It's summer! Read below about how you can save money by jumping in the card pool.

The Kalorama Wealth Strategies Quarterly Market Review is a brief updating the performance of the financial markets and providing information on investment and financial planning topics.

Although stocks rose in the final month of the second quarter, including a final-trading-day surge of 2.5%, it was not enough to offset losses from April and May. Concerns about a weak domestic economy and employment, as well as the ongoing European sovereign debt crisis, weighed on equity performance for the quarter. Nearly all major asset classes were lower; the only exception was real estate, edging up 1.5%. For the first half of 2012, all the broad sectors moved ahead, except for energy and natural resources, as the Dow Jones - UBS Commodity index dropped 3.7%.

While stocks were struggling, investors continued to find a safe haven in U.S. Treasury bonds and other fixed-income securities. In reaction to a dismal May employment report, on June 1st the yield on the 10-year Treasury Note sank to a record intra-day low of 1.44%. All major bond sectors rose for the second quarter and first half of 2012. Leading the pack at mid-year were U.S. Corporate High Yield and International Emerging Markets, jumping 7.3% and 7.0%, respectively, with U.S. Treasury TIPs next in line, rising 4.0%.

After its June 20th meeting, the Federal Reserve announced that it would expand its "maturity extension program" to put downward pressure on long-term interest rates, reduce unemployment, and stimulate the economy. The "Operation Twist" program was initiated in September 2011 whereby the Fed would "twist the yield curve" by selling $400 billion of Treasury securities in its portfolio with a maturity of less than three years and use the funds to purchase securities with maturities ranging from six to 30 years. The expansion will add $267 billion through the end of 2012.

Unchanged was the Fed's policy on short-term interest rates at zero to 0.25%. Also unaltered was its policy of reinvesting its portfolio of maturing housing debt into agency mortgage backed securities, as well as the expectation that economic conditions will warrant keeping short-term interest rates "exceptionally low" through 2014.

At the close of the quarter, the yield on the 10-year Treasury Note was 1.64%, sinking 57 and 24 basis points for quarter and first half of 2012, respectively (the yield as of July 17th was 1.51%).

Below are rates of return for selected market indices for the second quarter of 2012, year-to-date 2012, and the three, five, and 10-year compound annual returns as of December 31, 2011.

The web sites pay up to 92% for unwanted or unused gift cards and then re-sell them at discounts ranging from 2% to 35%. There is no sales tax and shipping is free; electronic gift cards are also available. Some items to consider when purchasing discounted gift cards:

• Only purchase cards from stores where you actually shop and that sell items you really need. Otherwise, you will end up with cards collecting dust and be in the same position as the person who sold them to the web site.
• Only purchase cards from web sites that sell cards with no fees and no expiration date.
• Check out the guarantee program to determine the policy for returns and card value (read the fine print!). Cardpool guarantees the card will be valid at the merchant and to the dollar amount specified for up to 100 days from the date of purchase, up to a maximum of $1,000 per customer. Plastic Jungle offers a guarantee for 60 days from the date of purchase and up to a maximum of $1,000 per customer. ABC Gift Cards has a 45-day return policy for invalid cards or balance discrepancies.
• Upon receipt of a card, call the 800 number on the card and/or take it to the retailer to confirm its value.

Finally, to get a bonus on top of your discount, use a credit card with a cash back or rewards program to purchase the gift cards! Happy shopping!

If you can qualify for a mortgage, it is an incredible opportunity to lock in low, long-term borrowing costs with a home purchase or refinance. Even if you have refinanced within the past couple of years, if your mortgage has an interest rate above 4%, it may make sense to consider going through the money-saving process again.

Please feel free to forward this link to friends and colleagues who can benefit from information about investing and financial planning. If I can be of any assistance to you or anyone you know, please do not hesitate to contact me.

Sincerely,

David

P.S. - What topics interest you? Please email us at mail@kaloramawealth.com.

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David M. Taube, CFA, CFP®

CEO and Chief Investment Officer

Kalorama Wealth Strategies, LLC

202-550-7262

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