the source for any reference to the performance of an index between two
specific periods.

TIP:           To Insure Promptness

SONAR: SOund NAvigation Ranging

POSH:          Port Out; Starboard Home (Supposedly, this acronym was printed on first-
               class tickets issued by the Peninsular and Oriental Steam Navigation
               Company going from England to India. The port side on the trip out would
               have the shadiest cabins. The same would be true of the starboard cabins on
               the return trip. From this origin, sprang the usage of the term meaning
               swank, elegant, or fashionable.)

AFAIK:         As far as I know

LOL:           Laugh out loud

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