The bailout of brokerage firm Bear Sterns was a huge shock to the financial systems. It follows the list of other troubles, including the housing market decline, the slippage in the value of bank stocks, turmoil in the municipal markets and the continuing effects of tight credit. The Dow is down around 15% from the October high and the question on everyone’s mind is the unsettling presence of the bear.

A bear market is defined as a 20% decline from the high in a stock market. The NASDAQ has been in bear territory since February. Some analysts have labeled this a bear market across the stock markets, regardless of the current decline percentages. What does this mean to all of our clients?

Wiiken & Gorman acknowledges that bear markets cause concern and discomfort for our clients. It is not so much the understanding that we are in a down cycle.  It is also the unrelenting bad news in the media and the sinking feeling that accompanies the headlines. You may begin to feel that your portfolio will never recover and that things will stay bad. This is a common emotional reaction to a volatile market on a downward slide. However, the average bear market lasts 18 months and recent ones have generally been shorter. Paula believes we probably entered bear market territory last fall.

While bear markets continue, they offer buying opportunities. In these difficult hours it is important to invest with the head and not the heart. Using the discipline of your investment categories and deciding on a buying strategy is very important. So is the knowledge that all bear markets end eventually. The bull market usually begins when things look worst, but the change to an up market is not recognized for a time.   

Please call or e-mail us if you have questions about your investing strategy.  Wiiken & Gorman is here to help you re-evaluate your goals and take a second look at your target market allocations. We also have a comforting chart about the emotional cycles of the markets and would be happy to e-mail you a copy.

Teaching children to be competent managers of their money is a true challenge for parents. Here are a few tips you might try with your minor children or grandchildren.

1. Teach about delaying gratification by offering a choice in some situations:  something material (like a cookie at the mall) or the money.

2. Open an account with a debit card for them in their pre-teen or early teen years. Make a deposit every three months and let them be responsible for their own spending on certain items, like clothes or haircuts. This teaches how to budget.

3. Set expectations for them around weddings and college. Let them know what you plan to contribute and stick to the plan.

4. Once they have a job, open a Roth IRA for them and encourage them to match  your contributions.

Mission Statement

We know that many of our clients enjoy traveling. We also hear from you in meetings about the things that make you happy. Paula just finished an interesting book called “The Geography of Bliss” by Eric Weiner. The book presents a serious and humorous analysis of what happiness means in different countries around the world. Some of the issues Mr. Weiner covers are lifestyle choices, materialism, the nature of society, the importance of recreation and the role of location.

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How Long to Save Your Records Re-visited

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We get asked this question frequently, so here is a refresher.

Tax Records

Keep tax records for seven years. This includes W-2s, 1099s and receipts. The IRS has three years to audit your return for most reasons. (If fraud or non-filing is involved, there is no time limit and serious underreporting of income carries a six year limit.)

Property Records

Keep mortgage agreements, deeds, escrow instructions and other records that show ownership as long as you keep the property. Make a file to store all receipts on home improvements. You will need these in the year you sell the property.

Family Papers

Save these indefinitely in a safe place like a safe deposit box. These papers include copies of your estate planning documents, automobile titles, deeds of trust, birth and marriage certificates, adoption papers and military discharge records. TIP:  Keep a list of what is in your safe deposit box at home and update the list annually.

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ADV and Code of Ethics

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When you became a client of Wiiken & Gorman you signed a contract and received a document known as the ADV form. The ADV is the form that we file regularly with the SEC.  We revise this document annually and whenever there is a material change in our business.  We continue to give the ADV out to all new clients. 

If you are interested in seeing the current Wiiken & Gorman ADV, updated in 2008, ask for it the next time you are in for a review or send us a SASE and we will return the most recent version to you by mail.  We also have our Code of Ethics available for review.

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Mutual Fund News

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Fund Re-openings. Some well respected value funds recently re-opened. In general their performances suffered in 2007, a year that rewarded growth over value. As a result the more impatient shareholders sold and left the funds.  Instead of selling assets, fund managers can raise cash by re-opening to new investors.

Some of the funds we like that are now open are Dodge & Cox Stock, Longleaf Partners and Tweedy Browne Global Value. Buying into these funds depends on your asset allocation and cash available. Please contact us if you are interested.

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Management

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Wiiken & Gorman manages money in pension plans, IRAs, personal accounts, and trusts. We charge a retainer fee for portfolio development, monitoring and reporting. We also help with financial life planning issues that arise. Please call us if you would like to work with us in this capacity.  The minimum portfolio size is $500,000 and we welcome your business.

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About Your Planners

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Paula and Mike are attending the NAPFA National Conference in Long Beach in mid-May. 

From there Paula goes to the college graduation of her stepson, Ryan.

Paula and Howard visited South Beach and the Florida Keys in February. A snorkeling trip and kayak outing were the highlights. Paula is now training for a Himalayan trek in Bhutan this October.

Mike’s older son Alex is expecting a baby in May with his wife Jessica. This will be the first grandchild for Mike and Pat.