The Worker, Homeownership, and Business Assistance Act of 2009

On November 6, 2009, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009 (the "Act"). The Act provides up to an additional 14 weeks in benefits to unemployed individuals. An extra 6 weeks of benefits is available to individuals in states with unemployment levels over 8.5 percent. The legislation also includes the following provisions:

First-time homebuyer credit

The Act extends and modifies the first-time homebuyer tax credit. Specifically, the Act:

• Extends the first-time homebuyer credit to principal residences purchased before May 1, 2010. The credit is extended to principal residences purchased before July 1, 2010 if a written binding contract is entered into prior to May 1, 2010.
• Increases the income limits that apply to the credit. For the purchase of a principal residence after November 6, 2009 the credit is reduced if modified adjusted gross income (MAGI) exceeds $125,000 ($225,000 if married filing a joint return) and is completely eliminated if MAGI reaches $145,000 ($245,000 if married filing a joint return).
• Establishes a new limitation: effective for purchases made after November 6, 2009, the first-time homebuyer credit is not available if the purchase price of a principal residence exceeds $800,000.
• Expands eligibility (purchases made after November 6, 2009) by allowing some existing homeowners to qualify for the credit when they purchase a new principal residence. Specifically, an individual (and, if married, the individual's spouse) who has maintained the same principal residence for at least five consecutive years in the eight-year period ending on the date that a subsequent principal residence is purchased, will be considered a first-time homebuyer for purposes of the credit. In such a case, the maximum amount of the credit is $6,500 ($3,250 for a married individual filing separately).

For purposes of the credit, in the case of a purchase of a principal residence after December 31, 2008, a taxpayer may elect to treat the purchase as if it were made on December 31 of the calendar year preceding the purchase for purposes of claiming the credit on the prior year's tax return. This means qualifying purchases in 2009 can be treated as if they were made on December 31, 2008, and qualifying purchases in 2010 can be treated as if they were made on December 31, 2009.

The Act also imposes additional new limitations on purchases made after November 6, 2009:

• No credit is allowed unless the taxpayer is 18 years of age as of the date of purchase. A taxpayer who is married is treated as meeting the age requirement if the taxpayer or the taxpayer's spouse meets the age requirement.
• The definition of purchase excludes property acquired from a person related to the person acquiring such property or the spouse of the person acquiring the property, if married.
• No credit is allowed to any taxpayer if the taxpayer is a dependent of another taxpayer.

For tax years ending after November 6, 2009, no credit is allowed unless the taxpayer attaches to the relevant tax return a properly executed copy of the settlement statement used to complete the purchase.

The Act also includes special provisions for members of the uniformed services and others who receive government orders for qualified official extended duty service. These provisions include extended time to claim the credit.

Five-year carryback of net operating losses

The American Recovery and Reinvestment Act of 2009 allowed eligible small businesses to elect to extend the general two-year net operating loss (NOL) carryback period for 2008 net operating losses to three, four, or five years. An eligible small business was defined as a taxpayer meeting a maximum $15,000,000 gross receipts test. The provision applied to an eligible taxpayer's NOL for any taxable year ending in 2008, or if elected by the taxpayer, the NOL for any taxable year beginning in 2008. However, the election was allowed only with respect to one taxable year.

The Worker, Homeownership, and Business Assistance Act of 2009 provides for an election similar in nature to the NOL carryback provision in the American Recovery and Reinvestment Act:

• Businesses may elect to extend the general two-year NOL carryback period to three, four, or five years. The election is not limited to businesses that meet a specified gross receipts test.
• The election can be used for an NOL for a taxable year beginning or ending in either 2008 or 2009. The election can be used for only one year, however.
• Under the terms of the election, NOLs carried back five years would be able to offset up to 50 percent of the taxable income from the fifth year, but could offset all of the income from the other carryback years.
• Eligible small businesses that elected to carry back 2008 net operating losses under the provisions of the American Recovery and Reinvestment Act of 2009 can still elect to carry back a 2009 NOL under the provisions of this Act.

The Act specifically excludes certain taxpayers. For example, a business in which the Federal government acquired an equity interest pursuant to the Emergency Economic Stabilization Act of 2008 is not eligible for the election.

--see disclaimer below--

Market Week: November 16, 2009

The Markets

After rising 500 points over six days and hitting a level not seen since the day after last year's vice presidential debate, the Dow slipped a bit but still managed to stay above 10,000. The S&P 500 once again bumped its head against the 1100 mark, but couldn't quite break through.

