The Markets

The tug of war in the stock market ended in just about a draw last week as the Standard & Poor’s 500 index rose a fraction.

Since the beginning of the year, the S&P 500 index has traded in a range roughly between 1,215 and 1,450, according to data from Yahoo! Finance. However, when you consider the weakness this year in the financial and homebuilding sectors, the rise in oil prices and the inflation spurt, we might view it as a positive accomplishment that the market is only down about 12 percent year-to-date as measured by the S&P 500 index. When you dig deep into the market, there’s been significant turbulence in certain sectors (e.g. financials, homebuilders), but some of that weakness has been offset by strength in the transportation and commodities sectors, according to Morningstar.

Of late, a stronger dollar and declining oil prices have helped breathe life into the markets. As of last Friday, the dollar had appreciated for 11 straight days against the euro, according to Barrons. While you never know for sure what causes a run like that, some of the “experts” suggest it’s due to weakening international economies. So, while the U.S. economy may be weak, other countries are starting to slow and that may make the U.S. look a little better on a relative basis.

August is frequently a peak time for Wall Street titans to retreat to the Hamptons and other upscale locales to soak up some sun and relax. As a result, stock market volume has been relatively light this month so it’s hard to draw any conclusions from the recent market action. As we head into the fall and get another round of quarterly earnings, that may change. Stay tuned…   

Sources: Yahoo! Finance, Barrons. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, 5-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

WHY DOES THE PRICE OF A STOCK FLUCTUATE? Theoretically, you could argue that stock prices are simply a function of supply and demand but that’s so broad that it’s not very useful in trying to determine the future direction of stocks. Over time, two main schools of stock analysis have developed-fundamental analysis and technical analysis. Fundamental analysts use financial data such as revenue and earnings to try and determine a company’s underlying value and potential for future growth. Technical analysts use charts based on market activity such as past prices and volume to try and identify the future direction of the stock. Devotees on each side vigorously defend their chosen method. 

There’s also a third, but less understood method of stock analysis called cycle analysis. This school looks at things such as harmonics (don’t ask), Elliott Waves, Kondratieff Waves, Gann patterns, presidential cycles, 40-week cycles, 20-week cycles and yes, even astrological cycles.  Cycle adherents are very quantitative and believe the markets are driven by mathematical patterns that are not readily observable. Of course, “cyclists” stand ready to discern these patterns for you for a fee.

So which school of analysis is the best? In reality, they all may have a place. The reason is, there are some market participants who believe in and invest based on these schools. If enough of them act at the same time, that ends up driving demand for a stock and could cause it to go up or down.  Unfortunately, there’s no way to measure or predict the impact of any one school on the price of a stock or the market as a whole.

Over long periods of time, stock prices tend to reflect the underlying earnings of the company. If you can get the earnings right and figure it out before the “crowd” does, then you may have a winning strategy. Of course, that’s no easy task.

Weekly Focus - Mind Reading?

The U.S. Army awarded scientists a $4 million grant to study brain signals in an attempt to, “decipher what a person is thinking and to whom the person wants to direct the message,” according to an August 15 Associated Press story. Using brain wave-reading technology known as electroencephalography, or EEG, scientists had volunteers wear an electrode cap and then they asked the volunteers to think of a word chosen by the scientists. The scientists then analyzed the brain activity. In what may be a scary thought (pun intended), the scientists, “hope to develop thought-recognition software that would allow a computer to speak or type out a person’s thought,” according to the article. And now you know were our tax dollars go.

Best regards,

Greg Womack, CFP

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

• Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

 Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

C010708

The Markets

If you simply look at the trend of our gross domestic product (GDP) over the past three quarters, you might get the impression that the economy is poised for takeoff. But, just like you shouldn’t judge the quality of a bottle of wine based on the beauty of its label, you shouldn’t trust statistics without looking into the details.

Here’s what the GDP trend looks like, according to newly revised data from the Department of Commerce:

Period              GDP Change

Q4 2007              -0.2%

Q1 2008               0.9%

Q2 2008               1.9%

Based on the chart, it looks like the economy was weak in Q4, but has been steadily improving since then. On the surface that’s accurate, but let’s look under the hood a bit.

The second quarter included $91 billion of one-time economic stimulus payments that helped boost the consumer spending component of GDP to an annualized growth rate of 1.9%, up from 0.9% in the first quarter, according to The Wall Street Journal. Also, the Journal noted, “Strong export growth is the biggest factor keeping the economy out of recession.” To buttress that point, exports grew 9.2% in the second quarter. But, how long will our strong export growth last? An August 1^st Journal article said, “Many parts of the world are slowing down themselves as rising prices take a toll on consumers and businesses.” If export growth slows, that may have a negative effect on future GDP growth.

Yes, we’re pleased to see that the economy grew 1.9% in the second quarter. However, upon further analysis, the number may be a little misleading. Wall Street seemed to agree because on the day the number came out, the Dow Jones Industrial Average dropped 205 points.

