Issue 14 • July 2008 

July Newsletter

In this issue we talk charitable giving and avoiding scams along with general market commentary.

Beware of crooks masquerading as charities:

It is normal to feel compelled to help out in a time of local or national disaster. For many of us that means opening the wallet and making a contribution to a charitable organization. Unfortunately, criminals know that it's very easy to con people out of their money by masquerading as a charitable relief organization.

The normal way these phony organizations work is by phoning consumers and acting as the official relief organization for a particular recent disaster. They will generally try to solicit your donation right then and get you to hand over your credit card information.

If you haven't heard of the organization or the phone rep is being a bit pushy, tell them you don't make donations over the phone until you confirm the status of the organization. A quick trip to the computer will give you all the information that you need: a Google search of the charity should turn up information if it is indeed a legitimate charity. There is also a website: www.give.org (run by the Better Business Bureau) that will let you check on a charity as well.

If in doubt the American Red Cross is always the first humanitarian responder to disasters and is worthy of your donations. You can access their homepage at: www.redcross.org which allows you to donate nationally or enter your zipcode and find your local chapter to contribute to.

Doom and Gloom?

In last months e-newsletter I stated the following: "Overall, I am cautious. The easy money has been made off of the March lows. Unless we get some shifts in the above indicators I am content to maintain current allocations which include about 20% cash positions." In looking back over the past 4 weeks, it was the right call but I definitely did not see the sharp drop we have witnessed. The question becomes now "where do we go from here?".

With the headlines screaming: oil and gas prices are soaring, housing prices are dropping, the midwest is flooding and the northpole is melting, it is very easy to get the doom and gloom mindset. My advice? Turn off your television. As a realist it is obvious that this market is going to take time to purge the excesses of years of credit expansion. It is a painful process that has seen financial stocks pummeled and the dollar devalued. (which is one of the reasons for soaring commodity prices) The good thing is that when it's finished the market will regroup and our economy will be better than ever.

In the near term there is the strong probability of a rally after the sharp selloff we have seen. The challenge will be where we head after this. For those of you that like statistics here is a link that shows the 20 worst months of the S&P and where the index was a few months afterwards. Odds are in our favor for a Summer bounce: http://www.minyanville.com/articles/S-P-djia-market-depression-great/index/a/17814

Longer term will depend on where oil and commodity prices are headed. Like every bubble, oil will eventually come back down. Don't believe me? the following is a chart of the Nasdaq bubble, Homebuilding stock bubble, China stock bubble and lastly the oil bubble. In every bubble environment we are told "this time is different". I will believe that only when it proves true.

Have a safe and happy 4th of July!


James A. Daniel,

This newsletter if for informational purposes only. The information contained within should not be considered as financial advice nor soliciation for financial services. Consult with your financial professional if you have any questions.

The Advisory Firm, LLC is a fee-only financial planning company and registered investment advisor.

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