 
TODAY'S STOCK MARKET Wall
Street is a long way from Paducah, but what happens there affects us
all, either directly or indirectly. Nothing ever goes straight up or
straight down, but IN today's market environment that IN one week sees
the Dow reach an all time high, to it being down several hundred points,
MAY have traditional investors concerned.
As August Program Chair, David Denton, pointed out, Rotary is now blessed with a large percentage of members representing the financial sectors, beating out the legal profession, which has traditionally held sway. Today, four Rotarians representing local brokerages gave their analysis of the markets. Jim Brown of UBS: Jim talked about the cyclical nature of the markets, breaking them into either consolidation or appreciation phases, which last for years. During appreciation phases you are likely to see double digit appreciation, such as in the most recent appreciation market from 1982 through 1999. Investors saw a 18.5% return on the S&P 500. Falling inflation, low interest rates and the mass participation in IRA's and 401K's led to a high level of stock ownership, all of which boosted the market. The beginning of 2000, however saw the bursting of the Tech Bubble, and what Fed Chairman Alan Greenspan called "Irrational Exuberance." Although the Dow most recently hit 14,000, there are factors that UBS say are contributing to what is becoming a consolidation period. Jim said 911 and the fear of future terrorist attacks, and a lower ownership of stocks will lead us into a period of single digit returns for the next decade. Most notably, Jim pointed out that the first wave of the Baby Boomers turned 60 in 2006. Many have retired or are thinking about retirement soon, and are thinking about taking some of their money off the table, which is leading to lower stock ownership. Chris Sims of Edward Jones: Chris likened the current market to meeting up with a bear in the woods. To survive a "bear" market, one has to remember the following: Keep a cool head. Try to stay calm. Make no sudden moves. Stand your ground. Never try to outrun a bear. It only makes matters worse. The upshot being: Bear markets are typically short and are historically followed by bull markets. Bear markets are a good time to go shopping for quality investments at bargain prices. "The quality stocks may fall, but like tennis balls, will bounce back up," said Chris. Hal Sullivan of Hilliard-Lyons: Hal said "divergent" forces are at work in the markets. On one hand, the economy seems strong, but other factors seem to be offsetting the good news of relatively low unemployment, rising wage rates, and good corporate earnings. On the other hand, there is a subprime issue weighing on the larger market with fears of increasing mortgage foreclosures and an ensuing credit crunch. As a result, the analysts at Hilliard-Lyons believe the Federal Reserve will issue a "slight" cut in interest rates, due to FED's comments on the credit market issued yesterday. The firm also predicts a return at the end of the year in the "high single digits." In an interesting chart, which reflected the returns of an initial $10,000 investment from 1986 through 2006, in the worst performing index, the best performing index, and in all indices, showed the best return ($710,908) to be the $10,000 investment in all nine of the indices. John Williams, Jr. of A.G. Edwards: John said asset allocation is the key to any portfolio. He also reminded investors that summer is traditionally the most volatile season resulting from low volume and market overreactions. He said the current bull market is only 57 months old. The longest bull market, from 1990 through 1998, saw the markets advance 301%. The most recent bear market ONLY lived for 24 months with a 36.7% decline. John said this is a good time to check balances, reflect on diversification and take a look at stocks that are in the "defensive sector," such as consumer staples and health care. Large caps with a rising dividend yield are a smart place to be, as well. Of the 83 large cap names, only three are outside the firm's "buy" range, while 29 are at the bottom of the "buy" range. "There's plenty to buy, " he said. A.G. Edwards is predicting an average year with some upside. The good news John sees is a six year high in consumer confidence, a drop in gas prices, and good employment numbers. "On a scale of one to ten, this market is a five. "Ahead, we see a four." said John. The firm's year end predictions are: S&P: 1550 Dow: 13,700 Nasdaq: 2630 Overall, the brokers advised against trying to time the markets by picking tops and bottoms. Ignore the daily volatility. Know what you're buying and why you bought it, so you can best take the feast with the famine.
David Denton, August program
chair
Fifteen
Rotarians are celebrating August birthdays. Marie Liang was the winner
of the weekly birthday floral arrangement from the The Flower Galley.
GUESTS Paula Bright-Jim Brown; Darlene Dryer, Jordan Tang, Brenda Allcock-Debbie Stone; Amy Kight-Rick Coltharp; Deon Mason, John Reese-Mike Muscarella; Brent Denker-Lisa Long; David Whirley-Eileen Duobinis-Gray; Lee Powell-Joe Powell VISITING ROTARIANS PDG Bill Robertson-Fulton; Rich Kirschner-Naples, Florida REPORTED MAKEUPS
HAPPY BIRTHDAY!
CLUB ANNIVERSARYS The
following are celebrating the date of their induction into Rotary:
Today's
editor - Desiree Owen
List of Unfilled Classifications Artist/Retail,
Arts Administration, Attorney (Civil, Commonwealth, Social Security
Administration, Marine Law), Banking (Mortgage Lender, Trust Management),
Bed & Breakfast/Hospitality, Building Materials, Cable TV/Advertising,
Chemical Plant, Chemical Plant Management, Commercial Door Contracting,
Communications Systems Integration, Community Development/Administration,
Contractor/Commercial, Day Care Management, Director/Substance Abuse
Prevention, Education ( Pre-school, Administration), Electronic
Document Management, Employee Leasing (Permanent, Temporary) Engineering/U-235
Plant, Equine Farming, Facility Manager, Film Making, Financial
Management/Jewelry Business, Financial Planning, Government/Risk
Management, Hardware/Retail, Hospital, Human Resources, Industrial
Supplies/Wholesale, Information/Management, Information Technology,
Information Technology/Internet Director, Insurance - Sales, Judge/Family
Court, Judge/District, Law (Corporation, Litigation, Domestic),
Medical/Podiatry, Medical Center Management, Medical/Public Relations,
Men's Clothing/Retail, Ministry/Christian, Motion Pictures Theatres,
Moving & Storage, Municipal Human Relations, Nursing/Geriatric,
Orthodontics & Facial Orthopedics, Photography Equipment & Supplies,
Public Service/Emergency Services, Rape Crisis Manager, Real Estate/Commercial,
Refined Oil Products/Retail, Restaurant/Italian, River Transportation/Port
Authority, Sales - Temporary Employees, Scout Executive, Space Education,
Special Gifts/Retail, Total Wellness, Waste Water Utility
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