Market/Index	2008 Close	Prior Week	As of 11/13/09	Week Change	YTD Change
DJIA	8776.39	10023.42	10270.47	2.46%	17.02%
NASDAQ	1577.03	2112.44	2167.88	2.62%	37.47%
S&P 500	903.25	1069.30	1093.48	2.26%	21.06%
Russell 2000	499.45	580.35	586.28	1.02%	17.39%
Global Dow	1526.21	1903.30	1950.46	2.48%	27.80%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	2.24%	3.50%	3.43%	-7 bps	119 bps

Last Week's Headlines

• An October Federal Reserve Board survey of bank lending officers showed that overall, credit continues to tighten for both small businesses and households. Approximately 45% of the banks surveyed reported making fewer commercial and industrial loans. And roughly half said that between now and February, they expect to reduce credit limits, raise required minimum credit scores, and/or increase annual fees for prime borrowers (for nonprime borrowers, the percentage planning such steps was even higher).
• U.S. exports rose 2.9% in September, but imports rose twice as much. The U.S. trade deficit, now $36.5 billion, is 18.2% higher than in August, and the trade deficit with China alone is at a year-long high.
• In other deficit-related news, President Obama and Treasury Secretary Geithner both worked overtime to try to reassure Asian nations that the U.S. recognizes the global need for a strong dollar and will work to reduce the trade deficit as the economy begins to recover.
• The European Union's economy followed that of the U.S. in growing during the third quarter. The 0.4% growth was the first positive figure since the first quarter of 2008.
• The Reuters/University of Michigan survey of consumer confidence hit its lowest level in three months, dropping from 70.6 in October to 66. And unfortunately, respondents' expectations for their prospects a year from now weren't much better. In October, the consumer expectations reading was 81; in November, it fell to 67--the lowest level since April.

Eye on the Week Ahead

October retail sales may suggest what's in store for the holiday shopping season. Investors will keep a watchful eye on inflation data, and options expirations at week's end could bring volatility.

Key data releases: Retail sales (11/16); wholesale inflation, industrial production (11/17); consumer inflation, housing starts (11/18); leading economic indicators (11/19).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--

College Board Releases New College Cost Numbers

College cost trends

Every October, the College Board releases its Trends in College Pricing report that highlights college cost increases and trends. While costs can vary significantly by region and individual college, the College Board publishes average cost figures, which are based on its survey of 3,500 colleges across the country.

Here are highlights from its latest report:

• At four-year public colleges for in-state students, tuition, fees, and room and board increased by 5.9% from last year, with the total cost for 2009/2010 averaging $19,388
• At four-year public colleges for out-of-state students, tuition, fees, and room and board increased by 6.0% from last year, with the total cost for 2009/2010 averaging $30,196
• At four-year private colleges, tuition, fees, and room and board increased by 4.3% from last year, with the total cost for 2009/2010 averaging $39,028

“Total average cost” includes tuition and fees, room and board, books and supplies, transportation, and a small amount for miscellaneous expenses.

To read the Trends in College Pricing report, visit www.trends-collegeboard.com.

Student aid trends

The College Board is quick to point out that the average "sticker price" cost figure is not necessarily representative of what most students pay. That's because almost two-thirds of undergraduate students receive grants that reduce the actual price of college. The largest provider of grant aid is individual colleges, followed by the federal government, private sources and employers, and state governments.

For the 2009/2010 year, the College Board estimates that students at public colleges will receive an average of $5,400 in grant aid from all sources and federal tax benefits, and students at private colleges will receive an average of $14,400 in grant aid from all sources and federal tax benefits. Federal tax benefits include the American Opportunity tax credit (formerly called the Hope credit), the Lifetime Learning tax credit, and the deduction for qualified higher education expenses.

Every year, the College Board also releases a sister report to Trends in College Pricing, called Trends in Student Aid, that examines student financial aid in more detail. To read this report, visit www.trends-collegeboard.com.

Market Week: November 2, 2009

The Markets

The nightmare before Halloween: The last week of October once again spooked the equities markets (though not nearly on the scale of, say, the last week of October 80 years ago, when the Dow lost more than 12% two days in a row). A strong rally Thursday prompted by a positive GDP report halted a string of down days but was followed by an even stronger slide Friday in the wake of weak consumer spending numbers. The small-cap Russell 2000 lost more than 3% on Friday alone, and the other major indexes weren't far behind. Ouch.

Market/Index	2008 Close	Prior Week	As of 10/30/09	Week Change	YTD Change
DJIA	8776.39	9972.18	9712.73	-2.60%	10.67%
NASDAQ	1577.03	2154.47	2045.11	-5.08%	29.68%
S&P 500	903.25	1079.60	1036.19	-4.02%	14.72%
Russell 2000	499.45	600.86	562.77	-6.34%	12.68%
Global Dow	1526.21	1940.90	1860.13	-4.16%	21.88%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	2.24%	3.48%	3.39%	-9 bps	115 bps

Last Week's Headlines

• Preliminary estimates of third-quarter gross domestic product (GDP) turned positive for the first time in a year. That could mean a turning point for the longest recession since the Depression era, though no official call would be made for some time. The Bureau of Economic Analysis said the U.S. economy grew at an annual rate of 3.5%. Contributing to the increase were consumer and government spending, exports, improved inventory levels, and more residential investment.
• Consumer spending fell 0.5% in September after "cash for clunkers" expired in late August, while incomes remained flat.
• U.S. home prices rose in August for the fourth straight month. Though still 29.3% down from its peak, the S&P/Case-Shiller index of prices in 20 leading cities was up by 1.2% from July, with only 3 cities experiencing declines.
• The Conference Board's measure of consumer confidence in October fell to its lowest level in 26 years. The job market played a major role in the second decline in a row. However, the pulse-takers must have been talking to different consumers than the Reuters/University of Michigan crew, which found that consumer sentiment rose during the month.
• The Federal Reserve Board's program of buying Treasury bonds, launched to support the bond markets in the wake of last year's financial crisis, came to an end.
• Durable goods orders rose 1% in September, and existing inventories fell for the ninth month in a row.
• For the first time in six months, new home sales fell 3.6% in September. The median sales price of $204,800 is 9.1% lower than last September.
• CIT Group, a major lender to small and mid-sized businesses, filed for Chapter 11 bankruptcy.