Investing is a bit like putting a puzzle together. It takes many pieces to create the whole. In this case, the “under the hood” GDP number is just one of many pieces that help define the state of the economy. We continue to review lots of “pieces” in an effort to do the best job possible for you.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, Five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

BEAR MARKETS ARE QUITE TRICKY because it’s common to see big “up” days in the middle of a major decline. These up days may convince a naïve investor that all is well and they may dive in, only to discover it was a head fake. The financial sector is a good example. Year to date through July 31, the Financial sector was down more than 25%, according to Bespoke Investment Group. However, if you look at the 10 biggest up days in the Financial sector since 1990, seven of them occurred in 2008. That’s right. Despite the sector dropping more than 25% this year, it still experienced seven dramatic up days.

The Technology sector experienced the same thing. During the 2000 - 2002 bear market, the Technology sector lost 82% of its value, according to Bespoke. Yet, during that horrible period, the sector experienced nine of its 10 biggest up days since 1990.

Just like the GDP trend discussed above, a big up day in the market makes a good headline, but it may not be the “all clear” signal. Nobody rings a bell at the top of a market and nobody rings one at the bottom. Among other things, it takes hard work, patience, and “emotion management” to succeed as an investor.     

YES, OIL COMPANIES DO MAKE A LOT OF MONEY, BUT as investors, we have to keep these profits in proper perspective. Exxon Mobil announced last week that it posted net earnings of $11.7 billion in the second quarter, according to MarketWatch. That was an all-time U.S. record for quarterly earnings. Ironically, it didn’t impress investors because the stock dropped nearly 5% on the day the earnings were announced, according to Associated Press. Investment analysts expected the company to earn even more.

So, what perspective should we be looking at here? Profit margins are a good place to start. If you take Exxon’s $11.7 billion in net profit and divide it by its quarterly revenue of $138.1 billion, you get a net profit margin of 8.5%. That’s solid but unspectacular. By contrast, let’s look at The Walt Disney Company. Disney announced last week that third quarter net profit was $1.3 billion on $9.2 billion in revenue. Doing the math, that comes out to a net profit margin of 14.1%. As you can see, Disney’s profit margin is more than 60% higher than Exxon’s, yet how many people in government are talking about a windfall profits tax on Disney?

We’re not making this point to defend oil companies. The point we’re trying to make is that once again, you have to look under the hood to determine what’s really going on. Exxon is a profitable company, but the margins they earn do not appear outrageous - even after considering the fact that oil prices have risen dramatically recently. 

Weekly Focus - Sleep On It

If you want to get smarter, don’t skimp on your sleep. According to a recent Scientific American article, “‘Sleeping on it’ seems to provide the clarity we need to piece together life’s puzzles.” Apparently, while we’re sleeping, our brain is busy processing that day’s information so, that when we wakeup, we may have an answer to a problem or we may have new insight on something that’s been puzzling us. So, there you have it - permission to sleep in!

Best regards,

Greg Womack, CFP

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

The Markets

It was a market of extremes last week.

First, the extreme bad news. On Tuesday, the Dow Jones Industrial Average closed below 11,000 for the first time in two years, according to Bloomberg. That same day, Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, lost more than a quarter of their market value, according to Bloomberg. Also, the S&P 500 Financials Index dropped 3%, closing at a level not seen since 1998 and capping its steepest-ever five-day retreat. And, to add insult to injury, Bloomberg reported that the global stock market decline has erased more than $13 trillion in market value since last October.

Now, the good news-investors’ memories can be short! Starting on Wednesday of last week, the Dow rose a total of 4.9% over three days, which was its biggest three-day gain since March 2003, according to Barron’s. Better than expected earnings from Wells Fargo, JP Morgan, and Citigroup helped fuel the rally, according to MarketWatch. And, speaking of fuel, oil prices declined more than $16 per barrel last week and that helped give support to the markets, according to MarketWatch.

The midweek rally was also boosted by news from the Securities and Exchange Commission on Tuesday that it was placing new temporary restrictions on short-selling the stock of 19 financial companies. This new rule is designed to relieve some of the downward pressure on companies such as Fannie Mae, Freddie Mac, Bank of America, Merrill Lynch, Citigroup, and Lehman Brothers, according to MarketWatch. This is not a recommendation to buy or sell any of these stocks, but it is worth noting that all 19 of the stocks on this list rose in value from Tuesday through the close of trading last Friday, according to the Wall Street Journal.       

When the dust settled last week, the Dow was up a much welcome 3.6%. With all the extreme action last week, it will be interesting to look back six months to a year from now and see if last week was a turning point or just another crazy week in this unpredictable market.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, Five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

SO WHAT ARE YOUR THOUGHTS on the concept of retirement? A recent study by Charles Schwab and AgeWave titled, “Rethinking Retirement: Four American Generations Share Their Views on Life’s Third Act,” reached the following conclusions:

• Fifty-two percent of respondents see retirement as an opportunity for a new, exciting chapter in life.
• Seventy-one percent of pre-retirees said they want to work in retirement and the most popular reason for working in retirement was to stay mentally active.
• Three in five said they would like to move to a completely different line of work when they retire.
• Slightly more than half of the respondents said they want to focus on their own needs and interests in retirement while 45% said they want to focus on giving back to family and community.
• Forty percent said they anticipate providing financial support to their parents at some point in the future and 25% think they’ll have to support a sibling.

