WEEKLY MARKET COMMENTARY

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WEEKLY MARKET COMMENTARY Update on Risks and Opportunities in the Financial Markets November 2011 Jennifer & Ryan Langstaff Legacy Retirement Advisors LPL Registered Principal 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer.Langstaff@LPL.c om www.LegacyCentralCoast.c om CA Insurance Lic# 0B63553 Weekly Market Commentary | Week of November 28, 2011 Highlights It was a black Friday for investors as the holiday week closed with the S&P 500 turning in its worst performance during the week of Thanksgiving since 1932. Fear gripped the market that the risk of a default by a major European government that would trigger a financial crisis was rising. It is likely to take years to resolve the debt problems in Europe; however as with the lingering U.S. subprime mortgage debt and housing problems, merely stabilizing the problem may allow markets and the economy to heal from the damage. As progress in managing risks and efforts toward fiscal sustainability meets with setbacks and disruptions, expect continued market volatility-but not all of it to the downside as in the past seven trading days. Black Friday Caps a Dark Week for Investors It was a black Friday for investors as the holiday week closed with the S&P 500 turning in its worst performance during the week of Thanksgiving since 1932. Despite strong retail sales indications and solid readings on U.S. economic growth, worsening sentiment on the European debt problems-combined with a failure of the super committee in the United States to agree on deficit cuts-pulled the S&P 500 down 4.7% adding to the cumulative decline of 7.9% in just the past seven trading days. U.S. economic data was solid again last week with claims for unemployment benefits falling further below the 400,000 level, home sales rising over 13% year-over-year, and a 12% year-over-year rise in orders for durable goods excluding the volatile transportation (airplane) orders in October. This week's ISM reading on Thursday and the employment report on Friday will be closely watched. Fourth quarter gross domestic product (GDP) is on pace to top the third quarter's growth rate. In addition, retail sales during Thanksgiving weekend climbed 16% as more shoppers hit the stores and spent more money, according to the National Retail Federation, wildly exceeding consensus estimates. Retail sales matter to the stock market mainly because they reflect the health and sentiment of the consumer and investor (Chart 1), but also because they contribute to growth of the economy and corporate profits. The market knew going into last week it was a long shot that the super committee would produce a deal for the $1 trillion-plus in deficit reduction with which they had been tasked. However, some disappointment over the failure that may have affected markets was that it dimmed the prospects for getting those items passed that have greater near-term consequences for the economy and markets. The real deal Congress must pass before year end is some combination of these expiring programs: Payroll tax cuts Unemployment benefits extension The 100% depreciation of new capital spending for businesses The annual physician Medicare fix and the AMT fix Although these extensions are by no means off the table and it is still likely some of these pass in an end-of-year session, the odds that Congress cannot reach any agreement have risen. The main driver of last week's market action was the fear among some market participants that the risk was rising of a default by a major European government that would, in turn, trigger the collapse of financial institutions and a crisis throughout Europe and beyond. This potential path echoes the chain reaction that followed the bankruptcy of Lehman Brothers in September 2008 that led to a global financial crisis. In late October 2011, European policymakers crafted a ground-breaking agreement that addressed recapitalizing the banking system, created an orderly default by Greece, and provided financial buffers against losses on future bond issuance among eurozone members. All of these steps are in an effort to reverse the tide of money that has flowed out of the European sovereign bond market and pushed up borrowing costs. These actions averted a 2008-like financial crisis. However, concerns remain about the outlook for economic growth in Europe and the ability of some countries to meet budget targets. As hurdles to implementation of the debt plan are materializing, bond yields of some European nations have risen to levels that make progress on balancing budgets very difficult. There are eight European countries with yields over 6% [Chart 2]. Last week, Italy saw its 10-year borrowing cost rise above the 7% threshold that forced Greece, Ireland, and Portugal to seek bailouts in 2010. There are many technical factors driving yields higher, including European bank asset sales as these institutions raise required