In September the Consumer Confidence Index was at 86.6 down from a 105.6 reading in August. The speculation for the low reading was a result of Hurricane Katrina and rising gasoline prices. It was the lowest rating since October 2003, when it indexed at 81.7.

The survey is conducted by sampling 5,000 households. Of those surveyed 20% expected business conditions to worsen over the next six months, and 25% expected fewer jobs to be available over that same time period.

What does this mean to the investment markets? These numbers generally reflect a downturn in consumer spending, but for the most part these numbers have already been projected by most analysts into the back half of the year’s volume. It would also be an indicator of flat retail numbers through the holiday. As a consumer, it means you will be able to capitalize on holiday bargains if you hold out until later in the season, as deeper markdowns will occur pre-Christmas as inventory levels remain high.

With the quarter ending we are seeing no light at the end of the session. Investors’ spirits have been dampened by the persistent bad news surrounding the hurricanes and their effect on natural resources. Focus was also placed on the ¼% rate hike the Federal Reserve put into place in September. Although it was widely expected, it did set a negative tone for the markets.

The bright spots in the market continue to be in the energy sector and the broader natural resources sector. Whether energy will continue to be robust is anyone’s guess, but I do feel there will be more growth to come in natural resources because the category encompasses both energy and gold which has been experience a boost from the unstable market conditions. Natural resources as a category was up 5.45% for the month compared to all indices being down across the board this month. Above is a recap of the week ending and year-to-date performances of the major indexes.

A diversified portfolio is always the best way to manage investments in a volatile market, with rotation in and out of sectors as dictated by market conditions.

Friday, October 28th 5:30 - 7:30 p.m.

Our annual client appreciation event will be held in our office at 12 Breakneck Hill Road, Suite 100, Lincoln, RI.
Please join us for this after hours event for cocktails and hors d’ouvres.
We are extending this invitation to all our clients, business associates and friends.
Please feel free to bring a guest along.

If you plan on attending please RSVP by Monday, October 24 at 727-8151 or via e-mail to athomson@coastalfinancialplanning.com.
This e-mail will serve as the only invitation to the event. I look forward to seeing you there.

In the wake of Hurricane Katrina, the Providence Journal ran several pieces on the how to help the victims. The September 3 issue of the Business Section focused on how to make sure your donations made it to the relief fund. In that interview, I recommended to their readers not to give cash. Always write a check to the specfic charity or place the donation on your credit card for record keeping purposes. Also, I recommended donored directed funds. This means if you had a specfic area you wished the funds to be directed i.e. children, food banks, etc. you could chose a charity that fulfilled that specific work. Visit websites like www.charitywatch.org or www.guidestar.com for sites that provide information on reputable charities that allow you to search by your own area of interest.

If anyone would like to discuss particular charitable donations for Hurricane Kartrina or any other foundation please contact me at my office.

We have recently added Fidelity Investments as an additional service provider for our clients. We will also continue our relationship with DataLynx/First Trust. There will be no disruption of business to our clients. As the business continues to expand, Fidelity will better be able to offer our clients additional services and technology to meet their growing needs.

We are excited about our new arrangement with Fidelity and future business development. I would like to thank my clients for their continued support, particularly during these difficult market cycles. I also appreciate new client referrals, as they are the cornerstone of our business. Thank you.

What was the price of Google, Inc. on June 27, 2005? ...

a. $199.87
b. $208.53
c. $304.10
d. Are you crazy, none of the above!!!

Many of you may have wanted to respond D, after remembering the rising tech prices of the late nineties, but it appears that many investors have short-term memory loss. The correct answer is C. At the close of the day on June 27, a then high of $304.10 was reached on Google (GOOG). Since that date the stock has again peaked at $320.95 and is currently trading around $310 with a P/E of 90.

For the record, I don’t anticipate seeing this stock showing up in anyone’s portfolio anytime soon. This is a perfect example of the consumer as well as institutional investors not paying attention to the financial details of this stock and getting caught up in momentum buying.