It appears that the very concept of retirement is changing. With people’s lifespan increasing, the idea of working for 40 years then retiring to golf and a rocking chair is pretty much gone. Today, many retirees are relatively young and in good health. Rather than relaxing, they want to pursue dormant passions and engage in more meaningful work-even if it means receiving little pay.

Whether you’re approaching retirement or in retirement, we’re happy to talk to you about how to make your golden years truly “golden.”

Weekly Focus - The Pursuit of Happiness

The Declaration of Independence says the pursuit of happiness is an inalienable right. Well, the writers of that document are on to something. Science is now telling us that instead of our happiness being stuck at some inborn level, we can actually take actions that will positively affect our happiness level and keep it at a high level for a long time. In her new book, The How of Happiness: A Scientific Approach to Getting the Life You Want, professor Sonja Lyubomirsky says about 50% of our happiness is genetically set and 10% is based on our life circumstances. That means a significant 40% is up for grabs. All we have to do is adopt the behaviors of happy people. And, without further suspense, here are some of those behaviors:

• Practice gratitude
• Be optimistic
• Nurture relationships
• Commit to goals
• Develop coping strategies
• Learn to forgive
• Be physically active

Happiness may take work, but the results will outweigh the effort.

Best regards,

Greg Womack, CFP

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

The Markets

With the second quarter in the history books, we’ll take a brief look back at what affected the markets over the first half of this year.

COMMODITY PRICES CONTINUED TO MAKE HEADLINES

The unrelenting rise in oil prices continued in the second quarter as a barrel of crude rose 37.8% in the second quarter and nearly 46% so far this year, according to MarketWatch. Gas prices rose in tandem as the average U.S. retail price for a gallon of regular gasoline climbed to a record $4.086 on June 30, according to MarketWatch. The AAA Daily Fuel Gauge Report says that’s a 40% increase from a year ago. Ouch! Precious metals were on a tear, too. Gold prices rose about 1% for the quarter and are up about 11% this year. Silver prices are up more than 17% this year while platinum is up more than 35%. Even copper prices are up more than 27% this year, according to MarketWatch. These steep increases have kept pressure on stock prices.

INFLATION REMAINED TOP OF MIND WITH INVESTORS

The consumer price index rose 4.2% for the 12 months ending May 2008, according to the Labor Department. That’s uncomfortably above the Federal Reserve’s presumed comfort zone of 1-2%, according to Pacific Investment Management Company (PIMCO). Of course, rising commodity prices are a big factor in the inflation number. The Federal Reserve is in a tight spot because under normal circumstances, they might raise interest rates to help squash inflation. Unfortunately, we’re in the midst of an economic slowdown with tight credit conditions, so raising interest rates would run the risk of throwing the economy into even greater turmoil. The Fed seems to be trying to walk a fine line between keeping rates low to help the economy, but not too low that it fosters out of control inflation and a plunging dollar. The way the markets have reacted so far this year, it appears that the Fed has some fine-tuning to do.

THE CREDIT MARKETS ARE STILL HAVING PROBLEMS

By now, everyone’s familiar with the subprime problems and the havoc they’ve caused. The new concern is that the subprime problems may migrate into problems with home equity lines of credit and other forms of credit, according to Barron’s. With the value of homes dropping, homeowners have less equity and lenders are starting to get stingy with credit. This could ripple through the economy and create additional strain. Surprisingly, even though the Federal Reserve has cut the Fed Funds rate from 4.25% at the end of 2007 to 2.0% by the end of April 2008, the average rate on a 30-year mortgage has hardly budged. During that time, it went from about 6.2% to about 6.0%, according to Freddie Mac. However, by early July 2008, the average rate on a 30-year mortgage had risen to more than 6.3%. Stubborn mortgage rates coupled with tight credit conditions are not helping the housing recovery.

HOUSING WOES CONTINUE

The 20-City Composite index published by S&P/Case-Shiller showed a 15.3% year-over-year decline in housing prices as of April 2008. All 20 cities in the index showed a decline, ten of which are in double-digits. Las Vegas, NV, Miami, FL, and Phoenix, AZ, took the top three spots with declines of 25% or greater, while Charlotte, NC, showed the most resilience with just a miniscule decline of 0.1%. One key to the economy is to get housing prices to stabilize. As it stands now, many would-be homebuyers are sitting on their thumbs rather than buying a home that may depreciate further. If prices level off, it might encourage them to jump into the market - which would be a good thing!

THE JOB MARKET IS WEAKENING

The U.S. economy has shed jobs each month this year for a total loss of 438,000 jobs. The unemployment rate stayed stuck at a four-year high of 5.5% at the end of June, according to the Labor Department. As quoted in MarketWatch, Joel Naroff, president of Naroff Economic Advisers, said the June employment report doesn’t “point to an economy that is crashing and burning,” but “it is consistent with an economy that is in a deep funk.” Not all industries are suffering. The upside to high commodity prices is that it’s keeping many energy-related companies in a hiring mood. Also, the weak dollar is helping the manufacturing sector - or at least keeping it from getting worse than it would be otherwise.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, Five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

WINNERS AND LOSERS

By broadening our horizon, we find that there are winners and losers throughout the world’s stock markets. Here is a partial list of second-quarter performance ranked by U.S. dollar returns.

