D3 Financial Counselors is sponsoring our first Annual Referral Celebration Dinner, an evening filled with dinner, dancing, and fun at the Downers Grove Chamber of Commerce Black and White Ball, on Saturday, September 20, 2008.  D3 is sponsoring this year’s Black and White Ball.  We’re anticipating this event will be modeled after the Academy Awards celebration.


This inaugural dinner dance is part of a new program at D3.  We’re celebrating all of the referrals that we receive into our business.  This event is our way of saying “Thank you” to all of our clients and friends who have referred business to us in 2008.


We consider it an honor and privilege to receive your referrals.  Our business has grown tremendously and much of that is due to recommendations we receive from clients like you.


Admission to the Black and White Ball Courtesy of D3:  FREE for anyone who refers business to us between now and September 15, 2008.  Our thanks to you!


If you know of anyone who has the need for a financial advisor or would like to get a second opinion on their current financial strategy – please refer them to D3.  We will ensure that they will receive the same high quality, fee only, financial counseling that you receive.  We have attached a form to fill out if you know someone that could use our services. As a reminder, we do work with people on an hourly basis, to help clients manage the cost of working with us.


Thank you for the referrals and we look forward to seeing you at the Ball in September.


D3 Business Update for Clients:

We have reconciled your accounts with the Fidelity statements, and have started to generate semi-annual performance reports.  Nancy, Becky and Jen will be calling our Advanced and Comprehensive clients, to schedule a time to review performance and financial plan updates.   As a reminder, if your investment returns, over the long term, exceed the required rate of return as defined in your financial plan; then, theoretically, you can take less risk with your investments.  For our comprehensive clients, your performance objective is to meet or exceed your financial plan’s required rate of return after our fees.


Our Current Thoughts on the Markets:

We were incorrect in thinking the stock market reached a low point this past March, but at least we weren’t alone in that belief.  We were correct in stating that, if oil prices remained high, the fear of a real recession would grow.  The onset of inflation resulting from rising food and oil prices, coupled with new concerns on the soundness of the entire financial system, has pushed the equity markets to new lows in July. We believe the fear regarding the financial sector is exaggerated.   So far, the banks are reporting earnings that are better than Wall Street analysts had been expecting. We acknowledge that some banks may still fail, but we don’t believe that bank failures will become a systemic problem.  For some stocks in the financial service sector, we believe the fears are being exacerbated by traders and hedge funds spreading false rumors to push prices down, thus driving up the value of their short positions.  We’re pleased that the Securities and Exchange Commission is addressing this fear mongering, by restricting the ability of short sellers to easily sell shares they don’t own.


Last month we began to wonder if the housing market had reached its low point.  We concluded that the inventory of unsold homes had to stabilize.  One indicator, which doesn’t get much publicity, hinted that inventories may have stabilized.  Also, a firm that publishes an index of housing prices reported that prices had stabilized in 8 large metro areas, away from Florida, Arizona, California, and Nevada.  While it’s still too early to declare a bottom for the housing market, at least some of the data is encouraging.  A continuing concern for us is the employment situation.  Many economists expected that May’s jump in the unemployment rate from 5.1% to 5.5% would be partially reversed in June, and were surprised when the rate remained at 5.5%.  A steadily rising unemployment rate will cause us to reduce our optimism on economic growth for the remainder of the year, and into early 2009.


We are starting to see the signs of a bottom in the stock market.  Market sentiment is at an all-time low, which is, historically, a good contrarian indicator.  Oil prices have started to decline as U.S. consumers reduce their demand for gasoline, and corporate earnings, so far, are strong enough to reduce the fear of a deep recession.


We still think that, outside of the financial services sector, international and domestic equities currently look like the best value of all the asset classes.   Interest rates and, therefore, bond prices, are now nearly as volatile as stock prices.   The bond market is wrestling with its own “tug-of-war,” between inflation fears, which causes rates to rise, and weakness in the economy, which drives rates lower.   Once the market believes the economy has stabilized, we think interest rates will march higher.  With an overweight to money market funds, we are positioned defensively.   As we gain a conviction that the equity markets have bottomed, we will dollar cost average into the market, and rebalance your portfolios based upon your long term asset allocation.


We have included your third quarter invoice with this newsletter. If you have authorized us to deduct fees from your account, that’s stated on the bottom of your invoice.  Otherwise, please authorize us to do so or just send us a check.  THANK YOU for your business.


Donald D. Duncan MBA CPA/PFS CFA™ CFP®        Nancy Lencioni & Becky Connery

Peter Marchese MBA CFA™                                       Adam Glassberg & Jen Steinhaus

Michael Meyers MBA CFP®