Eye on the Week Ahead

Investors will try to assess whether the last two weeks are an indicator of things to come, or a needed correction that could bring out those who sat out the seven-month rally and now are looking to get back in. We'll learn Friday whether unemployment has reached 10%, as is anticipated at some point. A possible Congressional extension and expansion of the homebuyer's tax credit could be significant, and the Fed's Wednesday announcement will be parsed for clues about when a future interest rate hike might be in the cards.

Key data releases: Manufacturing, car sales, pending home sales (11/2); Federal Reserve Board announcement (11/4); unemployment/payrolls (11/6).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--

Market Week: October 26, 2009

The Markets

Many companies last week managed to generate enthusiasm by beating earnings estimates--in some cases resoundingly--but new highs for the year also brought out profit-takers. After surpassing the 10,000 mark last week, the Dow zigzagged around that level before finally wilting below it by week's end. Small caps lost the most, while blow-out reports from some Nasdaq bellwethers helped keep it from sliding as much as the other major U.S. indexes.

Market/Index	2008 Close	Prior Week	As of 10/23/09	Week Change	YTD Change
DJIA	8776.39	9995.91	9972.18	-.24%	13.63%
NASDAQ	1577.03	2156.80	2154.47	-.11%	36.62%
S&P 500	903.25	1087.68	1079.60	-.74%	19.52%
Russell 2000	499.45	616.18	600.86	-2.49%	20.30%
Global Dow	1526.21	1940.20	1940.90	.04%	27.17%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	2.24%	3.42%	3.48%	6 bps	124 bps

Last Week's Headlines

• New housing starts rose slightly in September, but permits for new construction fell 1.2%. Both are still roughly 28% below last year's figures.
• Driven largely by a 2.4% drop in energy prices, inflation at the wholesale level was down 0.6% in September from the previous month. That means wholesale prices have fallen 4.8% in the last year, though core inflation, which excludes food and energy, is up 1.8% since last September.
• The Conference Board's index of leading economic indicators saw its sixth straight month of improvements, rising 1% in September. The six-month increase is the strongest since 1983. Average workweeks and building permits were the only two negative components of the index.
• The looming expiration of the first-time homebuyer tax credit helped push sales of existing homes to their highest levels in two years, according to the National Association of Realtors (NAR). Resales rose 9.4% during September after falling in August, and were up 9.2% from last September. And the preliminary results of a separate NAR survey showed that almost half of sales were first-time home buyers. The bad news? Of those transactions, 29% were distressed properties.
• Oil hit a new one-year high on reports that, despite weak demand, oil inventories were building less rapidly than expected. The euro traded above $1.50 for the first time in 14 months.
• The federal government took steps to restrict executive compensation at seven large companies that have received taxpayer assistance, and the Federal Reserve Board proposed tighter regulatory supervision of pay packages that might encourage risky banking practices.
• A tale of two economies: Chinese officials forecast that third-quarter growth figures due Thursday would accelerate to 9% from the previous quarter's 7.9%. However, the UK's economy shrank 0.4% in the third quarter (5.2% from a year ago).

Eye on the Week Ahead

Thursday's U.S. GDP figure will be closely watched to see if it manages to turn the corner and show growth. However, earnings reports will continue to be scrutinized for clues about whether current stock prices have already anticipated potential future good news.

Key data releases: Home prices, consumer confidence (10/27); durable goods, new home sales (10/28); Q3 gross domestic product (10/29); personal income and spending (10/30).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--

Caring for an Aging Parent

THIS IS THE SECOND IN A SERIES OF ARTICLES THAT WE'LL BE POSTING DISCUSSING TOPICS RELATING TO INCAPACITY.

Caring for your aging parents is something you hope you can handle when the time comes, but it's the last thing you want to think about. Whether the time is now or somewhere down the road, there are steps that you can take to make your life (and theirs) a little easier. Some people live their entire lives with little or no assistance from family and friends, but today Americans are living longer than ever before. It's always better to be prepared.

Mom? Dad? We need to talk

The first step you need to take is talking to your parents. Find out what their needs and wishes are. In some cases, however, they may be unwilling or unable to talk about their future. This can happen for a number of reasons, including:

• Incapacity
• Fear of becoming dependent
• Resentment toward you for interfering
• Reluctance to burden you with their problems

If such is the case with your parents, you may need to do as much planning as you can without them. If their safety or health is in danger, however, you may need to step in as caregiver. The bottom line is that you need to have a plan. If you're nervous about talking to your parents, make a list of topics that you need to discuss. That way, you'll be less likely to forget anything. Here are some things that you may need to talk about:

• Long-term care insurance: Do they have it? If not, should they buy it?
• Living arrangements: Can they still live alone, or is it time to explore other options?
• Medical care decisions: What are their wishes, and who will carry them out?
• Financial planning: How can you protect their assets?
• Estate planning: Do they have all of the necessary documents (e.g., wills, trusts)?
• Expectations: What do you expect from your parents, and what do they expect from you?