    Winners

Source: Dow Jones Indexes

     Losers

  Source: Dow Jones Indexes

The Dow Jones World index, which excludes U.S. stocks, fell 2.5% in dollar terms in the second quarter, according to the Wall Street Journal. For the one-year ending June 30, 2008, the Dow Jones World Index is down 10.3%. The one-year decline is somewhat better than the nearly 15% decline over that same period in the S&P 500. While we do believe it is appropriate to diversify your investments, there are times when stock markets around the world will act somewhat in unison - to the downside. This seems to be one of those times.

Weekly Focus - Be Positive

Yes, there’s been a dearth of good financial news over the past few months, but we strongly believe that things will eventually turn around. Once the economy works through the excesses of the housing bubble and commodity prices begin to stabilize, we may see a powerful new rally. We will also use this market decline as an opportunity to buy bargains in leading companies, and eventually “re-balance” (sell high & buy low) the portfolios back to the original allocations. This has been a proven strategy to help reduce risk and improve returns over a period of time. As always, we continue to work hard on your behalf to try to meet your goals and objectives. We very much appreciate the opportunity to work with you.  

Best regards,

Greg Womack, CFP

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

The Markets

The stock market and life seem to have at least one thing in common. Both go through transitions over time.

As we age, we move from one stage of life to another such as from infancy, to childhood, to adolescence, to young adulthood, to middle age, and then to senior adulthood. How well we manage these life transitions goes a long way toward our success and fulfillment in life. The stock market is no different as it is in the midst of a wrenching transition. How we deal with this transition-both proactively and reactively-will help determine your ultimate financial results.

It’s always dangerous to say “this time is different,” but, the reality is, each time the market experiences difficulty, there’s a unique set of circumstances that leads to the difficulties. In our present situation, unusually low interest rates and easy credit terms in the early to mid-2000s led to an unsustainable speculative housing boom that is now painfully unwinding. The low interest rates also drove down the value of the dollar and that helped cause commodity prices to soar and inflation to rise. The net result is consumers are hurting, corporate earnings growth is slowing, and the stock market is correcting.

To deal with this transition, here’s the process we’re following:

• First, we’re analyzing the root causes of the problem.
• Second, based on our understanding of the causes, we’re developing a working thesis for who we believe will be the winners and losers in this environment.
• Third, we’re adjusting our clients’ portfolios to try to take advantage of asset classes that may benefit from the current environment and to avoid the asset classes that may be hurt.
• Fourth, we remain ever vigilant in incorporating new data into our working thesis and making adjustments that we deem appropriate.

Despite our best efforts, there will likely be bumps along the way. As of last week, the decline in the Dow Jones Industrial Average brought it within a whisker of the traditional definition of a bear market, according to Barron’s. In markets like this, there are few places to hide.

Over time, we expect the economy and the financial markets to find some stability. Once that happens, the stock market may turn up again and we’ll do our best to take full advantage of it.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, Five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

SINCE WE’RE NEARING BEAR MARKET TERRITORY, it makes sense to review what a bear market is and to discuss what has been done from an historical perspective. While there’s no standard definition of a bear market, The Vanguard Group says one common definition is a decline of 20% or more over at least a two-month period. Using that definition, Vanguard says we’ve had 10 bear markets in the U.S. over the past 50 years.

Here are some statistics on what the last 10 looked like (all data is based on the S&P 500 Index):

• Shortest duration - 2.9 months from July 1990 to October 1990
• Longest duration - 30.5 months from March 2000 to October 2002
• Average duration - 14.1 months
• Smallest decline - 19.9% from July 1990 to October 1990 (while this is less than 20%, Vanguard included it in the list)
• Largest decline - 49.1% from March 2000 to October 2002
• Average decline - 30.4%

If the current correction should turn into an “official” bear market, the above figures may help us keep perspective on the decline. Since the S&P 500 hit its all-time record high back in October 2007, we would already be eight months into the new bear market should the S&P 500 cross that 20% threshold in the next few days. Of course, we have to let you know that past performance is no guarantee of future results. Markets will do what they want and they don’t necessarily have to follow a script from the past.

With that said, it’s important to understand the past. From the above data, here are several key points we’d like you to keep in mind:

• First, bear markets are normal. Over the past 50 years, we’ve had 10 of them - that’s an average of one every five years.
• Second, the last bear market ended in October 2002, which is more than five years ago. If we enter a new bear market now, that would be in line with the historical average.
• Third, every bear market in the past eventually gave way to new record highs in the S&P 500, according to data from Vanguard and Yahoo! Finance. We have no reason to think this time will be different.
• Fourth, bear markets can be ugly. As equity investors, we may have to endure the pain of the occasional bear market in order to reap the potential long-term attractive returns offered by equity investing.

As always, we’re available if you have any questions.

Weekly Focus - Think About It

“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.”

– Jimmy Dean

Best regards,

Greg Womack, CFP

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

The Markets

The three Cs-credit, crude, and consumers-are still impacting the direction of the financial markets.

