Even the smartest guy in the room sometimes makes mistakes.

Jamie Dimon, CEO of the huge U.S. bank JP Morgan, has been called the smartest guy in the room for his ability to effectively steer the bank through the economic crisis. And, while most of the other big U.S. banks have tarnished reputations, Dimon's firm was the one that stood out from the crowd.

Unfortunately, that all changed last week.

In a hastily arranged conference call with investors, Dimon revealed that the bank lost $2 billion in just the past six weeks on "bets aimed at shielding the bank from the market fallout of Europe's deepening mess," according to The Wall Street Journal. These "bets" lost money due to "unusual movements in the relationships between various derivative indexes focused on investment-grade and junk-bond corporate debt, both in the U.S. and Europe," according to the Journal.

This debacle points to three important investment lessons:

1. Keep it simple. Trading fancy derivatives or using complex black box trading strategies might give you an air of sophistication, but it may also lead to your downfall. As Leonardo da Vinci said, "Simplicity is the ultimate sophistication."
2. Pick and track your investments closely. In describing the trades that blew up, Dimon said, "The new strategy was flawed, complex, poorly reviewed, poorly executed, and poorly monitored," according to Bloomberg. Clearly, in this ever-changing world, a "set it and forget it" investment strategy won't cut it.
3. Be humble. Even a smart guy like Dimon can trip up. One of the biggest errors in investing is self-deception - thinking and acting like you are the smartest guy in the room. It's better to worry about what could go wrong - and plan for it - than think you're invincible.

The investment landscape is littered with formerly sharp investors who forgot these three lessons. We plan on keeping them front and center.

DOES IT MAKE SENSE that a painting sells for $120 million in this economic environment?

You may have seen the recent headline that Edvard Munch's painting, "The Scream," sold for a record-breaking $120 million. It made us wonder what the implications are of an anonymous bidder forking over that kind of cash for a pastel on canvas just three years out from a horrible economic crisis. Does this mean happy days are here again?

Placed in broad context, the high sale price for a work of art might be symptomatic of policymakers' response to the economic crisis, according to The Wall Street Journal. When the economy began collapsing in 2008, governments around the world responded by cutting interest rates and flooding their economies with monetary stimulus. All this money sloshing around had to end up somewhere - and some of it might have found its way into hard assets such as commodities, precious metals, collectibles, and, yes, an Edvard Munch painting.

There's something called the law of unintended consequences, which means solving one problem might inadvertently create a new one. In this case, the massive stimulus in recent years propped up the economy in the short run, but it may have unintentionally masked the real problem and simply delayed a day of reckoning.

With the following economic and political issues in play, that day of reckoning may be nearing:

• Eleven European countries have experienced two consecutive quarters of economic contraction.
• The unemployment rate across the eurozone has matched a record high.
• Job growth in the U.S. is slowing.
• The Chinese economy is slowing.
• The political situation in Greece is chaotic.
• France has a new Socialist president.

Sources: MarketWatch, The Wall Street Journal

Now, the good news. In any economic environment, there will be winners and losers. As the steward of your financial life, we do everything we can to try and help you land on the winning side regardless of what the economy and markets throw in our way.

WEEKLY FOCUS

"Nature is pleased with simplicity. And nature is no dummy."
-- Isaac Newton, English physicist, mathematician, astronomer, natural philosopher, alchemist, theologian… yes, a really smart guy!

For your convenience the sources have been listed below:
http://www.cnbc.com/id/47406567/
http://articles.marketwatch.com/2012-05-11/commentary/31655422...
http://online.wsj.com/article/SB1000142405270230407030457739...
http://www.bloomberg.com/news/2012-05-11/what-jamie-dimon-do...
http://online.wsj.com/article/SB10001424052702304203604577396...
http://blogs.wsj.com/economics/2012/05/04/something-to-scream-ab...
http://www.marketwatch.com/story/europe-stocks-rise-after-earnings...
http://www.marketwatch.com/story/us-economy-gains-115000-jobs-i...
http://thinkexist.com/quotation/simplicity_is_the_ultimate_sophistication...
http://www.goodreads.com/quotes/show_tag?id=simplicity
http://en.wikipedia.org/wiki/Isaac_Newton

The most important news last week may have actually happened this past weekend.

On Sunday, voters went to the polls in France, Greece, and Germany and the results could have a major impact on world markets. French voters sent incumbent president Nicholas Sarkozy packing and, instead, elected Socialist Party candidate Francois Hollande. Hollande "has pledged to shift the burden of economic hardship onto the rich and to resolve the protracted euro sovereign-debt crisis by softening the current prescription of austerity," according to The Wall Street Journal. While his strategy is debatable, it will likely cause a rift with Germany and add uncertainty to recent eurozone agreements.