Preparing a personal data record

Once you've opened the lines of communication, your next step is to prepare a personal data record. This document lists information that you might need in case your parents become incapacitated or die. Here's some information that should be included:

• Financial information: Bank accounts, investment accounts, real estate holdings
• Legal information: Wills, durable power of attorneys, health-care directives
• Funeral and burial plans: Prepayment information, final wishes
• Medical information: Health-care providers, medication, medical history
• Insurance information: Policy numbers, company names
• Advisor information: Names and phone numbers of any professional service providers
• Location of other important records: Keys to safe-deposit boxes, real estate deeds

Be sure to write down the location of documents and any relevant account numbers. It's a good idea to make copies of all of the documents you've gathered and keep them in a safe place. This is especially important if you live far away, because you'll want the information readily available in the event of an emergency.

Where will your parents live?

If your parents are like many older folks, where they live will depend on how healthy they are. As your parents grow older, their health may deteriorate so much that they can no longer live on their own. At this point, you may need to find them in-home health care or health care within a retirement community or nursing home. Or, you may insist that they come to live with you. If money is an issue, moving in with you may be the best (or only) option, but you'll want to give this decision serious thought. This decision will impact your entire family, so talk about it as a family first. A lot of help is out there, including friends and extended family. Don't be afraid to ask.

Evaluating your parents' abilities

If you're concerned about your parents' mental or physical capabilities, ask their doctor(s) to recommend a facility for a geriatric assessment. These assessments can be done at hospitals or clinics. The evaluation determines your parents' capabilities for day-to-day activities (e.g., cooking, housework, personal hygiene, taking medications, making phone calls). The facility can then refer you and your parents to organizations that provide support.

If you can't be there to care for your parents, or if you just need some guidance to oversee your parents' care, a geriatric care manager (GCM) can also help. Typically, GCMs are nurses or social workers with experience in geriatric care. They can assess your parents' ability to live on their own, coordinate round-the-clock care if necessary, or recommend home health care and other agencies that can help your parents remain independent.

Get support and advice

Don't try to care for your parents alone. Many local and national caregiver support groups and community services are available to help you cope with caring for your aging parents. If you don't know where to find help, contact your state's department of eldercare services. Or, call (800) 677-1116 to reach the Eldercare Locator, an information and referral service sponsored by the federal government that can direct you to resources available nationally or in your area. Some of the services available in your community may include:

• Caregiver support groups and training
• Adult day care
• Respite care
• Guidelines on how to choose a nursing home
• Free or low-cost legal advice

Once you've gathered all of the necessary information, you may find some gaps. Perhaps your mother doesn't have a health-care directive, or her will is outdated. You may wish to consult an attorney or other financial professional whose advice both you and your parents can trust.

PART THREE -- Next Wednesday's article is "Common Incapacity Documents" and "Medicare, Medigap, and Medicaid"

--See Disclaimer Below--

Market Week: October 12, 2009

The Markets

Up, up, and away: After a two-week breather, equity indexes once again found new life. Back-to-back triple-digit increases kicked off the week and helped launch the Dow toward Friday's new high for the year, though it still trails the other major indexes. The S&P 500 put together a string of five straight up days, ending the week only a fraction of a point from its September 2009 high, while the Nasdaq held onto its lead year-to-date. Contributing to the euphoria were promising initial earnings reports from several companies as well as sales figures from some large retailers that improved over last year's dismal figures.

Market/Index	2008 Close	Prior Week	As of 10/9/09	Week Change	YTD Change
DJIA	8776.39	9487.67	9864.94	3.98%	12.40%
NASDAQ	1577.03	2048.11	2139.28	4.45%	35.65%
S&P 500	903.25	1025.21	1071.49	4.51%	18.63%
Russell 2000	499.45	580.20	614.92	5.98%	23.12%
Global Dow	1526.21	1832.87	1913.14	4.38%	25.35%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	2.24%	3.22%	3.38%	16 bps	114 bps

Last Week's Headlines

• More companies in the services sector grew than contracted in September, according to the Institute for Supply Management. For the first time in a year, the ISM's index edged over the crucial 50% level.
• The Reserve Bank of Australia raised hopes about economic recovery when it raised its key interest rate by 25 basis points to 3.25%. The surprise move also prompted questions about whether and how soon other countries might follow suit. However, both the European and British central banks left rates unchanged, and the Federal Reserve Bank has said the target U.S. rate is unlikely to go up in the near future.
• The U.S. dollar took a beating as gold hit an all-time intraday high amid speculative chatter (later denied) about oil-producing countries potentially conspiring to work toward pricing oil in a basket of currencies instead of the dollar.
• The U.S. trade deficit unexpectedly fell in August. The gap between exports and imports shrank 3.6% after three straight months of increases. Exports were up 0.2%, while imports dropped for the first time since May.
• Overall consumer credit shrank at an annual rate of 5.8% in August. Revolving credit, such as credit card balances, dropped even more (down 13% from last year).