Just when you think the credit markets have reached bottom, another multi-billion dollar write-down seems to pop up. Last week, Citigroup warned that it may take additional markdowns on its subprime portfolio when it announces second quarter earnings in July, according to TheStreet.com. In the first quarter, Citigroup took about $12 billion in pretax write-downs and investors had hoped that would be the end of it. In addition to Citigroup’s problems, two bond insurers lost their Moody’s “AAA” rating and regional bank Fifth Third Bancorp said it needs to raise $2 billion in capital to help stabilize its financial position, according to Associated Press. Until the financial sector stabilizes, it may be difficult for the stock market to find its footing.

Crude oil prices continued to grab headlines last week as the price of a barrel of crude closed near $135 per barrel, according to MarketWatch. News of supply disruptions in Nigeria and tough talk between Israel and Iran helped keep prices high. Gas prices are also uncomfortably high as they averaged $4.13 per gallon as of June 16. A year ago, the average nationwide gas price was $3.06 per gallon. No doubt many Americans are reevaluating their travel plans for the summer.    

Consumers are a wildcard and in this tough environment, the question is, how much will they pullback their spending? If they cutback significantly, that may ripple through the economy and send us into a significant recession. So far, that does not appear to be happening. Consumers may not be as flush as they were a year or two ago, but their spending hasn’t fallen off a cliff.

We will continue to monitor the three Cs and make opportunistic portfolio adjustments as appropriate. In the meantime, as the old saying goes, “Patience is a virtue.” We believe that is true when it comes to investing and we believe that our patience will be rewarded.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, Five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

WE ALL KNOW THAT OIL PRICES HAVE RISEN DRAMATICALLY over the past few years, but a recent June 12 research piece from Bespoke Investment Group put it in perspective. The article pointed out that the price of a barrel of oil has risen by 730% from November 19, 2001, to its recent record close on June 6 of about $139 per barrel. By comparison, that looks eerily similar to the NASDAQ Composite Index’s rise of 640% between June 24, 1994, and its record high of 5048 on March 10, 2000.

So what happened to the NASDAQ in the years following its 640% rise? It plunged by 78% in less than three years, according to Bespoke.

In fact, the NASDAQ still has not surpassed its 2000 high. The big question is, will oil prices follow a similar pattern and drop precipitously? There are heated opinions on both sides of that question.

Some people believe that we’ve entered a “new era” in which strong demand from countries such as China and India will outstrip the supply of oil and thus, create a long-term energy problem that will result in high oil prices. Others believe oil prices are in bubble territory and that they’ll eventually “pop” when demand slows and alternative energy sources are developed.

One thing we can say with some confidence is that asset prices sometimes reflect human emotions. There seems to be a little bit of fear and greed in all of us and occasionally, it manifests itself in asset prices that go from one extreme to another. We’ve seen it in the NASDAQ. We’ve seen it in the housing market. And, now we’re seeing it in the oil market.

Just how high energy prices will rise and how far they’ll fall is anybody’s guess. Fortunately, we’re not in the business of guessing. Instead, we’re in the business of helping grow and protect our clients’ assets. To that end, we’re doing everything we can to help you benefit regardless of what happens to the cost of energy.     

Weekly Focus - Do You Agree With This List?

What are the technologies that have changed our life the most? Here’s LiveScience.com’s list of the top 10 disruptive technologies:

10. Magnetic strip card

9.   Gun powder

8.   Iron smelting

7.   Rubber

6.   X-rays

5.   Microprocessor

4.   Electricity

3.   Nuclear fission

2.   Flight

1.   Internet  

Would your list be any different?

Best regards,

Greg Womack, CFP

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

* To unsubscribe from the Womack Weekly Commentary please reply to this e-mail with “unsubscribe” in the subject line.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

The Markets

There was lots of gurgling beneath the surface, but by the end of last week, the Dow Jones Industrial Average eked out a welcome gain.

Helping the cause was a report from the Commerce Department, which showed a 1% increase in retail spending in May. It was the fastest increase in six months and due, in part, to consumers trading their stimulus checks for tangible goods. Ironically, in a June 13 article, Reuters reported that the Reuters/University of Michigan survey of consumer confidence dropped to 56.7 in early June, which was a 28-year low. Apparently, consumers tried to shake off their gloom by engaging in one of their favorite activities-shopping.   

Inflation concerns plagued the bond market last week as the yield on the 2-year Treasury note climbed 60 basis points. That was the largest weekly gain in nearly seven years, according to MarketWatch. Also, according to MarketWatch, yields rose as investors became more convinced that the Federal Reserve may raise interest rates later this year to help combat rising inflation. On the positive side, higher interest rates may cool inflation and help strengthen the dollar, but it could put a damper on a housing recovery. Like just about everything the Federal Reserve does, there’s a tradeoff.

A barrel of oil closed last week at about $135, down from a record high of about $139 per barrel on June 6, according to Bloomberg. Airlines, of course, have been hard hit by this rise in energy prices and now some people are calling for the industry to be re-regulated. Bob Crandall, the former CEO of American Airlines, said in a June 10 speech, “Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality, and international reputation.” He said, “a dollop of regulation, along with new government policies and appropriate investment, would help the carriers get back on the right track.”