capital. However, fundamental factors lie at the heart of the rise, particularly for the eight European nations with yields over 6%. The troubles of Greece, Portugal and Ireland are no secret. These three nations were granted bailouts in 2010 that continue to provide ongoing support. The worst off is Greece, which, despite a landmark debt deal, still faces years of economic decline. The best off is Ireland which has proven itself as the bailout country most loyally implementing austerity and markets are responding. Irish yields have fallen from 13.8% to 9.3% over the past four months and the economy has produced solid economic growth. Fortunately, the bond markets of these nations are relatively small and banks have largely insulated themselves from the impact of a default. Hungary is part of the European Union and received IMF funding, but does not use the euro and cannot until 2020 at the earliest. Italy has implemented spending cuts and is running a primary surplus, meaning that the borrowing is to cover their debt costs and not to fund new spending. Italy's budget deficit is less than 5% of its GDP, lower than France's 7% and close to Germany's 4%. However, Italy has over 2 trillion euros in debt totaling about 120% of GDP. In an effort to lower debt, Italy has cut government workers, raised revenue with closing some tax breaks, and sold some government assets. With the recent change in power in the Itailian government, more cuts are on the way. In some ways, Spain is better positioned than other European countries. It has shown a greater tolerance for cutting spending and last week's election generated a strong majority for the incoming ruling party which has emphasized further fiscal reform. Fortunately, Spain's debt-to-GDP is only half that of Italy. On the negative side, its budget deficit is twice Italy's and its banking sector is perhaps the most damaged in Europe, other than Greece. While Iceland does not use the euro and is not even a member of the European Union, Iceland suffered a banking collapse in 2008 and required support from the IMF. Iceland has made some progress. Notably, Iceland had its credit rating outlook raised last week by Standard and Poor's and bond yields have declined to 7% from about 13% at the peak in 2008. While a bond yield of 6.1% may seem high, Poland's borrowing costs are in line with the average of the past 10 years and well below recent peaks and therefore likely to remain manageable. As many European countries (eight) have yields below 3% as above 6%. Although these countries do not share the same fiscal position, they are not immune to the economic impact of contagion in the region. The troubles with Greece, Italy, and Spain lie at the heart of the problem for all of Europe. The long-term success of rescue efforts is dependent upon European nations taking additional steps to adhere to their plans for achieving financial stability and deficit reduction. It is no coincidence all of these three countries have seen a change to their governments in 2011 to those willing to take more aggressive actions. Lack of enforcement of budget rules is a big part of what drove Europe to the current state. Going forward, the European policymakers want to ensure important steps are taken before extending additional support to halt the slide in the markets. While it will take years to resolve the debt problems in Europe, with the lingering subprime mortgage debt and housing problems in the United States, merely stabilizing the problem can allow markets and the economy to heal from the damage.We expect the passage of the difficult, but necessary, reforms among the troubled nations, during the coming weeks and months. As progress in managing risks and efforts toward fiscal sustainability meet with setbacks and disruptions, expect continued market volatility - but not all of it to the downside as in the past seven trading days. Hopefully, as we leave black Friday and the month of November behind the market has a brighter start to December.   IMPORTANT DISCLOSURES The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. This research material has been prepared by LPL Financial. The LPL Financial family of affiliated companies includes LPL Financial and UVEST Financial Services Group, Inc., each of which is a member of FINRA/SIPC. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity. Tracking #1-025916 | Exp. 11/12   If you no longer wish to receive this email communication, remove your name from this specific mailing list, or opt-out of all mailing lists. We are committed to protecting your privacy. For more information on our privacy policy, please contact: Jennifer & Ryan Langstaff 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer.Langstaff@LPL.com The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Jennifer & Ryan Langstaff is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC   This newsletter was created using Newsletter OnDemand, powered by McGraw-Hill Financial Communications.