Eye on the Week Ahead

Earnings season will pick up steam, providing increased clarity about whether or not this week's early reports were a good indicator of overall corporate health. The Commerce Department's retail sales statistics will be closely watched as an indicator of consumer spending. The Treasury-subsidized Public Private Investment Partnership (PPIP) will begin buying mortgage-backed toxic assets from banks and insurance companies.

Key data releases: Retail sales (10/14); inflation (10/15); overseas purchases of Treasury debt, industrial production, consumer sentiment (10/16).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--

Quarterly Market Review: July-September, 2009

Patience is a virtue: A year after the financial world was shaken to its core, the equity markets sprinted through the third quarter, although they crossed the finish line gasping for breath. The Dow and S&P 500 had their best quarters in more than 10 years, and have now regained a little over 40% of their losses since their October 2007 highs. The Nasdaq has done even better, coming more than halfway back to its 2007 high. Less-bad economic statistics began to level off, and toward the end of the quarter, some even turned positive (sadly, unemployment rates weren't among them). Equity analysts began weighing both the odds of the rally's running out of steam and the idea that cost-cutting and easy year-over-year profit comparisons might support equities through year-end.

Bond investors (assisted by Fed purchases) seemed to digest more Treasury debt without difficulty. Bond funds continued to receive the bulk of mutual fund new cash inflows during the quarter. The yield curve between 2-year and 10-year Treasuries, now at 2.36%, is steeper than the 1.85% of a year ago. The dollar continued its slide relative to the euro, and gold ran true to form by rising sharply in September.

Economic Data/Currencies

Data	Current	Year Over Year	Notes
Consumer Price Index (CPI)(as of September 16)	+0.4%	-1.5%	Gas prices key to both monthly increase and yearly decline; core inflation at lowest rate since 2004
Unemployment rate (as of October 2 for September)	9.8%	+3.6%	263,000 job loss worse than anticipated; unemployment rate at 26-year high
Gross Domestic Product (GDP) (as of September 30 for Q2)	-0.7%		Substantial improvement from Q1's -6.4% decline
As of September 30, 1 euro equaled:	$1.46		Dollar hit 12-month low of $1.48 in September
As of September 30, $1 equaled:	¥89.98		Dollar weaker than June's ¥95.55

The Markets

Market/Index	End of Quarter	Quarterly Change	Year Over Year
DJIA	9712.28	+14.98%	-10.49%
NASDAQ	2122.42	+15.66%	+1.46%
S&P 500	1057.08	+14.98%	-9.37%
Russell 2000	604.28	+18.88%	-11.08%
Global Dow	1894.59	+16.28%	-6.59%
Fed. Funds	.25%	0	-175 bps
2-year Treasuries	.95%	-16 bps	-105 bps
10-year Treasuries	3.31%	-22 bps	-54 bps
Crude Oil (per barrel)	$66.56	-4.7%	-33.9%
Spot Gold (per oz.)	$1007.70	+8.5%	+11.5%

Quarterly Economic Perspective

• Unemployment problems increasingly spilled over into housing. The estimated percentage of mortgages that were either delinquent or behind at least one payment ranged from 3% to more than 5% during the second quarter (the most recent statistics available). By the end of May, prime fixed-rate mortgages reportedly represented one of every three new foreclosure filings, according to the Mortgage Bankers Association; a year earlier, they were one out of every five.
• Seasonal improvement in home sales--July resales were up 7.2% from the previous month--waned by quarter's end. August inventories of unsold homes improved, but were still substantially above last year's levels. The pipeline of foreclosures yet to be processed and the scheduled November end of the tax credit for first-time buyers represented potential storm clouds.
• As Federal Reserve Chairman Ben Bernanke pronounced the recession "very likely over," the Fed began winding down purchases of Treasury debt. It expects the entire $300 billion to be spent by the end of October but will continue to buy mortgage-backed debt through the end of March. Despite the support those purchases have given the bond markets, yields on the 10-year bond have risen from 2.54% on March 18, when the program was announced, to 3.31% on September 30.
• Treasury Secretary Tim Geithner announced that $70 billion of the $250 billion loaned to banks over the last year has been repaid. Loans that have been repaid in full have earned a 17% return.
• Initial public offerings (IPOs) and corporate mergers and acquisitions, which had slowed to a crawl in the wake of the credit crisis, began to show signs of renewed life in the third quarter. The Disney/Marvel Entertainment, Dell/Perot Systems, Xerox/ACS, and Abbott Labs/Solvay deals, plus Kraft's bid for Cadbury, joined previously announced mergers of Pfizer/Wyeth and Oracle/Sun as indicators that the credit markets are more open to financing corporate acquisitions.
• Retail spending statistics got a boost from the federal "cash for clunkers" program, which was extended and then abruptly ended in late August because of its unanticipated popularity.

