WH Cornerstone Newsletter
Independent solutions to life's financial opportunities February 2005

in this issue

The Volatility Vector

Putting the "For Sale" Sign on Your Business

Don't Be Fooled by Estate Tax Cuts

Pursuing Growth in Retirement

Income for Life

Why Are Most Americans Underinsured?



The Volatility Vector

In 2004, the stock market took investors for a wild ride. There were more anticipation-building ascents and hair-raising plunges than the scariest roller coaster. After a promising start in January, the S&P 500 took back everything it had given, and then some, by mid- March. After a swift recovery in early April, the market was back in the doldrums by May. And so on, up and down, until the index hit its lowest point of the year on August 12. At that day's close, the market was down 4% for the year. To the uninitiated, August 12 might have seemed like a good day to look for alternatives to investing in the stock market. But to an investor with a long-term perspective, it was just another trading day.

In The Long Run - On August 13, yet another stock price recovery began. It faltered in September, but then built into a solid upswing by late October. By the end of 2004, the S&P 500 was up 10.87% for the year. Most of the year's gains took place between October 26 and December 31. Running for cover earlier in the year would have meant missing out on a return that was in line with the S&P 500's average annual return for the past 50 years. Of course, it would be foolish to ignore the fact that the November 2 election played a role in the market's late run-up. But over the long history of the stock market, there has been rarely a time when some external event wasn't affecting the market with positive or negative results. The stock market is heavily influenced by emotion.

Anxiety and panic might be common human emotions, but they are dangerous to financial decision making. The worst mistakes are typically based on short-term emotions rather than long-term thinking. Pouring over daily portfolio performance might make some less- experienced investors feel that they are in control, but it can also make them vulnerable to the emotional effects of the daily ups and downs of market performance.

For the stock market, 2004 more resembled the long- term status quo than an anomaly. Over the course of days, weeks, and months, stock market investors can expect some significant fluctuations. But over the long term, the broader market has steadily risen. Of course, past performance is no guarantee of future results, and it is possible to lose money over long periods.

Read on...


We recently spent some time with colleagues who knew us well. They were pleasantly surprised to be reminded that WH Cornerstone has always been a Fee-Only financial advisor. Ah ha! No matter how well you think people understand what you do, it never hurts to say it again.

We do not sell products. We offer unbiased financial advice. We are an independent Registered Investment Advisor. We are not obligated to some big company, their proprietary offerings or sales- driven opportunities. We act as a fiduciary in a client-centered relationship. What does it mean to you? It means that as a fiduciary we are legally obligated to maintain an allegiance of confidentiality, trust, loyalty, disclosure, obedience and accounting to our clients. No compromises. Complete transparency.

We provide comprehensive financial planning and investment management. We work with our clients to make better financial decisions to life's financial opportunities aligned with their core values and goals.

Time to Share. Create a Buzz. Wealth Creation For Women Ladies, it is time to take charge of your financial future! The life expectancy of women is seven years longer than men. At some point in a woman's life, she will be responsible for 90% of her own finances. This interactive workshop is designed to set you on the path of creating true wealth for yourself through just a few simple steps. We will cover the importance of paying yourself first, automating your finances, analyzing cash flow, budgeting and net worth, goal setting and the basics of investing. We are teaching this one night course on March 1 from 7:00-9:00 p.m. through Duxbury Before and After Dark. To learn more you can visit their website by clicking here or contact us.

  • Putting the "For Sale" Sign on Your Business
  • Someday, most successful business owners will do one of two things: sell the business or transfer ownership to family members. At any given time, 40 percent of U.S. businesses face the transfer-of-ownership issue. Owners who plan ahead may have a better chance of getting a fair price for the business, managing taxes, and giving the buyer a solid value.

    Whether you just opened your doors or are planning to leave soon, it's a good idea to plan your exit now. When it comes time to sell or transfer the business, some critical issues need to be addressed.

    Read on...
  • Don't Be Fooled by Estate Tax Cuts
  • In July 2004, the federal government was on pace to collect more gift and estate taxes for the year than were collected in 2003 - despite a reduction in the top estate tax rate and a higher exemption amount.

    One explanation for the increase could be because the wealthy were benefiting from the stronger economy. Regardless of the cause, it's important to remember that the federal estate tax remains a potential liability until 2010, when it is scheduled to be repealed - but only for one year.

    Read on...
  • Pursuing Growth in Retirement
  • Throughout most of the past century, loyal employees could count on retiring with a pension that paid a set amount of income for life. But over the past two decades, the proportion of employees covered by defined benefit plans (traditional pensions) has fallen by half. At the same time, the proportion of employees participating in defined contribution plans has tripled.

    Future Threats - Inflation can ratchet up expenses such as energy, food, and medical care, and pinch the budgets of retired households on fixed incomes.

    Read on...
  • Income for Life
  • Many people underestimate how long they are likely to live in retirement. According to a recent survey, only two out of 10 pre-retirees were able to estimate a personal life expectancy that is close to the average life expectancy for their respective ages.

    Unfortunately, people who don't plan for the possibility of living well into their 80s or 90s may wonder whether it's really possible to both "live long and prosper."

    Read on...
  • Why Are Most Americans Underinsured?
  • Few people expect to die at a young age. This perceived lack of risk may result in insufficient life insurance protection.

    Few people expect to die at a young age. This perceived lack of risk may result in insufficient life insurance protection.

    The consequences of having inadequate life insurance coverage can be tragic. Understanding the basics of life insurance is the first step toward owning the coverage that is most appropriate for your family's situation.

    Read on...
  • WomensWallStreet
  • Empowering women financially...one click at a time.

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