The airline industry was deregulated back in 1978 and according Portfolio.com on June 12, the industry has a net loss of more than $13 billion since that time. The stock prices of some of the major airlines also reflect the dire state of the industry. United, Northwest, Delta, and American all closed at less than $7 per share as of the end of last week, according to Yahoo! Finance. 

The high cost of energy is creating winners and losers in the stock market. Airlines have been one of the losers. We continue to work hard on your behalf to try to find the winners.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, Five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

IF ATTENDEES of the Federal Reserve Bank of Boston’s 52nd Annual Economic Conference held last week in Chatham, Massachusetts, were looking for an inflation sound bite in Federal Reserve Chairman Ben Bernanke’s speech, it’s likely they settled on: “The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations, as an un-anchoring of those expectations would be destabilizing for growth, as well as for inflation.” What the heck does that mean?

The Chairman may be setting the stage for an increase in interest rates. Some Fed observers believe we’ve reached the end of the rate-cutting cycle. Yet, Bernanke finds himself in the quintessential Catch 22. Drop rates lower and he delivers another blow to the plummeting global value of the U.S. dollar and opens the door for inflation here at home. Yet, can the weakened U.S. economy grow if he decides to let rates stay put?

Bernanke’s speech may signal that inflation worries have begun to offset concerns on how to fuel economic growth. For the consumer, however, the Chairman’s take away message was: Inflation has remained high largely due to sharp increases in the prices of globally-traded commodities, and likely will be accelerated by the latest round of increases in energy prices. Yet, according to Bernanke, the Fed is paying close attention to the extent to which consumers believe prices will rise in the future. That is, if consumers, investors, and business owners become overly concerned about inflation, they might change their purchasing decisions in ways that aggravate inflation, turning their worries into a self-fulfilling prophecy.

What does all the attention on inflation mean for the future of interest rates? Economic pros and cons aside, it’s a political factor that may impact the Chairman’s thinking most strongly. Americans head to the polls in November and, historically, Fed chairmen do not like to be seen as influencing the presidential elections. Accordingly, while interest rate increases could be on the horizon, they may not happen until after the new president takes office.

Weekly Focus - Financial Capital of the World

No, it’s not New York. According to the 2008 MasterCard Worldwide Centers of Commerce Index, London takes the top spot followed by New York, Tokyo, Singapore, and Chicago. Los Angeles slipped to #17 from #10 in 2007. Western Europe led the list regionally by claiming 10 of the top 25 cities. The cities were rated on the following seven key dimensions: legal and political framework, economic stability, ease of doing business, financial flow, business center, knowledge creation, and information flow.

Best regards,

Greg Womack, CFP

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

 The Markets

Big Brown laid a big goose egg on Saturday at the Belmont Stakes as did the stock market the day before.

As the heavy favorite to win the Triple Crown, Big Brown proved once again that there are no sure things in racing. The stock market is no different. In recent weeks, as the stock market rallied from its mid-March lows, many pundits suggested the worst was over. While that may still be true, last Friday’s nearly 400-point drop in the Dow Jones Industrial Average reminded investors that things can change in a hurry.

A weak employment report, another record surge in oil prices, and a weaker dollar all combined to send the domestic stock market last Friday to its worst daily loss in more than a year, according to Barron’s. The Labor Department said May payrolls fell by 49,000-a smaller decline than expected, according to a Bloomberg News survey-while the unemployment rate rose by 0.5% to 5.5%. The rise in the unemployment rate is worrisome, however, as reported by MarketWatch.com, and the Labor Department said the big jump may partially reflect “statistical distortion” caused by the difficulty of “seasonally adjusting” the numbers to reflect the big influx of students entering the job market this time of year. In other words, reality may not be as bad as the report suggests.

While the stock market was down last week, the bond market was up. The yield on the 10-year Treasury declined from 4.05% on Friday, May 30, to 3.94% on Friday, June 6. Bond prices move inversely to a bond’s yield so that means the value of bonds went up last week, according to data from Yahoo! Finance. This is an example of how diversification may help temper volatile movements in the stock market.

Thomas J. Lee, chief U.S. equity strategist at JPMorgan, took an optimistic view on the jump in unemployment. He said, “The Dow Industrials posted a 30% average gain in the 12 months following a jump in the unemployment rate by half a point or more since 1950,” according to Bloomberg. Let’s hope the current jump continues that positive 30% average gain.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, Five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

WHILE OVERALL DOMESTIC STOCK PRICES ARE DOWN OVER THE PAST YEAR, other various asset classes have performed well. With the low returns in the U.S., some investors have pulled money out of domestic stocks and put it to work elsewhere. This “money in motion” has helped prop up other asset classes.

With so many investment choices these days, we’re not limited to just what’s happening in the domestic market. Frequently, even if the U.S. equity market is down, one or more other asset classes somewhere in the world is performing well. Because of globalization and innovation, it’s relatively easy for investors to move money from one asset class to another. Consequently, we can see big moves in the financial markets in short time periods as investors readjust their portfolios to try to take advantage of changing market conditions.