WEEKLY MARKET COMMENTARY

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WEEKLY MARKET COMMENTARY Update on Risks and Opportunities in the Financial Markets November 2011 Jennifer & Ryan Langstaff Legacy Retirement Advisors LPL Registered Principal 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer.Langstaff@LPL.c om www.LegacyCentralCoast.c om CA Insurance Lic# 0B63553 Weekly Market Commentary | Week of November 21, 2011 Highlights With no debt ceiling, default or downgrade threat, the market impact of this week's public unveiling of the super committee's recommendations is likely to be muted relative to the debt ceiling debacle of late July and early August. Congress' record-low 9% approval rating reflects the low bar of expectations for the super committee. The market expects the default cuts of $1.2 trillion will do the bulk of generating the required savings. Even with no agreement from the super committee, an end-of-year deal may still take place that may pair a smaller deficit reduction package of a few hundred billion dollars with the extension of the expiring payroll tax cut and federal unemployment benefits. Super Committee: Go Big or Go Home? With the congressional super committee's deadline on finding $1.5 trillion in deficit reduction this week, the markets want to know if they will go big or just go home for the Thanksgiving recess. The debt ceiling debacle that came to a head in early August 2011 left a lasting impression on the stock market. The S&P 500 index plunged 17% from July 22 to August 9, in part driven by Washington's inept handling of the increase of the country's debt limit and the subsequent downgrade of the U.S. credit rating by Standard and Poor's on August 5. Fortunately, this week's public unveiling of the proposals from the super committee tasked with finding the required $1.5 trillion in deficit reduction over 10 years is unlikely to spark the same violently negative market reaction. There are two key reasons the market reaction is likely to be much more muted: First, there is no debt ceiling or potential default looming this time. This is because the budget act put in place in August 2011 triggers automatic cuts-also called sequester-totaling $1.2 trillion over nine years beginning in 2013, in the event the super committee fails to come up with $1.5 trillion in proscribed savings. This pushes the time frame when the United States will again bump up against the debt ceiling to early 2013-after the next election. Second, we are unlikely to see a debt downgrade of the United States this time. In recent months it has become clear through public comments that the major rating agencies are unlikely to downgrade the U.S. credit rating on a failure of the super committee to agree on the deficit reduction as long as they do not remove the sequester that invokes the automatic $1.2 trillion in cuts and do not circumvent the size of the cuts through budget accounting gimmicks. The next credit event is likely not until 2013, under a new Congress. Fitch may move the U.S. credit outlook to negative implying a bias to downgrade and both S&P and Moody's have said a downgrade is likely absent a major fiscal consolidation package in 2013. With no agreement, $1.2 trillion in deficit savings will result from the automatic discretionary spending cuts through program spending caps known as sequestration. However, it is unlikely that the cuts triggered by the automatic sequester will actually take place come 2013. This is because there is likely to be a major deficit reduction package in 2013 under a new GOP-dominated Congress following the 2012 elections. This plan will significantly alter the pro-rata allocation of cuts across discretionary spending programs that would take place under the automatic sequester. This base case results in an outcome for the markets that is muted - especially relative to this summer's reaction. Congress' 9% approval rating (Chart 1) highlights the low expectations for the super committee to bridge the partisan divide and craft a ground-breaking deal that addresses the nation's debt that crossed the $15 trillion threshold last week. However, the failure to come to an agreement does not mean that Congress goes home with no plan to take any fiscal action this year. An end-of-year deal may still take place that may pair a smaller deficit reduction package of a few hundred billion dollars with the extension of the expiring payroll tax cut and federal unemployment benefits. IMPORTANT DISCLOSURES The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. This research material has been prepared by LPL Financial. The LPL Financial family of affiliated companies includes LPL Financial and UVEST Financial Services Group, Inc., each of which is a member of FINRA/SIPC. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity. Tracking # 1-024746 | Exp. 11/12   If you no longer wish to receive this email communication, remove your name from this specific mailing list, or opt-out of all mailing lists. We are committed to protecting your privacy. For more information on our privacy policy, please contact: Jennifer & Ryan Langstaff 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer.Langstaff@LPL.com The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Jennifer & Ryan Langstaff is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC   This newsletter was created using Newsletter OnDemand, powered by McGraw-Hill Financial Communications.