Greek voters also went to the polls and "delivered a stinging rejection of the two incumbent parties, with many people casting ballots for smaller, far-left and far-right parties," according to the The Wall Street Journal. This, too, will likely result in more political and economic uncertainty. And in Germany, incumbent Angela Merkel's party suffered some setbacks in state elections.

What's leading to all the angst in Europe? Here are three things:

1. Recession fears - 11 European countries have now experienced two consecutive quarters of economic contraction.
2. Unemployment fears - the unemployment rate across the eurozone is at a record high.
3. Business confidence fears - April's read on the manufacturing PMI for the eurozone - a measure of confidence among businesses - fell to the lowest since June 2009.

Sources: MarketWatch, The Guardian

The bottom line is citizens are voting for change, but "political realities will complicate even more what is an already delicate economic and financial outlook for Europe, the world's largest economic area," according to Mohamed El-Arian, CEO and Co-CIO of PIMCO, as reported by CNBC.

These elections show that the economic crisis that began in 2008 is still rippling throughout the world.

WHAT DO DOTS HAVE TO DO WITH BEING A BETTER INVESTOR? In his fascinating new book, Imagine: How Creativity Works, author Jonah Lehrer describes the creative process and what steps we can all take to be a little more creative. One of those steps is to talk to more people and expose yourself to new situations. By "colliding" more often with people who are not like you and throwing yourself into new environments (like a foreign country), your mind will come up with more new ideas than you could have thought of on your own.

And, while business owners may not like this, Lehrer's research suggests, "The most important place in every office is not the boardroom, or the lab, or the library. It's the coffee machine." It's those casual conversations with colleagues that generate new interactions and spark ideas.

This leads to an important point about investing.

Brian Uzzi, a professor at the Kellog School of Management, studied the instant messages (IM) sent by traders at a large hedge fund over an eighteen-month period. As reported in Lehrer's book, these traders sent more than two million messages over that period and the average trader was involved in 16 different IM conversations simultaneously - talk about multitasking! Essentially, these traders were rapidly communicating with each other and trying to make sense of the latest news so they could profitably trade on it.

As summarized by Lehrer, Uzzi concluded, "The best traders were the most connected, and people who carried on more IM conversations and sent more messages also made more money." Further, Uzzi said, "The act of investing is like solving a difficult puzzle. These traders are trying to connect the dots. Because the traders are listening to their network, they manage to accomplish what they could never have done by themselves."

In essence, successful investing partly relies on "connecting the dots" of information that bombard us. While we're not day traders like the people Uzzi studied at the hedge fund, the concept of connecting the dots still applies - albeit on a much longer timeframe. And, to connect the dots, we have a large network of colleagues who can help us separate the daily noise from what's truly meaningful.

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"Everyone who's ever taken a shower has had an idea. It's the person who gets out of the shower, dries off, and does something about it who makes a difference."
-- Nolan Bushnell, founder of Atari, Inc. and Chuck E. Cheese's Pizza-Time Theaters

For your convenience the sources have been listed below:
http://online.wsj.com/article/SB100014240527023043631045773873921...
http://www.cnbc.com/id/47314617
http://www.marketwatch.com/story/europe-stocks-rise-after-earnings-spain...
http://www.guardian.co.uk/business/2012/may/02/eurozone-unemployment-e...
http://www.kellogg.northwestern.edu/faculty/uzzi/ftp/PNAS-2011-Saavedra-1...
http://www.kellogg.northwestern.edu/faculty/uzzi/ftp/media%20hits/Herds%20...
http://books.google.com/books?id=X8ucIGZKR2gC&pg=PA155&lpg=PA1...
http://www.nytimes.com/2012/04/03/books/imagine-how-creativity-works-by...
http://www.ideachampions.com/weblogs/archives/2011/07/25_awesome_quot...

Move over European debt headlines, corporate earnings have something to say.

Even though troubles are brewing again across the pond in Europe, corporate earnings season in the U.S. is stealing the spotlight. Why? According to CNBC, more than 100 companies in the S&P 500 have reported earnings and 8 out of 10 have delivered better than expected results - and that's grabbed investors' attention.

Each quarter, publically traded companies update investors on how their businesses fared over the previous three months. And, according to the updates we're seeing, business is still looking okay. The news helped push the S&P 500 higher by 0.6 percent on the week.

Now, like all statistics, there's more than one way to interpret the earnings numbers. While 8 out of 10 companies have beaten expectations, the "expectation" was pretty low. In fact, earnings increased only 3.7 percent from the year ago quarter, according to Zacks. For the remaining S&P 500 companies that are set to report, Zacks expects those companies to report slightly negative earnings growth compared to the year ago quarter.

Over in Europe, Spain and Italy saw the borrowing rate increase on their government debt, which suggests their debt problem is far from over. And, the International Monetary Fund released a report that stated the obvious - if the European debt crisis can't be contained, it would negatively impact global economic growth in a severe way.