As always, we remain on alert for the best investment opportunities and, as we deem appropriate, we’ll try to take advantage of them on your behalf.

Weekly Focus - Do You Want to Live Longer and Healthier?

If you answered “Yes” then, play more golf. Playing golf may reduce your death rate by 40%.

A new study published in the Scandinavian Journal of Medicine & Science in Sports made that startling conclusion even after controlling for sex, age, and socioeconomic status. In more understandable terms, golf may add five years to your life expectancy, according to the study as reported by Bloomberg. And, if you’re a low handicap golfer, you’re even better protected, according to the study.

So, if your loved one is complaining about you spending too much time on the links, just say, “Honey, I’m doing it for you so I can live longer and spend more time with you.” Yeah, right!

Best regards,

Greg Womack, CFP

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

The Markets

How do you succeed as an investor? According to legendary bond manager Bill Gross of PIMCO, “Investment success depends on an ability to anticipate the herd, ride with it for a substantial period of time, and then begin to reorient portfolios for a changing world.”

Essentially, Gross is saying, “find a trend and throw yourself in front of it.” The trick is to spot the trend early then move out of it before it fades away or, worse yet, crashes. Over the past 10 years, we’ve seen a few trends. For example, we had the tech stock boom of the late 1990s, the real estate boom of the early 2000s, and, now, the commodities boom over the past couple years. The first two trends ended badly, while the jury is still out on how the commodities boom will end.

As a financial advisor, we’re constantly scanning the horizon to try to identify trends and turning points in trends. When we identify a trend, we try to position your portfolio to take advantage of it. When we suspect a trend is starting to end, we try to adjust accordingly. Of course, no financial advisor will ever be 100% accurate, but, the good news is, we don’t have to be. You can still have a very successful financial result even with the occasional bad investment.

The key is to construct a portfolio that is diversified and that offers a chance of at least several components going up in value at any given time. Innovation in the financial sector now allows us to invest in areas that previously were difficult to access. That’s good news because we now have more asset classes from which to choose. With greater choice, we have more opportunities to find an asset class that may be starting an upward trend.

While the innovation is great, it does carry a price. Wall Street financial engineers got fancy and created sophisticated derivative products, such as collateralized debt obligations (CDOs), that are now coming back to haunt them. As a result, they discovered the hard way that if you don’t know what you’re doing, Wall Street can be an expensive place to learn.

It may not feel like it, but the trend in the stock market is up. Since reaching a recent low of 1273 on March 10, the S&P 500 has risen to 1400 as of last Friday, according to data from Yahoo! Finance. That’s a gain of about 10% in less than three months. While impressive, we’re not getting complacent. Like an airplane flying at 35,000 feet, we could hit unexpected turbulence at any time so we’re trying to stay vigilant on your behalf.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, five-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

AS YOU WELL KNOW, GAS PRICES HAVE RISEN DRAMATICALLY LATELY. Where’s the cost increase coming from? In mid-May, crude oil, which accounts for 55% of the price of gasoline, surged to an all-time trading high of $135 a barrel. Accordingly, gasoline prices, which for months lagged the big run-up in oil, accelerated upward, fueled by the summer travel season.

High gas prices are just the tip of the iceberg. The rising price of oil, up 25% in the first quarter of 2008, negatively impacts macroeconomic variables from real GDP growth, inflation, and employment to exports/imports and interest rates. In fact, the Energy Information Administration (EIA) estimates that every $10 per barrel increase in the price of oil will reduce U.S. GDP by approximately $6.9 to $13.8 billion in current dollars.

What’s causing high oil prices? According to, High Oil Prices Have Significant Effects on Consumers and the U.S. Economy, published by Congress’ Joint Economic Committee, rising oil prices are the result of “decisions made by OPEC and other oil-producing countries, stagnant production in Iraq, and ongoing concerns about political and supply stability in a number of oil-producing countries.” What’s more, since oil is denominated in U.S. dollars, the dollar’s 40% decline in the last six years has put additional upward pressure on oil prices. And, because oil prices are affected by oil futures which are traded on the commodities futures exchange, prices also have been driven up by the increased speculative buying by institutional investors from pension funds to university endowments that own the largest share of outstanding commodities futures contracts. Yet, the most significant, long-term factor driving oil prices higher may be the greatly increased demand for oil in developing countries such as China and India.

While experts believe the combination of our nation’s increased energy efficiency and the changing composition of output means that the U.S. economy is less vulnerable to high oil prices than it was during the oil crisis of the 1970s, high prices still can have a negative impact on economic growth because of their effects on producer costs. For example, as the price of oil drives the cost of gasoline higher, transportation costs rise, increasing the prices of goods and services. If those costs can’t be passed along to the consumer, unemployment and subsequent decreases in production may result.

As Raymond L. Orbach, Under Secretary for Science at the U.S. Department of Energy, noted in a recent keynote address, that because global energy consumption is expected to double, perhaps triple, by the end of the century, we should find ways to supply new energy. To adequately meet the energy demands of the future, Orbach says “transformational breakthroughs” are needed to provide a foundation for novel, alternative technologies. He believes major advances could be on the horizon because of the emergence of nanotechnology, which could lead to revolutionizing the way energy is used, stored, and transmitted.