Investor's Almanac

History Lessons: September's stellar performance by the equity indexes confounded investors who relied on the month's reputation as the worst month for equities. Past Septembers dating back to 1929 have seen an average decline of 1.2%; by contrast, the S&P rose 3.63% last month. It's not a record; 1939's 16.5% gain holds the record for Septembers. On the other hand, it's also nothing to sneeze at, especially compared to last September's 9% drop or the worst September on record (1931's -29.9%).

Did You Know? It ain't over 'til it's over, but it's over long before the fat lady sings: It takes anywhere from 6 to 18 months after a recession ends for the National Bureau of Economic Research (NBER) to make it official. The NBER formally labeled the current cycle a recession a year after it began in December 2007.

All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely-traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Nasdaq Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--

New Alzheimer's Report Spotlights Need to Plan Ahead for Incapacity

THIS IS THE FIRST IN A SERIES OF ARTICLES THAT WE'LL BE POSTING DISCUSSING TOPICS RELATING TO INCAPACITY.

A New 2009 Alzheimer's Report Spotlights the Need to Plan Ahead for Incapacity

On September 21, 2009, World Alzheimer's Day, Alzheimer's Disease International released a new report indicating that the number of people with Alzheimer's or another dementia, currently 35 million worldwide, is expected to nearly double every 20 years, to 65.7 million in 2030 and 115.4 million in 2050.

According to the 2009 Alzheimer's Disease Facts and Figures report, issued by the Alzheimer's Association, someone in the United States develops the disease every 70 seconds, and an estimated 5.1 million Americans over age 65 have the disease. This report also states that about 2.7 million people over age 85 have Alzheimer's, and that by the time the first of the baby boomer generation reaches 85 in 2031, an estimated 3.5 million seniors in that age group will have disease.

These statistics highlight the need for estate planning in general and incapacity planning in particular, as well as disability, long-term care, and special needs planning.

If you would like to discuss disability, long-term care, medigap insurance or special needs planning, please feel free to contact us for an individual appointment.

--see disclaimer below--

Market Week: October 5, 2009

Starting out on the wrong foot: Thursday's 203-point slide in the Dow wasn't exactly how investors had hoped to launch 2009's final quarter, and Friday's unemployment statistics didn't help. Equity indexes slumped for the second week in a row; however, the decline so far hasn't reached the level of the two previous pauses in the rally that began in March. Profit-taking after Wednesday's end of the third quarter, plus manufacturing data that turned south after several months of improvement, were likely contributors to the pullback.

Market/Index	2008 Close	Prior Week	As of 10/2/09	Week Change	YTD Change
DJIA	8776.39	9665.19	9487.67	-1.84%	8.10%
NASDAQ	1577.03	2090.92	2048.11	-2.05%	29.87%
S&P 500	903.25	1044.38	1025.21	-1.84%	13.50%
Russell 2000	499.45	598.94	580.20	-3.13%	16.17%
Global Dow	1526.21	1884.05	1832.87	-2.72%	20.09%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	2.24%	3.33%	3.22%	-11 bps	98 bps

Last Week's Headlines

• Unemployment rose to 9.8% after 263,000 additional jobs were lost in September. That's the highest level in 26 years and the 21st straight month of losses.
• Home prices rose 1.6% in July from the month before. It was the third straight month of increases in the S&P/Case-Shiller index. Of the 20 cities measured, only Seattle and Las Vegas saw prices decline. And though pending sales have often had difficulty closing in recent months, the National Association of Realtors' measure of pending home sales (contracts signed but not closed) also had its seventh straight month of increases, rising to its highest level since March 2007.
• Consumer spending rose 1.3% in August (0.9% if price changes aren't counted). However, the last of "cash for clunkers" was responsible for a good part of that. Incomes rose 0.2%, but after adjusting for taxes and higher prices, real disposable income fell 0.2% (the third straight decline).
• U.S. manufacturing activity disappointed in September, declining to 52.6% compared to August's 52.9%, However, it was still above the 50% level that represents economic expansion rather than contraction. New factory orders turned down by 0.8% after four months of increases; however, not including transportation (i.e. cars), orders were up 0.4%.
• Not surprisingly, car sales dropped substantially in September, returning to pre-"cash for clunkers" levels.
• The Conference Board's index of consumer confidence took a mild hit in September, falling to 53.1 from 54. 5 in August.
• The American Bankers Association said delinquencies on consumer debt such as home equity loans and credit card balances continued to rise during the second quarter (the most recent statistics available). With 3.35% of all outstanding accounts delinquent, this was the sixth straight quarterly increase.

Eye on the Week Ahead

It's put up or shut up time as third-quarter earnings season kicks off with Alcoa's midweek report. Without much new economic data to guide them, investors will be trying to assess whether ongoing cost-cutting and benign comparisons to a lousy Q3 2008 can breathe life back into the rally.