At the moment, the U.S. markets seem fixated on corporate earnings and have put the European problem on the back burner. But, in this interconnected world, problems overseas may eventually find their way to our shores.

WHEN $1 TRILLION ISN'T ENOUGH… Earlier this year the European Central Bank (ECB), Europe's equivalent of our U.S. Federal Reserve, responded to the fear surrounding the European debt crisis by offering unlimited three-year loans with a 1.0 percent interest rate to European banks. According to The Wall Street Journal, at least 800 banks across Europe responded to this offer by borrowing over $1.3 trillion. As planned, the banks then took a good portion of that money and bought government securities that paid a higher interest rate. It sounds like a great deal to the banks - borrow money at a 1.0 percent rate then turn around and buy government securities that pay a much higher rate and pocket the difference.

The primary objective of this emergency lending was to indirectly allocate money to European governments who are heavily indebted. The ECB thought that making cheap money available would help lower interest rates in these troubled countries and "buy" them more time to work out their economic problems.

How's it working?

Initially, interest rates in troubled countries dropped dramatically as banks bought the high-yielding government securities and fears of a collapse eased. Unfortunately, The Wall Street Journal says many of the banks who borrowed money from ECB may have already exhausted most of those funds - leaving little money left to keep pushing interest rates down. As a result of this fear, interest rates are rising again, particularly in Spain and Italy, and, like a leak in a dike, it's hard to stop a rise once it gets going.

Will the ECB step in again and help European banks and governments avoid a Greek-style default? It's too early to tell, but either way, we'll be closely watching this tug-o-war between positive corporate earnings in the U.S. and negative headlines out of Europe.

Stay tuned…

WEEKLY FOCUS

"There are no shortcuts to any place worth going."
-- Beverly Sills

For your convenience the sources have been listed below:
http://www.cnbc.com/id/47120743
http://www.zacks.com/commentary/20670/Q1+Earnin...
http://money.cnn.com/2012/04/19/markets/thebuzz/ind...
http://online.wsj.com/article/SB100014240527023044...
http://online.wsj.com/article/SB100014240527023042...
http://online.wsj.com/article/SB100014240527023043...
http://finance.yahoo.com/news/stock-futures-signal-slig...
http://online.wsj.com/article/SB100014240527023035...
http://online.wsj.com/article/SB100014240527023048...
http://blogs.wsj.com/eurocrisis/2012/02/29/which-bank...

It's back. Volatility, that is.

Like a yo-yo, the market bounced around and the S&P 500 index ultimately ended down 2.0 percent for the week and 3.4 percent from this year's closing high, according to Reuters. Despite the drop, the market is still showing a solid 9.0 percent gain for the year.

Once again, debt issues in Europe made headlines as Spain became the latest problem country. That, along with some disappointing economic growth data from China, helped spark the volatile week. Because of its massive size, any slowdown in China is closely watched by market participants.

As a sign of the big swings this week, the Dow Jones Industrial closed the day up or down by at least 100 points on four out of the five days last week, according to Barron's.

Highlights from the week included:

• China's economy expanded at the weakest pace in over three years last quarter, missing consensus economic forecasts.
• Yields on debt in Spain jumped due to a weak debt auction, renewing fears that the European debt crisis could start affecting the global markets again.
• Several U.S. banks reported earnings that underwhelmed investors, resulting in weakness in financial stocks.
• U.S. inflation remained under control which may leave open the possibility for further Federal Reserve intervention should economic data deteriorate.

Sources: The Wall Street Journal, Yahoo! Finance

The quarterly corporate earnings season is now underway so we wouldn't be surprised to see more market volatility as investors digest the latest read on the health of corporate America.

THE "SHOVE IT" INDICATOR as highlighted by CNBC made a noteworthy gain in February suggesting consumer confidence may be increasing. You're probably wondering, "What in the world is the 'shove it' indicator?" Well, every month the government conducts a Job Openings and Labor Turnover Survey, or "JOLTS" for short. One of the data points in the JOLTS report is the number of workers who quit their job as opposed to being laid off. And, in February, for the first time since September 2008, the quitters were in the majority.

What does this mean? Generally speaking, people who quit their job are typically more confident that there is another job waiting for them when they voluntarily leave a position. Nicholas Colas, chief market strategist at ConvergEx Group says, "Quits go hand-in-hand with consumer confidence."

This positive JOLTS data point follows a disappointing government jobs report for the month of March where only 120,000 new jobs were created. Also, the preliminary March reading of the University of Michigan's consumer confidence survey showed a decline from the previous month. Analysts had expected confidence to stay flat, according to International Business Times.

This conflicting economic data gave the bulls and the bears ample ammunition to bolster their respective case. And, conflicting data like this may lead to a continuation of the yo-yo as investors try to predict which direction the economy is headed.

