Spectrum Advisors Newsletter First Quarter 2009

Q1 2009 - Happier New Year!!!

The year 2008 will certainly be looked back on as a year of historic proportions. The crisis in the credit markets created a risk aversion hysteria that resulted in a steep decline in the value of virtually all asset classes involving risk- stocks, bonds and commodities. The year saw the bellwether S&P 500 index decline by 34% with the NASDAQ and international indexes posting even greater declines. This represents the worst performance for the markets since 1931! We are glad that 2008 is behind us! And we anticipate that 2009 will be a better year. While we expect the first half of the year to bring more bad economic news in the form of more job losses, increased unemployment, declining corporate earnings and economic recession there is reason for some tempered optimism.

It is likely that the most intense parts of the economic contraction are already behind us. And history shows that the stock market tends to bottom and recover well before recessions end. In fact, since the November lows in the major indexes, most have experienced a 25% rally. Governments around the world have implemented unprecedented measures to re-start and stimulate the global economy. Mortgage rates have come down appreciably and the credit markets are functioning again. We are about to inaugurate a new president, who is committed to a sizeable stimulus package, and he will likely benefit from the "hopeful honeymoon" that accompanies a change in administration. We are optimistic that 2009 will produce better returns.

You may have experienced a change of attitudes regarding your appetite for risk. If this is the case, please call us to discuss alternatives to traditional market vehicles that can offer principal protected returns and/or help to mitigate the losses of riskier assets.

Lastly, Mike and Don attended an 8-hour seminar on Long Term Care planning as part of our continuing professional education. It reminded us of the statistical certainty that at least one spouse in the couples that we work with will require Long Term Care during his/ her lifetime. As we are committed to protecting and preserving your assets, it is important that you think through the costs and methodology for addressing the ever-increasing costs for this care. Let us know if you would like to review options for dealing with these costs.

We hope you are off to a great start in 2009!

Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/ SIPC Headquartered at 18 Corporate Woods Blvd., Albany NY 12211