The following are the year-end market results by market index through December 28, 2007:

Index	W/O 12/24	W/E 12/28	Change	% Change	YTD
DJIA	13,450.65	13,365.87	-84.78	-0.6%	7.2%
NASDAQ<	2,691.99	2,674.46	-17.53	-0.7%	10.7%
S&P 500	1,484.46	1,478.49	-5.97	-0.4%	4.2%
Russell 2000	785.60	771.76	-13.84	-1.8%	-2.0%

As many of you know, we had a slow and steady growth in our portfolios through the year, then a huge rallying in October and then the mid-November drop.

The drop came on the heels of what was anticipated to be a Fed funds rate cut of 50 basis points. Instead, the Feds disappointed the market with a 25 basis point cut, and caused a market pull back.

The thought behind the market pull back was, the greater the rate cut, the lower interest rate. It would also affect those consumers who already own housing with variable rate mortgages. The loosening of the Fed rate, it is hoped, would trickle down to this consumer, and free up cash to avoid defaults on home payments.

This year’s market favored energy, utilities, industrial materials, health care, consumer staples and technology. In the year ahead I will be focusing in on Gold and Precious Metals as a hedge in most portfolios as well as Natural Resources. I will begin to reduce positions in small caps and consumer discretionary goods, until I see a trend that indicates otherwise.

The following are the portfolios’ performance numbers for the year: my moderately aggressive model came in at 9.9% after fees, and including reinvested dividends. The moderately conservative portfolio came in at 5.8% after fees, and including reinvested dividends.

Please remember that these portfolios have been invested for a full year, and that no two portfolios are identical. Additionally, all individuals possess different risk tolerances and investment time horizons. Lastly, in the interest of compliance, this information should not be viewed as an advertisement for my investment services. It should be used as a benchmark to gauge your own personal portfolio’s performance.

• Falling housing prices
• The mortgage mess
• The weak dollar
• Rising oil prices

Is your portfolio looking better to you already? One year ago a one-year CD yielded 5.01%, today it is yielding 3.31%. Gold was selling at $636 at the end of 2006; today it is trading around $839. These changes, although something you may not purchase directly, are directly effecting your investments.

Measures of inflation are easily seen in the CPI components of our daily lives. For example, the 12- month change in transportation increased 9.6%, in medical care it was 5%.

Home prices vs. personal savings are another cause of major economic concern. Although on a national level home prices are dropping, consumer savings is at a national rate of -.5%. This would mean the average household is in debt.

Let’s not forget those homebuilders - the Department of Commerce has shown a slow down in total building permits requested; however: the consumption gap between consumer spending on housing and permits as of 12/31/2007 is around 15%.

Now for the positives: The economy has continued to create jobs at a steady rate and unemployment remains low - on the average 5%.

Analysts expect single digit growth for 2008 - growth is always better than flat or negative numbers.

There is a strong likelihood of a 50 basis point cut by the Feds in the month of January, this is the catalyst needed to spark the anemic financial markets.

The Feds have stated that core inflation has improved modestly in 2007.

So bottom line, what does this all mean?
My interpretation is heavily weighted on the Fed rate cut. I believe that there is value in the market, particularly with financial stocks like Citigroup that were hurt in the subprime market issue.

This stock has a particularly attractive dividend and the PE is in line with the financial markets once again. I also think there are continued opportunities in the health care sectors with the graying of America. I do think that you have to be cautious with what you buy and move slowly into the markets as they play out through the year.

A new study by the Securities and Exchange Commission (SEC) finds that "free lunch" seminars may in fact mislead seniors into making unwise investments. These were the findings that resulted from complaints filed with the SEC against individuals and companies that set-up schemes to defraud thousands of seniors of their retirement dollars.

The seminars were presented as "free lunches" in exchange for seniors to listen to investment advice. They were advertised with claims like "Immediately add $100,000 to your net worth". These seminars were actually inappropriate sales pitches, which included recommending risky investments to conservative individuals and suggested illiquid investments to those who needed cash.

The SEC filed charges against 26 individuals and companies in connection with $428 million in a securities fraud scheme that targeted seniors. The complaint also alleges that the sales people who sold the investments collected commissions totaling more than $72 million.

Buyer beware, there is certainly nothing wrong with going to your local library and listening to a advisor speaking on a topic. However, when someone is willing to give you a free meal there is generally a lucrative contract involved in the seminar for that adviser.

Please discuss this with your senior parents, and be cognizant of what they are doing with their money. The local banks are also guilty of trying the sell seniors’ annuities and tying their money up for some time.

I know our parents don’t often like to have this discussion with their children, but it does help to explain to them that you are looking out for their best interest and not the salesperson that services them.

Your planner in the news. . . .this month Is replaced with Your US Military in the News... Many of us have had the good fortune of spending the holidays with our families and friends. Our troops all over the world are not as fortunate.

The following site www.AnySoldier.com links individuals who would like to make contact with a solider in any branch of the service. It also provides them with support and you can send along any small package if you choose. This can make a big difference in a soldier’s day.

Special thanks to Michelle Girasole, of Precision Web Marketing, who is a friend and client, for bring this site to my attention.

The year ahead. Letters will be going out this month to schedule our annual performance reviews. Please contact my office to schedule a time where we can review your asset allocations and discuss any changes that may effect future planning decisions.

I encourage all clients to use this newsletter to supplement their knowledge base, but also to take time to call me when questions arise.

Please feel free to share this newsletter with a friend. You need not be a client to be a subscriber.

As always, if you have questions regarding the content of the newsletter, please call. I will attest to the fact that an educated client develops from a trusted relationship whose basis is formed from an open line of communication over a period of time.

The relationships I have developed with my clients and colleagues are the cornerstone of my business.

Their confidence in me is my primary source of new business. Your referrals are welcome and always appreciated. I thank you all for contributing to Coastal Financial Planning, Inc.’s success in 2007