Key data releases: ISM services (10/5); consumer credit (10/7); international trade (10/9).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--

IRS Allows Additional Time to Roll Over 2009 RMDs from IRAs and Employer-Sponsored Plans

On December 23, 2008, President Bush signed The Worker, Retiree, and Employer Recovery Act of 2008 into law. The law waived required minimum distributions (RMDs) for 2009 from IRAs and employer sponsored defined contribution plans (including 401(k), profit-sharing, stock bonus, 403(b), and 457(b) plans).

In many cases, because the law was passed so late in 2008, and because many individuals and plan sponsors were confused about how to comply with the new rules, IRA owners and plan participants received RMDs they weren't required to take, and which they didn't want. Individuals who received such RMDs were allowed to roll them into an IRA or eligible retirement plan (even though RMDs aren't usually eligible to be rolled over). Some individuals failed to complete their rollovers within 60 days, or weren't aware of their ability to roll over the funds. In some cases, employees who received RMDs as part of substantially equal periodic payments, which are also generally ineligible for rollover, were uncertain whether a rollover was allowed.

In Notice 2009-82, the IRS provides relief to plan participants and IRA owners who have already received an unwanted 2009 RMD, and for whom the 60-day rollover period has expired. Under the Notice, these individuals will generally have until November 30, 2009, to complete a rollover. This relief applies to IRA owners, plan participants, and spouse beneficiaries. (Note: this special rule does not apply to RMDs received in 2009 for 2008.) For employer-sponsored plans, the relief applies to any payment that is equal to the 2009 RMD, and to any substantially equal periodic payments the employee received during 2009 that included RMDs.

The Notice cautions that the one-rollover-per-year rule still applies to IRAs. Under this rule, which applies separately to each IRA, only one rollover from a particular IRA can be made to any other IRA in a 12-month period. Roth conversions do not count as a rollover for purposes of this rule.

The Notice also provides additional guidance to taxpayers and plan sponsors in the form of Q&As, including the following:

• The deadline for an employee or a beneficiary that had until the end of 2009 to choose between receiving RMDs under the 5-year or the life expectancy rule is extended until the end of 2010.
• In plans that permit a nonspouse beneficiary to directly roll over a deceased participant's account balance, the nonspouse designated beneficiary has until the end of 2010 to make the direct rollover and use the life expectancy rule with respect to an employee who died in 2008.
• In general, the rollover can be back to the same plan that made the distribution (if the plan permits such rollovers).
• The 2009 RMD waiver does not apply to substantially equal periodic payments taken in order to avoid the 10 percent early distribution tax on distributions prior to age 59½, even if the individual is using the "RMD method" to calculate those payments.

You can find a copy of Notice 2009-82 here.

--see disclaimer below--

Deadline Rapidly Approaching to Recharacterize 2008 Roth Conversions

Did you convert a traditional IRA to a Roth IRA in 2008 only to see your new Roth IRA balance decline due to market conditions? If so, you may want to consider recharacterizing your conversion. A recharacterization essentially allows you to undo the conversion and treat it as if it never occurred. But you must act quickly--the deadline for recharacterizing 2008 conversions is October 15, 2009.

Why would you want to recharacterize your conversion? When you convert a traditional IRA to a Roth IRA, you're taxed as if you received a distribution on the conversion date. But if your Roth IRA has suffered a significant loss since the conversion, you wind up paying tax on assets that no longer exist. A recharacterization lets you undo the conversion, and may result in significant tax savings.

You would also want to recharacterize if you converted a traditional IRA to a Roth in 2008 and then found you weren't eligible to convert because your 2008 income exceeded the $100,000 limit that applies to conversions before 2010.

If you recharacterize your Roth 2008 conversion in 2009, you'll be able to reconvert your traditional IRA to a Roth after waiting at least 30 days following the date of the recharacterization. In addition, if you reconvert in 2010, you'll be eligible for a special rule that allows you to report half of the resulting income on your 2011 tax return, and the other half on your 2012 tax return.

Example(s): Mary converted a $100,000 traditional IRA to a Roth IRA in June 2008. She filed for a federal income tax extension, giving her until October 15, 2009, to file her 2008 federal return. But Mary's IRA is currently worth only $60,000--it has lost 40 percent of its value since the conversion. Nevertheless, Mary must pay income taxes based on the conversion date value of $100,000. She has until October 15, 2009, to recharacterize her conversion, and avoid paying federal income taxes on the $100,000. (If Mary has already filed her 2008 income tax return and paid the taxes on a timely basis, she can file an amended return for a refund, as long as she recharacterizes the conversion by October 15.) Mary can again convert her traditional IRA to a Roth IRA after waiting 30 days from the date of the recharacterization.

To recharacterize a 2008 conversion, you need to carefully follow specific IRS rules. Your financial professional can help you determine if a recharacterization, or reconversion, is right for you, and help guide you through the procedural requirements.

--see disclaimer below--

Market Week Summary for Week Ending September 25

Market Week: September 28, 2009
The Markets

The rally took a breather (or possibly a last gasp?) this week. The Dow backed away from the tantalizingly close 10,000 level with a 177-point intraday swing on Wednesday after the Federal Reserve's discussion of its future bond-buying plans. It was largely downhill from there as the major indexes took back much of last week's gains.

