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 Dear Clients and Friends: What a difference a year makes. In mid-September of last year, Lehman Brothers filed for bankruptcy, precipitating the peak of the financial crisis. The effects were felt quickly. Within a few days of Lehman's announced bankruptcy, a money market fund broke the buck and money markets stopped buying the commercial paper of financial institutions. In the following weeks, even the largest and most creditworthy of U.S. corporations were either unable to borrow or were forced to pay handsomely to do so. In the aftermath, the whole financial system seized up. This tipped the sluggish economy into recession and the markets into a tailspin. It took a year, but growth has slowly returned. The Federal Reserve and Treasury responded to the financial crisis with enormous and unprecedented policy actions to restart the frozen financial markets and restore funding to financial institutions. Eventually, credit markets healed and growth began to emerge. In the past few months, we have seen almost universal signs of growth, with a rise in manufacturing output, retail sales, home sales, business spending, and even IPO and merger and acquisition activity. But the recovery is incomplete without a turnaround in employment. While job losses have slowed to one-third the pace we saw in the first quarter of 2009, when the effects of the financial crisis were most severe, they have yet to turn positive. While a lagging economic indicator, a turnaround in employment is essential to sustaining the recovery. We expect that despite a rise in the unemployment rate to 10%, job growth will turn positive around the start of 2010. Despite a more than 50% rally from the low of March 9, 2009, the S&P 500 index has yet to return to the level that preceded the Lehman Brothers bankruptcy. However, it is worth noting that many companies have re-attained their year-ago price levels and others are worth more than they were a year ago even though their stock prices are lower. For example, Citigroup's stock price is down 76% from a year ago, yet the market capitalization of the company is higher than it was just before the Lehman Brothers bankruptcy. This is because Citigroup was forced to issue many new shares, diluting the value of existing shares. Other financial companies are also worth more than they were a year ago even though their share prices are lower by about 20%. As a result, the stock market recovery masks the full extent of the healing that has taken place. The next 12 months will bring new challenges including the impact on Treasuries should the Fed raise interest rates. Also, when all the dollars sitting on the sidelines begin to mobilize, we will need to deal head-on with inflation. Yet, the economy and markets have begun to establish a solid footing. We look forward to more signs of recovery in the coming months, but will keep a keen eye out for threats that may be lurking. LPL NEWS As valued clients, you have firsthand knowledge of the valuable services we provide and our client-centric approach to helping you achieve your goals. In the recent J.D. Power & Associates 2009 Full Service Investor Satisfaction Study, LPL Financial earned high accolades. We are proud of this distinguished honor because we work hard to make sure that your financial goals are always our number one priority. Our practice is backed by the resources of LPL Financial, the nation's largest independent broker/dealer,* which provides us with access to unbiased research and a wide selection of nonproprietary investment options. Even though we receive this powerful support, we are independent. This independence allows us to serve your needs first, above any corporate mandates. Our strong partnership with LPL Financial allows us the independence to deliver the power of Wall Street with the personalized service of Main Street. LPL Financial earned J.D. Power's recognition because advisors like us are proactive with client communications, diligent in helping clients refresh their financial plans, upfront about financial risks and goals, and honest about their investment performance. Because we are independent, we have no company agenda to promote or corporate mandates to fulfill. We will continue to view our relationship with you as a partnership, built through trust, integrity, and communication. This can only be achieved with a strong commitment to the process on our part and yours, and we thank you for your ongoing efforts and loyalty. PFS News At home, Planned Financial Services continues to grow prudently. Our laser focus in helping clients achieve their "Return on LifeTM" has become a mantra. It embraces our clients' passion for life. Our clients are not seeking a cookie cutter methodology like many of the large wire houses, banks, and insurance companies offer. Instead, our clients desire a firm that can recognize their individuality and customize a flexible approach that meets with their specific wishes for their legacy and Return on LifeTM on their terms. Planned Financial Services receives multiple awards from the business community Planned Financial Services continues to build on our culture of advising our clients to better control their financial futures on their terms. We were recently notified of our third consecutive Weatherhead 100 Award which, since its inception in 1987, showcases the fastest growing companies in Northeast Ohio. As a qualifying company, we must show consistent and high growth over the prior five year period. These awards are highly regarded throughout Northeast Ohio. They are a well-deserved acknowledgement of the hard work, commitment and innovation exhibited by our team. We consistently strive to succeed and I am proud of our team's contributions. Most importantly, these awards are a testament to our dedication and commitment to providing our clients exceptional service across every facet of our business. The Planned Financial Services (PFS) Experience is for visionary leaders -- individuals, families and business owners -- who have carefully formed ideas about how they want to manage their money and legacy and to prepare for future generations. In turning to PFS for guidance, they are not handing over control of their assets and future. They are making sure their unique voice is heard and their vision reflected through every engagement. We're proud of the number of unique services we have developed over the years to meet specific needs, including:
We will continue to invest in technology to better advise our clients as well as safeguard their information. We recently upgraded our server security system as well as additional firewalls and backup systems. While the state of the economy and financial markets has not allowed us to wipe our brow as of yet, there is always opportunity in chaos. We strive to wisely build and protect wealth while remaining aware of all that is taking place in the markets, including the "latest, greatest" investment and get rich quick schemes. If there ever was such a thing, everyone would have been doing it yesterday. We will continue to be the steady hand that leads you through these challenging times with prudent and proactive advice based on your goals. As always, but especially now, please call Jeremy, Walt, Patty, or me with any questions or concerns. We respect and value your input. Most importantly, however, we value our relationship as your wealth advisor.
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