In This Issue

Do Active Managers Shine in Down Markets?
Too Good to Be True?
Self Employed 401(k)s - Enhanced Retirement Planning Opportunities
Estate Planning and Celebrity Tax Consequences
GFC April 2008 "Kids and Money" Seminar Recap
Year-To-Date Investment Returns (April 30, 2008)

Do Active Managers Shine in Down Markets?

The U.S. stock market lost 9% in the first quarter of 2008, following a gain of 5% in 2007. However, domestic equities did regain some footing in April, finishing up 4% for the month. Although the first quarter loss was steep, there have been regular declines as long as financial markets have existed. And although market volatility is unavoidable, it is possible to reduce portfolio volatility by improving your asset allocation, which is especially important during difficult markets.

So, did active managers shine in Q1? Find out.

Too Good to Be True?

We have all heard the phrase, "if it seems too good to be true, it probably is". Well, let's see if the old mantra held true for investors who owned shares of the company that we highlight below.

Following its initial public offering in late 1985, this NYSE-listed firm achieved steady growth in earnings and dividends, and the shares delivered a hefty annualized return of 25% from January 1986 to December 1999, crushing the S&P 500 Index by nearly 7% per year.

Even during the subsequent bear market of the early 2000s, the company continued to soar: its total return for the three-year period ending December 2002 was a whopping 44% as compared to -38% for the S&P 500 Index.

And when the market recovered, it performed even better, beating the S&P 500 by a healthy margin in each year from 2003 to 2006. Over the 20-year period ending December 2006, the firm's shares outpaced those of Warren Buffet's Berkshire Hathaway by 4.5% a year.

Guess what company this is.

Self Employed 401(k)s - Enhanced Retirement Planning Opportunities for Self-Employed Individuals

Self-Employed 401(k) plans provide attractive retirement planning options for self-employed persons. The plan combines the benefits of a 401(k) and SEP-IRA into one. Here's how it works:

• As an employee of the business, you can contribute up to $15,500 (or $20,500 if you are 50 or older) in 2008 (similar to a traditional 401(k) plan, these are elective deferrals)
• Additionally, as the "employer" of the business, you can also make a "profit sharing contribution" of up to 25% of your net business income (similar to a SEP-IRA)

The maximum that can be contributed (including the elective deferrals and profit sharing contribution) is $46,000 in 2008. Therefore, if your net business income exceeds $230,000, there is no difference between contributing to a self employed 401(k) and SEP-IRA.

More information can be found on our website.

Estate Planning and Celebrity Tax Consequences

Everyone needs estate planning. While each person's place in life, family status, and net worth may be different, one characteristic all persons share is mortality. Planning can help you minimize taxes, ensure that your property is distributed as you intended, and arrange for the care of your loved ones. Furthermore, estate planning is the only means available to ensure that your wishes are carried out, not if you die, but when you die.

See how much celebrities paid in estate taxes.

GFC April 2008 "Kids and Money" Seminar Recap

Last week, we hosted a seminar entitled "Teaching Kids About Money" at our office in Berkeley. For those who were unable to attend (or for those who need a quick refresher) we have summarized some key points from the presentation.

Year-To-Date Investment Returns (April 30, 2008)

Fun Facts

82.9%, -5.0%

82.9% - Total return of the S&P 500 Index from 2003 to 2007

-5.0% - Total return of the S&P 500 Index YTD through April 30, 2008

165.7%, -4.0%

165.7% - Total return of the MSCI EAFE Index from 2003 to 2007

-4.0% - Total return of the MSCI EAFE Index YTD through April 30, 2008

20

Number of golf rounds former Merrill Lynch CEO Stanley O'Neal played during August and September of the quarter his company racked up the largest quarterly loss in its 93-year history (Fortune)

$5,500

Average annual out-of pocket dollar cost to care for an aging parent or spouse (National Alliance for Caregiving)

1 in 3

Ratio of retirees who say they are spending more on medical expenses than they anticipated (Medco Health Solutions)

30%, 87%

30% - percentage of all people 35 to 65 who will suffer a disability for at least 90 days (Health and Insurance Association of America, The New York Times, February 2000)

87% - percentage of American adults who do not believe it is "somewhat likely" or "very likely" that they will become disabled (National Association of Insurance Commissioners)

60%

Income replacement ratio at retirement that U.S. workers are on pace to reach (Fidelity Research Institute)

6, 7

6 - The number of years the S&P 500 has experienced a negative return over the past 30 years (through 2007).

7 - The number of years that international stocks (as measured by the MSCI EAFE Index) have experienced a negative return over the past 30 years (through 2007).

4.1%, 3.0%, 5.1%

4.1% - the increase in the CPI in 2007, the highest jump in 17 years

3.0% - annualized yield on 3 month T-Bills as of April 30, 2008

5.1% - annualized yield on 3 month T-bills as of April 30, 2007

59%, 1%

59% - percentage of employees who rank retirement funding and post-retirement health care as their #1 issue (Deloitte Consulting)

1% - percentage of employers who rank retirement funding and post-retirement health care as their #1 priority (Deloitte Consulting)