WEEKLY FOCUS

"Expectation is the root of all heartache."
-- William Shakespeare

For your convenience the sources have been listed below:
http://www.ibtimes.com/articles/327923/20120413/consumer-sentiment...
http://www.bloomberg.com/news/print/2012-04-13/spain-default-swap...
http://online.barrons.com/article/SB500014240531119048574045773...
http://online.wsj.com/article/SB100014240527023043566045773413...
http://finance.yahoo.com/news/futures-off-spain-yields-rise-105658265...
http://www.cnbc.com/id/47030350/
http://online.wsj.com/article/SB100014240527023043566045773405...
http://finance.yahoo.com/news/food-gas-costs-push-us-123818377.html
http://online.wsj.com/article/SB100014240527023038154045773351...
http://www.brainyquote.com/quotes/quotes/w/williamsha143400.html

When in doubt, blame it on the weather.

It's human nature to want to ascribe a reason to everything that happens in the world. Rather than feeling like it's all random, we always want to know why the market went up or why bats hang upside down or why white is the most popular car color.

And, last week's employment report is no different. The government said the economy added 120,000 new jobs in March, however, that was well below the 210,000 increase expected by economists surveyed by MarketWatch. So, to what did some economists attribute the smaller than expected increase? You guessed it, the weather!

Unseasonably warm winter weather in many parts of the country may have disrupted the normal winter hiring pattern. According to MarketWatch, "Companies kept workers on or hired people in January and February who otherwise would have been added in March or April."

In addition to hiring, weather was also a key driver behind recent strong retail sales. Bloomberg reported that, "Retailers are benefiting from warm weather that boosted demand for spring products…"

Over time, the effects from weather will likely even out so there's no need for us to add a meteorologist to the team. But, just so you know, it's not always dollars and cents behind changes in the markets. Sometimes you just have to stand outside and check out the weather.

DON'T WORRY, BE HAPPY is apparently more than just a cliché. Research over the past 10 years shows there is a direct link between happiness and business outcomes. Author and researcher Shawn Achor says "happiness" raises sales by 37 percent, productivity by 31 percent, and accuracy on tasks by 19 percent. He goes on to say, "The single greatest advantage in the modern economy is a happy and engaged workforce."

So, how do you become happy at work?

Achor says you have to train yourself and start developing new, positive habits. For example, he challenges his clients to implement one of the following positive exercises everyday for 21 days.

• Write down three new things you are grateful for each day.
• Write for two minutes a day describing one positive experience you had over the past 24 hours.
• Exercise for 10 minutes a day.
• Meditate for two minutes, focusing on your breath going in and out.
• Write one quick e-mail first thing in the morning thanking or praising someone in your social support network (family member, friend, old teacher).

By following one of these exercises, Achor says your happiness will rise and so will your business success.

The tiny Himalayan country of Bhutan has taken this idea of happiness even further. Four years ago, the country launched a "gross national happiness" measure to guide public policy. According to The Guardian, Bhutan's "constitution mandates that at least 60% of the country remains under forest cover in perpetuity and its stated policy is to be 100% organic in its agricultural production."

Now, Bhutan's definition of happiness is a little different than our typical Western definition. The Bhutan government says, "it refers to the deep, abiding happiness that comes from living life in full harmony with the natural world, with our communities and fellow beings, and with our culture and spiritual heritage, in short, from feeling totally connected with our world."

Well, no matter how you define it, it looks like it "pays" to be "happy."

WEEKLY FOCUS

"Rules for Happiness:
something to do,
someone to love,
something to hope for."
-- Immanuel Kant, German philosopher

For your convenience the sources have been listed below:
http://www.marketwatch.com/story/us-econo...
http://www.bloomberg.com/news/2012-04-0...
http://www.cnn.com/2012/03/19/opinion/hap...
http://www.guardian.co.uk/sustainable-busin...
http://www.goodreads.com/quotes/tag/happiness

Last week marked the end of a very strong first quarter for the stock market.

For the quarter, the S&P 500 index rose 12.0 percent, its strongest start to a year since 1998. In fact, the index ended the quarter 3.4 percent above the average year-end projection of strategists surveyed by Bloomberg. In other words, the market gained more in the first quarter than analysts thought it would gain for the whole year.

Looking back on the strong start, analysts pointed to an easing of Europe's debt woes, a strengthening global economy (at least in some areas), rising consumer sentiment in the U.S., and supportive Federal Reserve policy, according to Bloomberg and CNNMoney.

Speaking to The Wall Street Journal, Bob Doll, chief equity strategist at BlackRock, summarized the quarterly nicely when he said, "This year has been all about people coming away from the abyss that the world might end, and putting risk back on."

Some analysts suspect this year's strong start may be déjà vu all over again (hat tip to Yogi Berra). Stocks roared out of the gate in 2010 and 2011 only to drop later in the year, "as the U.S. economy faltered and Europe's crisis worsened," according to The Wall Street Journal.

