July 21, 2008 Conference Call Summary

Russell Investments Private Client Services
Speaker: Mike Smith, CFA


Russell is most known for their indexes. It has been managing institutional money (i.e. AT&T, IBM, Caterpillar, etc...) since 1969 and retail investor money since the early 80's.

The US equity market has had a difficult quarter down 11%, and the worst quarter since the depression. It has been a market of extremes with the price of oil, commodities and financial subprime mortgage issues. On the other hand, International equities are doing much better than the US equities.

The weakness of the US dollar has allowed International companies to buy more goods from the US. Emerging markets continue to outpace other asset classes with Japan, in particular, having a good second quarter. Currently, Japan does not have any subprime issues to contend with.

The fixed income market has received a lot of negative press (i.e. credits, mortgages and housing markets). The one year return has actually been good. There was a flight to quality in the first quarter of 2008 (Treasuries), and in the 2nd quarter it was reversed.

There are 4 areas of the economy which are being watched and are of concern: 1. Energy/oil - With the price of oil at around $131/barrel could be just like the technology bubble in the late 90's.
2. Credit/Housing - Loans are much more difficult
3. Inflation - The Federal Reserve may have to raise rates
4. Currency - As interest rates remain low the US dollar will remain weak


The expectation of Russell Investments is for a pick up in the economy/equity market around the second half of 2009. Diversified strategies are built for these difficult times. Although past performance is no guarantee of future results, discipline and staying the course helped during these times. History has not been kind to those that attempt to time/move in and out of the market.

Source: Russell Investments


ASAM Perspective
Speakers: Stuart Horowitz and Andrew Rosenberg


You can't control the direction of the markets but we can control cost and expenses of investments within portfolios. We are analyzing strategies that are now available to the end user in order to provide investments with low expense ratios and tax minimization without sacrificing performance.

Please do not get caught up in the media hype of gloom and doom. This causes unnecessary panic. We have customized portfolios to withstand a downturn in the market based on each client's risk tolerance and desired lifestyle. We have been communicating to clients for the last 18 months that they should expect a down year in the market. This was not unexpected.

For those clients in portfolio income distribution mode, remember TEDI - our patent pending model. We do not need all of our money at one time. We are not drawing money from the later pools where you would see the most volatility within the equity markets.

We are not stock pickers. It is too risky to have 85% - 100% in any one company. Some individual stocks are down more than 50% this year alone. A portfolio that is down 5% when the S&P 500 Index is down more than 12% is not a bad portfolio.

If you do not hear from us it does not mean we are not doing anything. It means your portfolio does not require any changes. Market downturns are not a reason to completely restructure a portfolio. We are optimistic about the long term.

We have received calls with concerns over banks and the FDIC insurance they provide. The general rule of thumb is that FDIC insurance covers up to $100,000/title at the same institution (individual). A qualified account at a bank is protected up to $250,000 (IRA). You should direct specific questions regarding FDIC Insurance to the bank where your money is held. Your accounts at NFS have SIPC coverage and not FDIC insurance. It covers up to $500,000 (inclusive of $100,000 cash for non settled investments). This does not cover the loss of value on an investment.


This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and 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. The information presented does not constitute a solicitation for the purchase or sale of any security. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general.