Just as the rise in oil prices in the 1970s led to significant breakthroughs in energy efficiency and alternative fuel production, so, too, will today’s oil spikes foster scientific exploration and innovation. In fact, because the supply and demand curve may drive prices higher throughout the 21^st century, we likely will see significant developments in the field of alternative energy sources, many of them driven by the cyclical nature of the oil industry.

Weekly Focus - “Staycation” Anyone?

With high energy prices and people strapped for time, some folks are now opting for “staycations.” Instead of traveling to a far away destination, they’re opting to stay close to home. It could be as simple as spending a few days at home in the hammock or going to a local resort for a romantic escape.

If you have any exciting “staycation” ideas, let us know!

Best regards,

Greg Womack, CFP

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.

 The Markets

Oil prices up, stock market down. That just about sums up last week’s market action.

After rising 57% in 2007, the price of a barrel of crude oil has risen another 38% so far in 2008-and it’s starting to hurt, according to Barron’s. Oil is a key ingredient in so many different products that many companies are now passing along their cost increase to consumers. For example, Kimberly-Clark Corp. just announced that this summer, prices will rise 6 - 8% on Kleenex facial tissue, Cottonelle and Scott bathroom tissue, Viva paper towels, Huggies diapers and Pull-Ups training pants. That’s on top of a 4 - 7% increase on those same products just three months ago, according to MarketWatch.

Airlines are one of the industries most directly affected by high energy prices since a significant percentage of their costs come from jet fuel. Over the past year, jet fuel has risen 86% and the airlines are scrambling to adjust, according to Reuters. American Airlines announced last week it was cutting its capacity by 11 - 12% and instituting a $15 fee for each checked bag, according to Briefing.com. United Airlines announced it was raising round-trip fares by as much as $60, according to Barron’s.

It may be too little too late for the airlines. Last week alone, the stock price of United Airlines dropped 46%, American Airlines dropped 31%, and Northwest Airlines dropped 29%, according to data from Yahoo! Finance.

It’s expensive to fly. It’s expensive to drive. Maybe video-conferencing will turn out to be “the next best thing to being there.”

With Memorial Day behind us and the summer season ahead of us, we’ll closely monitor whether this will be a long, hot summer on Wall Street, or a turning point to a new bull market.

Sources: Yahoo! Finance, Barron’s. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly. Three-, 5-, and 10-year returns are annualized.  Assumes dividends are not reinvested.

IF YOU’RE LIKE MANY AMERICANS, there’s a good chance you saw the new Indiana Jones movie over the Memorial Day weekend. Did you notice the cost of your ticket and the cost of that popcorn and soft drink? Well, thanks to the rising cost of energy, don’t be surprised to see the price of your movie ticket rise by as much as 30% this year, according to Richard Gil, a University of Santa Cruz economist.

So what’s the relationship between the price of a movie ticket and rising energy prices? In a word-corn.

Those outrageous prices for movie theater popcorn, soft drinks and candy actually subsidize the price of a movie ticket by about 25%, according to a May 19 Advertising Age article. And guess what’s happening to the price of corn? It’s skyrocketing because corn is a key ingredient in ethanol. As much as 35% of this year’s corn crop will go toward ethanol production, thus leaving less for us to munch on at the theater, according to an Agriculture Department report.

Without much room to raise the already high popcorn, soft drink and candy prices, theater owners will likely have to raise ticket prices to maintain their margins. And to make matters worse, Advertising Age reported that in the past 18 months, “the cost of coconut oil used for popping corn has risen 24%…and the price of the paper pulp to produce popcorn tubs has jumped 40% in the past 36 months, making the tub more expensive than the corn inside it.”

If it’s any consolation, the Motion Picture Association of America said that adjusted for inflation, a movie ticket costs less today than it did 31 years ago. So the moral of the story is, enjoy those “cheap” movie ticket prices while they last.

Weekly Focus - Memorial Day

“A hero is someone who has given his or her life to something bigger than oneself.”

–Joseph Campbell

As another Memorial Day gives way to summer, let’s not forget the sacrifices our brave men and women made to secure our freedom. They paid the ultimate price and we are forever grateful.

Best regards,

Greg Womack, CFP

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Investors cannot invest directly in indices.

Provided by: Womack Investment Advisers, Inc. (WIA)

The views are those of Womack Investment Advisers and should not be construed as investment advice.  All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.  All economic and performance information is historical and not indicative of future results.  Consult your financial advisor for more information.

Investments are NOT DEPOSITS; NOT FDIC INSURED;  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY, AND NOT GUARANTEED BY THE BANK.  MAY GO DOWN IN VALUE.

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The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. 

* The Nasdaq Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. 

* Consult your financial professional before making any investment decision. 

Past performance does not guarantee future results.

Womack Investment Advisers

1366 E. 15^th St.

Edmond, OK  73013

405-340-1717

405-340-6091 Fax

http://www.womackadvisers.com/

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Womack Investment Advisers, Inc. and Cambridge Investment Research, Inc. are not affiliated.