Potential spoilers for the market over the next few months include:

• Renewed European debt woes, particularly in Portugal and Spain.
• Renewed weakness in the U.S. economy, possibly due to unseasonably warm weather in some parts of the country that may have "pulled forward" some shopping and construction activity.
• High gasoline prices, which could take a big bite out of consumers' pocketbooks.
• Slower corporate earnings growth and profit margins that may down from near record levels.
• An economic slowdown in China that exceeds expectations.

Sources: The Wall Street Journal, Financial Times

So far this year, investors have shrugged off the worries and plowed higher. With supportive Federal Reserve policy underpinning the market, that old adage seems to apply - "Don't fight the Fed."

WHILE GASOLINE PRICES ARE HITTING RECORD HIGHS for this time of year and oil has shot past $100 per barrel, natural gas prices are plumbing 10-year lows, according to The Wall Street Journal. What are the implications of this large price disparity for America's long-term energy security?

As indicated below, gasoline, oil, and natural gas are critical to the U.S. energy picture as they account for a large percentage of our energy use.

Energy Demand by Fuel Source in the U.S. in 2010

• 37 percent petroleum products (includes oil and gasoline)
• 25 percent natural gas
• 21 percent coal
• 9 percent nuclear
• 8 percent renewable

Source: U.S. Energy Information Administration

Oil, in particular, is deeply entwined in our economy as 10 of the past 11 recessions were preceded by an oil price shock, according to Moody's Analytics. Even the 2008 economic crisis, which on the surface was triggered by the subprime mortgage crisis, was accompanied by a massive spike in U.S. oil prices to a record high of about $145 per barrel in July 2008, according to Reuters. As oil prices rise, gasoline prices are likely to rise, too, because gasoline is a by-product of oil refining. In fact, a 42-gallon barrel of oil yields about 19 gallons of gasoline, according to the U.S. Department of Energy.

So, where does natural gas fit in the U.S. energy story?

Interestingly, new technology including horizontal drilling and hydraulic fracturing ("fracking") has led to a substantial increase in the supply of natural gas. The Department of Energy has even said we have more than a 90-year supply of natural gas at current consumption rates. This massive supply is one reason why natural gas prices are so low right now.

One plus for natural gas versus oil is that almost all of the natural gas we consume is produced domestically while 45 percent of the oil we consume is imported, according to Financial Times. With natural gas prices low and supply abundant, we're starting to see more emphasis on using natural gas instead of oil.

As the U.S. continues to regain its economic footing, it's critical that we have the right mix of energy sources available at a reasonable price. Historically, that's not always happened and, consequently, it's an important factor that we monitor on a regular basis.

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"Worry does not empty tomorrow of its sorrow, it empties today of its strength." -- Corrie ten Boom, author, Holocaust survivor

For your convenience the sources have been listed below:
http://www.bloomberg.com/news/2012-03-30/u-s-stock-fut...
http://money.cnn.com/2012/03/30/markets/stocks/index.htm...
http://online.wsj.com/article/SB10001424052702303816504...
http://online.wsj.com/article/SB10001424052702304177104...
http://online.wsj.com/article/SB10001424052702303816504...
http://www.economy.com/dismal/article_free.asp?cid=229078...
http://www.reuters.com/article/2008/07/11/us-markets-oil-idU...
http://energy.gov/articles/hows-and-whys-replacing-whole-barrel
http://www.eia.gov/pressroom/presentations/howard_012320...
http://www.eia.gov/energy_in_brief/about_shale_gas.cfm
http://www.ft.com/intl/cms/s/0/4611795a-63bb-11e1-9686-00...
http://www.goodreads.com/quotes/tag/worry
http://www.ft.com/intl/cms/s/0/db1d3968-79a9-11e1-8fad-00...

A trillion here, a trillion there and, pretty soon, you have a nice market rally.

Through a program called quantitative easing, central banks around the world have flooded the world economy with the equivalent of trillions of U.S. dollars. Quantitative easing involves central banks making large-scale purchases of debt - usually government or mortgage debt - and paying for that debt by creating money out of thin air, according to The New York Times. The hope (and remember, hope is not an investment strategy) is that with more money sloshing around the global economy, interest rates will drop and that will stimulate demand and increase economic growth.

If all goes according to plan, the economy will recover and then the central banks will sell the bonds they purchased and "destroy" the money they received for selling the bonds. When the whole cycle is completed, the net effect is no new money is created, according to the BBC. Optimists say this is an appropriate activity for central banks when the economy faces major hurdles. Pessimists say the central banks are unlikely to turn off the spigot and we could end up with runaway inflation.

And, yes, it's a big spigot. Just between the U.S. and the United Kingdom, more than 2.5 trillion dollars of new money has been created since 2008, according to Reuters and the BBC.

On top of that, the European Central Bank made more than 1 trillion euro available to banks in the form of cheap three-year loans in just the past few months. The hope (there's that word again) is that banks will use this money to lend and invest, and, thereby, boost the economy, according to Bloomberg.