Market/Index	2008 Close	Prior Week	As of 9/25/09	Week Change	YTD Change
DJIA	8776.39	9820.20	9665.19	-1.58%	10.13%
NASDAQ	1577.03	2132.86	2090.92	-1.97%	32.59%
S&P 500	903.25	1068.30	1044.38	-2.24%	15.62%
Russell 2000	499.45	617.88	598.94	-3.07%	19.92%
Global Dow	1526.21	1926.12	1884.05	-2.18%	23.45%
Fed. Funds	.25%	.25%	.25%	0 bps	0 bps
10-year Treasuries	2.24%	3.47%	3.33%	-14 bps	109 bps

Last Week's Headlines

• After four straight months of increases, existing home sales fell 2.7% in August--a sharp drop from July's 7.2% increase. However, the total backlog of unsold homes was down to an 8.5-month inventory. Sales of new homes were essentially flat after four months of increases, and inventories of unsold new homes fell by 3%.
• As expected, the Fed kept interest rates steady but will extend its purchases of mortgage-backed securities, gradually winding down the program by the end of Q1 2010. However, Fed buying of Treasury bonds, which has helped support that market, will stop at the end of October as previously announced.
• Leading economic indicators tracked by the Conference Board were up for the fifth month in a row. The major factors in the 0.6% August increase were supplier deliveries, the interest rate spread between 10-year Treasuries and the fed funds rate, and higher stock prices. Only three indicators--real money supply, weekly jobless claims, and new orders for nondefense capital goods--were negative.
• Five IPOs that began trading on a single day this week and increased filings for more at the SEC gave another indication of renewed appetite for increased risk.
• Orders for durable goods fell 2.4% in August after a 4.8% increase the month before. A dramatic drop in commercial aircraft orders was responsible for much of the decline. However, even non-transportation-related goods were down slightly after having increased 0.9% in July, and defense-related spending provided much of the support for that figure.
• Gold had its first weekly loss in six weeks, and well-stocked inventories pushed oil down roughly 8%, the biggest weekly loss since July.
• The G20 leaders agreed to promote more domestic consumption by export-dominated China and Japan, a lower U.S. budget deficit, increased International Monetary Fund ownership by developing nations, and reforms in bank compensation policies and capital requirements. However, skeptics noted that the so-called global framework for growth lacks any enforcement mechanism.

Eye on the Week Ahead

Potential window-dressing on the part of large institutional investors could mean volatility in advance of the end of the quarter on Wednesday. Friday's unemployment claims stats are expected to continue to show job losses.

Key data releases: Home prices, consumer confidence (9/29); revised Q2 gross domestic product (9/30); auto sales, personal income and spending, manufacturing (10/1); unemployment, nonfarm payrolls (10/2).

Data source: Includes data provided by Brounes & Associates. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indexes listed are unmanaged and are not available for direct investment.

--see disclaimer below--

Health-Care Reform

Confused by the ongoing health-care reform debate? If so, you're not alone. With multiple bills and proposals in play, it's often hard to get a grasp on even the most basic elements of the discussion. While the outcome of the debate is uncertain, here are some of the major issues that are being discussed.

Universal vs. mandatory coverage

One of the main goals of health-care reform is to make affordable health coverage available to all Americans. To help provide coverage to individuals and families who can't afford it, most of the proposals provide assistance in various forms, including new tax credits, an expansion of eligibility for Medicaid, and insurance premium subsidies.

In fact, most of the major proposals currently being discussed actually require individuals to obtain health-care coverage (i.e., "mandatory" coverage). Under these proposals, individuals who refuse to get coverage would pay a financial penalty. Similarly, employers would be required to offer health-care coverage or pay a fine.

The "public option"

One of the most significant areas of debate centers on the so-called "public option." The term "public option" generally refers to the establishment of a government-run health-care plan that would compete with private insurers and provide coverage to millions of uninsured Americans. There has also been some discussion of establishing health-care cooperatives (nonprofit organizations that would be completely independent of the federal government) as an alternative to a government-run health-care plan.

Paying for reform

The costs associated with most of the health-care reform proposals being discussed are significant. The nonpartisan Congressional Budget Office (CBO) estimates that the legislation currently being considered in the House would cost more than $1 trillion over ten years, with a corresponding increase to the federal deficit over that period of time exceeding $200 billion. To help pay for health-care reform, reductions in Medicare spending are built into the House bill. Other proposals to raise revenue include raising taxes on high-income families, and taxing high-end health plans.

In his address to Congress on September 9, 2009, President Obama proposed a health-care reform plan he estimated would cost $900 billion over ten years, and pledged that he would not sign legislation that increased the deficit. The President described a plan in which savings within the current health-care system paid for most of the cost, with at least a portion of any shortfall paid by charging insurance companies a fee for their most expensive policies.

An evolving landscape

There are, of course, many specific provisions being discussed that we haven't mentioned here, and not all of them are controversial. For example, any health-care reform legislation is likely to tackle some of the current issues relating to pre-existing conditions. The entire discussion is evolving very quickly, however, with new proposals and ideas coming into play daily. The legislation that emerges will affect all of us in one way or another, so it's important to stay informed.