Tuesday's Big Bounce Back

Yesterday's big +316 point bounce back for the DOW just goes to show that there is no way to guess the direction of the stock market in the short term. However, the issues that are causing concern in boardrooms across the country still remain. E-Trade, the discount brokerage, lost a whopping -60% on Monday after Citigroup analyst Prashant Bhatia raised the possibility of bankruptcy due to write-downs of E-Trade's sub-prime related investments. That sent shock waves through the financial sector as firms such as; Merrill, Citigroup, Bank of America, Bear Sterns, HSBC, Wachovia,Washington Mutual, etc. try to grasp the limit of exposure they have to these illiquid, hard-to-value, convoluted securities. Merrill and Citigroup have both let go of their CEO's due to billion of dollars of losses and the realization of last year's overstated profits under their watch. Interest rates are expected to be lowered another -.25 bpts at the Fed's 12/11/07 meeting, however, if we do not see at least another -.25 bpt cut materialize the market may react very negatively.

A tough week in the market (the first of many)

Wow!  What a tough week in the market.  The -360 point drop in the DOW on Wednesday shows that the market is finally waking up to what the bond market has been telling us for the past few months.  Looks out for big companies like Citigroup and WaMu to start slashing dividends to try to keep things afloat as they deal with billions of dollars of write-downs from their Structured Investment Vehicles (SIV's) which are holding toxic sub-prime mortgage debt.  The recent drop in the 10 year treasury yield down to 4.30% indicates a tremendous flight to safety.  Investors that seemed to have an insatiable appetite for risk are suddenly running for cover.  Luckily those retirees kicking back with their fixed annuity payments need not worry ; )

Thanks,

MM

THE FED MEETING

On the markets:

The Fed meets tomorrow to discuss interest rates and a -.25 bps reduction is widely expected.  This will certainly lower the rates that retirees can earn down at the bank.  The market reaction will more than likely be positive and this will help prop up stock prices in the short term.  However, the reason for the rate cut (the ever weaker housing market) may eventually start weighing on the broader economy.  If the housing market gets any weaker due to falling home prices, mortgage resets, foreclosures, and tightening credit it's effects may spill over into the broader economy in the form of softer quarterly numbers from retailers.  That is when the stock market may become a very dangerous place to be.  A short term jump in the stock market due to a fed interest rate reduction may be a perfect opportunity to start taking some money off the table and safe guarding it with guaranteed interest rates.

Thanks,

MM

Welcome to Immediate Annuities weblog!

Welcome!

I have just started this weblog to create an open dialogue regarding immediate annuities.  I am a Certified Financial Planner for a firm based along the Hudson River in NY.  I began my career as a stockbroker in NYC and quickly realized that I would rather build a business using slow and steady guarantees.  As the baby-boom generation (those born between 1946-1964) nears retirement, and more and more companies drop their defined benefit pension plans for cheaper defined contribution 401K plans, it is more important than ever for retirees to explore the benefits of a guaranteed lifetime income.  I hope this weblog can help demystify immediate annuities and help readers better understand the value and limitations of these types contracts.

Thank You,

MM