All this "easy money" has helped fuel a strong start to many of the world's stock markets this year. The big question is, will this easy money be the bridge that gets the world economy back on a self-sustaining growth path or is it simply keeping the patient addicted to an unsustainable monetary policy?

Effectively answering questions like this keeps our job very interesting!

QUANTITATIVE EASING HAS LED TO A STEALTH "TAX" ON SAVERS in what's been called "financial repression," according to Bloomberg. As mentioned above, one goal of quantitative easing is to lower interest rates. On that score, it's succeeded since interest rates are super low all along the yield curve. Unfortunately, there's a problem with that - interest rates on many bonds and savings accounts are lower than the rate of inflation. This means savers are losing purchasing power (the stealth tax) while debtors are able to pay back their debts in inflated (i.e., "cheaper") dollars. Savers are effectively being "financially repressed."

The public debt of the U.S. is more than $15 trillion, according to the Treasury Department. The annual interest expense on that mountain of debt is more than $400 billion. Not surprisingly, the government wants to keep interest rates low because that will keep their interest payments low. Also, by tolerating some inflation, that debt pile can be paid back in inflated dollars. So, who loses in this deal? It's the diligent American saver who lives below their means and has to endure very little interest on their savings.

Government policy makers are well aware that their actions are, to some extent, helping debtors at the expense of savers. They also know that in this complicated, global economy, there's no easy way to make everybody happy and still get us out of the fiscal hole we're in. Knowing that, we'll keep doing our best to help you prosper.

WEEKLY FOCUS

If you could spend one year traveling around the U.S. and Canada, how many different bird species do you think you could see? Well, there's actually an informal competition that does just that and it's called a Big Year. Last year, a movie starring Steve Martin, Jack Black, and Owen Wilson chronicled the Big Year exploits of three men who tried to set a new Big Year record in 1998. Sure enough, one of the men set a new record of seeing 748 bird species that year. Check out the movie and you'll never look at birding quite the same.

For your convenience the sources have been listed below:
http://topics.nytimes.com/top/reference/timestopics/subje...
http://www.bbc.co.uk/news/business-15198789
http://www.reuters.com/article/2012/03/22/usa-fed-fish...
http://seekingalpha.com/article/406831-ecb-s-ltro-2-th...
http://www.bloomberg.com/news/2012-02-29/ecb-s-s...
http://www.bloomberg.com/news/2012-03-11/financial...
http://www.treasurydirect.gov/NP/BPDLogin?applicatio...
http://www.treasurydirect.gov/govt/charts/charts_expen...
http://en.wikipedia.org/wiki/Big_year

It was a busy week on Wall Street with numerous big moves and key milestones hit. Here are a few of the highlights:

• The S&P 500 index and the Dow Jones Industrial Average had their biggest weekly gains since last December.
• The S&P 500 closed at its highest level in nearly four years and the NASDAQ index closed at its highest level in more than 10 years.
• Yields on U.S. government bonds rose substantially on the back of "steady albeit moderate economic expansion," according to Barron's.
• Gasoline prices continued to rise and are now up 18 percent since December and pump prices topped $4 a gallon in many parts of the country.
• Employment is looking better as initial claims for U.S. unemployment benefits matched a four-year low.

Sources: Barron's, The Wall Street Journal, MarketWatch

In addition, the Federal Reserve released a policy statement last week that was well-received by the markets. MarketWatch wrote, "The central bank seems keen on stressing that it will do everything it can to keep rates low and allow the economy time to heal." Economist Ian Shepherdson commented that the Fed, "is clearly shifting its stance away from blanket gloom to something more realistic."

And, to add even more bubbly to last week's rosy news, Apple stock briefly pierced an all-time high of $600 per share on enthusiasm for the new iPad. This isn't a buy or sell recommendation for the stock, but merely an indication of the market's recent bullish enthusiasm.

While the market may be in a giving mood now, it can take it away quickly and without ringing a bell. Either way, we remain diligent in doing the best we can on your behalf.

WHY IS MONGOLIA ONE OF THE WORLD'S FASTEST GROWING ECONOMIES and is there a lesson to be learned from them? While the U.S. economy languished at a 1.7 percent growth rate in 2011, Mongolia - a landlocked country sandwiched between China and Russia - grew a staggering 17.3 percent, according to The Wall Street Journal.

Blessed with an abundance of natural resources such as copper, gold, and coal, Mongolia's growth has been turbocharged by foreign investors seeking to exploit its still largely untapped commodities.

Now, here's where it gets interesting. The Organization for Economic Co-operation and Development (OECD), just released a study that shows there is, "a significant negative relationship between the money countries extract from national resources and the knowledge and skills of their school population." Another way of saying this is countries with very few natural resources (think Japan or Hong Kong) tend to have highly educated students.