INDEPENDENT INVESTOR

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INDEPENDENT INVESTOR Timely Insights for Your Financial Future November 2011 Jennifer & Ryan Langstaff Legacy Retirement Advisors LPL Registered Principal 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer.Langstaff@LPL.c om www.LegacyCentralCoast.c om CA Insurance Lic# 0B63553 Independent Investor | November 2011 The Role of Insurance in Your Financial Plan Insurance is an important element of any sound financial plan. Different types of insurance protect you and your loved ones in different ways against the cost of accidents, illness, disability and death. Generally speaking, the insurance decisions you make should be based on your family, your age and your economic situation. Following is an overview of various types of insurance along with suggestions to make sure you are adequately covered. Auto Insurance Auto insurance protects you from damage to your vehicle and/or from liability for damage or injury caused by you or someone driving your vehicle. It can also help cover expenses you or anyone in your car may incur as a result of an accident with an uninsured motorist. Auto liability coverage is necessary for anyone who owns a car. Many states require you to have liability insurance before a vehicle can be registered. However, state-required minimum coverage often does not provide adequate protection. Suggested minimums are $100,000 for medical expenses per injured person, $300,000 for the total per accident and $50,000 for property damage. Collision, fire and theft coverage are also advisable for a vehicle having more than minimal value. The cost of auto insurance varies greatly depending on many factors: the company and agent, your choice of coverage and deductible limits, where you live, the kind of vehicle to be insured and the ages of drivers in the family. Discounts are often available for safe drivers, nonsmokers and those who commute to work via public transportation. Homeowner's Insurance Homeowner's insurance should allow you to rebuild and refurnish your home after a catastrophe and insulate you from lawsuits if someone is injured on your property. Coverage of at least 80% of your home's replacement value, minus the value of land and foundation, is necessary for you to be covered for the cost of repairs. There are several grades of policies, ranging from HO-1 to HO-8, with increasingly comprehensive coverage and cost. As a baseline, most homeowners' policies cover the contents of the house for 50% to 75% of the amount for which the house is insured. The liability coverage in many homeowners' policies is $300,000. Life Insurance Life insurance, payable when you die, can provide a surviving spouse, children and other dependents with the funds necessary to maintain their standard of living. It can also be used to help repay debt and fund education costs. The amount you need depends on your situation. If you make $100,000 a year, have a sizable mortgage and two kids headed to an expensive college, you could need $1 million in coverage. Talk with an insurance agent who offers policies from companies whose financial strength is ranked high by rating agencies. And remember that you can shop around. Helpful Resources: National Association of Insurance and Financial Advisors (877) 866-2432 This group can put you in touch with an insurance advisor who can help you determine how much insurance you need and refer you to an agent. A.M. Best (908) 439-2200 ext. 5742 Standard & Poor's (212) 438-2400 Moody's (212) 553-0377 These agencies rank and rate insurance companies and can give you information about an insurance company's financial strength. A small fee will be charged for these services. Disability Income Insurance When you are unable to work for an extended period, a long-term disability policy is activated, replacing a portion of your lost income. Some employers offer some form of company-paid disability income insurance. Typically, such coverage is only partial and/or short-term in nature. Thus, many people seek to purchase an individual disability income insurance policy. When shopping around for disability insurance, try to get a noncancelable policy with benefits for life, or at least to age 65, and as much salary coverage as you can afford. Insurers will usually cover up to 65% of your salary. Generally, you should have total coverage equal to two thirds of your current pretax income. Health Insurance Most people enjoy medical insurance as an employee benefit, often with their employers paying whole or part of the premiums. Many employers offer a choice between HMOs (health maintenance organizations) and traditional fee-for-service care. Rates for HMOs are usually cheaper but have more constraints. Privately purchased health insurance is much more expensive -- often by several hundred dollars a month - depending on such things as deductibles, coverage choices and where you live. Long-Term Care Insurance With an aging population and uncertainty about the future of Social Security and Medicare, insurance to cover the high cost of nursing home or at-home health care is becoming more widespread. Medicare pays very little of the cost of long-term care in the United States. Medicaid will pay for the care, but only for patients whose assets are almost completely depleted.1 With Congress always debating the future funding of these programs, financial planning for long-term care is more crucial than ever. Medigap insurance can help pay medical expenses of the elderly not covered by Medicare. However, it does not cover custodial nursing home costs. In fact, about half of all nursing home residents pay for the care with personal savings.1 Contact a qualified insurance professional or AARP for more information on long-term care insurance. 1Source: www.Medicare.gov. This article was prepared by McGraw-Hill Financial Communications and is not intended to provide specific investment advice or recommendations for any individual. Consult your financial advisor, or me, if you have any questions. If you no longer wish to receive this email communication, remove your name from this specific mailing list, or opt-out of all mailing lists. We are committed to protecting your privacy. For more information on our privacy policy, please contact: Jennifer & Ryan Langstaff 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer.Langstaff@LPL.com The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Jennifer & Ryan Langstaff is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC   This newsletter was created using Newsletter OnDemand, powered by McGraw-Hill Financial Communications.