The OECD said countries with few natural resources tend to realize that "the country must live by its knowledge and skills and that these depend on the quality of education." By contrast, resource rich countries (with some exceptions), tend to take the path of least resistance and generate wealth through digging up their resources. Often, they then fail to convert this wealth "into the human capital that can generate the economic and social outcomes to sustain their future."

It remains to be seen if Mongolia will learn from history and turn its resource riches into long-term educational dividends.

The U.S. is fortunate because we have do have abundant natural resources. However, there's always room for improvement in taking the spoils of these resources and converting them into positive economic and social outcomes that can propel us well into the future.

As the OECD wrote, "Knowledge and skills have become the global currency of 21st century economies. But, there is no central bank that prints this currency, you cannot inherit this currency, and you cannot produce it through speculation, you can only develop it through sustained effort and investment by people and for people."

WEEKLY FOCUS

We do not inherit the earth from our ancestors, we borrow it from our children.
- Native American proverb

For your convenience the sources have been listed below:
http://online.barrons.com/article/SB50001424053111904797...
http://online.wsj.com/article/SB10001424052702304459804...
http://blogs.marketwatch.com/thetell/2012/03/16/big-weekly-...
http://www.marketwatch.com/story/mixing-gasoline-and-poli...
http://www.marketwatch.com/story/us-jobless-claims-match-...
http://www.marketwatch.com/story/fed-stands-pat-downpl...
http://www.cnbc.com/id/46758866
http://oecdeducationtoday.blogspot.com/2012/03/knowledg...
http://www.bea.gov/newsreleases/national/gdp/gdphighlights.pdf
http://online.wsj.com/article/SB100014240527023037173...
http://www.quotegarden.com/environment.html

It's been rather calm in the stock market lately.

For the past couple years, the euro zone debt problems and the "will we or won't we relapse into a recession" worry have been on center stage. Now, Europe's immediate liquidity issue has been patched and the U.S. economy seems to be on firmer footing. Accordingly, the stock market has responded to these developments and, last week, the S&P 500 index closed at its highest level in more than 3½ years, according to The New York Times.

Fear has declined, too. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, ended last week at about 17. That's down from 48 reached last August and well below the 22-year average of 20.6, according to CNBC and Bloomberg. A low VIX suggests investors are less fearful of near-term market volatility.

Are there any worries on the horizon that could upset this calm?

Oil prices are one thing to keep an eye on. They rose 6 percent last week and closed at nearly $110 per barrel. Geopolitical tensions in the Middle East contributed to the rise as Iran is reportedly within sight of creating a nuclear bomb. That, of course, creates major headaches not only for the Middle East, but for the world in general.

On top of that, "There's also an oil pipeline dispute between Sudan and South Sudan in northeastern Africa; unrest in Syria, Yemen, and Nigeria; varying levels of tribal infighting in Iraq and Libya; and the possibility of leadership issues in Venezuela, where the president is undergoing his third surgery for an undisclosed type of cancer," according to The Milwaukee Journal Sentinel.

So far, the stock market hasn't flinched in the face of these flashpoints. However, an unexpected turn for the worse in any of these areas could trip the markets. And, since the S&P 500 index has more than doubled in value since the March 9, 2009 low, according to The New York Times, it might not take much to trigger a market correction.

As a financial advisor, we know that there is always something to worry about. Frankly, it's our job to worry about what could go wrong so you don't have to. The good news is, as a country we always seem to find a way to overcome whatever obstacle is thrown our way.

INVESTORS TEND TO GET CAUGHT UP IN THE DAY-TO-DAY NOISE of the financial markets even though the markets often move in long secular cycles that can last more than a decade. For example, let's look at interest rates.

At the end of 1964, the 10-year U.S. Treasury note yielded 4.2 percent. Over the following nearly 17 years, the yield rose until it peaked at 15.8 percent in September 1981, according to Bloomberg. During that span, the yield fluctuated significantly (the noise), but the long-term secular trend was a rising interest rate environment.

Since that peak in September 1981, the yield on the 10-year Treasury has been in a more than 30-year long-term secular decline. In fact, the yield was a slim 2.0 percent last week - well below 1964's 4.2 percent. This decline was interrupted by numerous interest rate increases along the way (the noise), but the long-term trend was a decline in rates.

Turning to the stock market, it also exhibited significant moves during these two interest rate cycles.

From the end of 1964 to the end of 1981, the Dow Jones Industrial Average rose from 874 to 875. That's no misprint. Over that 17-year period, the Dow rose exactly 1 point. In other words, it went nowhere. However, during that period, it rose as high as 1,052 and dropped as low as 578, according to Bloomberg. Here, the long-term secular trend in the equity market was to move sideways with lots of noise in between.

Fast forward to 1982. From its low in August that year, the Dow Jones Industrial Average took off on a 17+ year secular bull market that saw the Dow rise 15-fold, according to Bloomberg. And, yes, there was lots of noise during that 17-year bull run including the 22 percent decline - in one day on Black Monday - October 19, 1987.

Here's the takeaway - markets are very noisy. While we monitor what happens in the short-term, we want you to focus on the long-term. Day-to-day fluctuations may top the headlines, but it's the long-term trends that you should pay attention to.

WEEKLY FOCUS

Only put off until tomorrow what you are willing to die having left undone.
- Pablo Picasso, Spanish painter, draughtsman, and sculptor

For your convenience the sources have been listed below:
http://www.nytimes.com/2012/02/25/business/daily-stock-market...
http://www.jsonline.com/business/global-turmoil-pumping-up-gas...
http://www.cnbc.com/id/46511879
http://www.bloomberg.com/news/2012-02-24/crude-oil-rises-for...
http://www.bloomberg.com/news/2012-02-22/volatility-futures-re...
http://www.marketwatch.com/story/crude-races-past-108-on-iran...
http://www.economist.com/node/21548228
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http://www.bloomberg.com/news/2012-02-06/stocks-least-loved...
http://finance.yahoo.com/q/hp?s=%5EDJI&a=11&b=30&c=1981...
http://www.brainyquote.com/quotes/quotes/p/pablopicas120938.html

Valentine's Day is over, but there's still a "whole lotta love" swirling around the stock market these days.

The Dow Jones Industrial Average closed last week at its highest level since May 2008 while the S&P 500 is knocking on the door of its highest close in almost four years, according to The Wall Street Journal. The gains were driven by optimism that Greece will get another bailout and better-than-estimated data on jobless claims, manufacturing, and housing, according to Bloomberg.

Even though the market has been rising, potential party spoilers abound.

You may have noticed the last time you filled your car gas prices are on the rise again. In fact, CNBC reported gas prices are at a record high for this time of year. The report says gas prices could hit an all-time record high this spring.

Gas prices aren't the only thing on the rise. Tensions in Iran and the Middle East are stoking a rise in oil prices. Together, higher gas and oil prices could take a bite out of consumer and corporate wallets.

Over the weekend in Asia, China announced a change in its banking system reserve ratio in an effort to spur lending and economic growth. This monetary easing comes on the heels of a report that shows housing prices declined in 47 out of 70 major Chinese cities in January. Housing has been a strong economic engine for China for years and any slowdown there could cause problems.

Across the pond, new numbers show that Italy, Greece, Portugal, the Netherlands, and Belgium are now officially in recession, according to The Wall Street Journal. Even mighty Germany saw its economy slightly contract in the fourth quarter of 2011 compared to the third quarter.

Despite these negatives, the market seems to be climbing the proverbial "wall of worry." Whether it will scale this wall and stay on top or fail to reach the top and retreat remains to be seen.

HOW MUCH INCOME WOULD YOU NEED to feel "rich?" Gallup recently conducted a poll and discovered that the median income needed by Americans to feel rich was $150,000. That is three times the roughly $50,000 median annual household income of Americans.

Probing a little deeper, the survey results revealed the following interesting points:

1. 15 percent of the respondents said they needed to earn $1 million or more to feel rich while 30 percent said $100,000 or less would make them feel rich.
2. Women said they needed $100,000 per year to feel rich while men needed $150,000.
3. College graduates needed $200,000 to feel rich while non-college graduates needed $100,000.

In a separate question, Gallup asked Americans how much net worth they would need to feel rich. The median response was $1 million.

So there you have it - to feel rich in America the average American needs either $150,000 in annual income or $1 million in net worth.

Now, let's contrast that with our tax laws. The highest marginal tax rate starts when single filers or married couples filing jointly reach $379,150 in taxable income. That's quite a bit above the median $150,000 number that was reported by Americans to make them feel rich.

According to Gallup, "The question of the point at which someone becomes rich certainly has policy implications in the United States. Gallup finds Americans now about evenly divided on whether the rich, broadly speaking, should be heavily taxed."

You can expect to hear a lot more about tax policy during the upcoming elections later this year.

WEEKLY FOCUS - Does this make sense?

Did you ever notice that when you put the words "The" and "IRS" together, it spells "THEIRS?"
- Author Unknown

For your convenience the sources have been listed below:
http://online.wsj.com/article/SB1000142405297020488040457...
http://www.marketwatch.com/story/us-stocks-mostly-up-on-gr...
http://www.bloomberg.com/news/2012-02-17/u-s-stocks-adva...
http://www.cnbc.com/id/46439046
http://www.bloomberg.com/news/2012-02-18/china-cuts-banks...
http://online.wsj.com/article/SB1000142405297020488040457...
http://www.gallup.com/poll/151427/Americans-Set-Rich-Thresh...
http://www.irs.gov/pub/irs-pdf/i1040tt.pdf
http://www.quotegarden.com/taxes.html