We recently returned from a family visit to northwest Iowa. We decided to go through Mapleton, Iowa on our way to the Omaha airport so we could take a few supplies to the people there that had been subjected to disastrous tornados on April 9. Since it had been one month and one day since the tornados had done their damage we were not sure what we would find. We called a church that had been designated as an aid center and were told that what they really needed was laundry detergent, so we threw some detergent bottles in the trunk and took them along.

What we saw was sobering. All over town we saw large tree stumps, many several feet across, indicating the downing of very large trees. Many homes in the little town of about 1200 people were marked in red as uninhabitable. Repairmen were hard at work replacing walls, roofs, and lawns. Many homes were partially flattened. Since it had been just over a month, and Iowa people are nothing if not industrious, it was hard to imagine what the place had looked like just after the disaster. There was an open area at the edge of town that had been designated as a dumping area and the pile of debris looked to be about 18-20 feet high.

When one considers that the damage in little Mapleton was minimal compared to the massive damage and the loss of hundreds of lives in the southern states it is really amazing that in this time of technological and scientific advances we are still relatively powerless to protect ourselves from the periodic ravages of nature. The current flooding along the Mississippi is further evidence of this fact. Those of us in the pacific Northwest should be thankful that, except for an earthquake every decade or so, we are insulated from these types of disasters. After seeing what we saw in Mapleton, suddenly a lot of persistent, drizzling rain doesn’t seem so bad.

The S&P 500 Index finished 2010 at 1,257.64. Through the first two months of 2011 the S&P has closed above that figure every day.

The trivia question is this: When was the last calendar year when the S&P 500 never once closed below the last reading of the previous calendar year?  Our guess was way off. We figured the answer would probably be sometime in the 1995-1998 period when the market had great years, but it turns out that in January of all those years the market took a little dip before heading upward.

The answer? 1985.

Events in the Middle East and North Africa have made the market very nervous, especially concerning oil prices. It certainly appears that the dictatorship in Libya is on its last legs, and that regime change there is just a matter of time. The near term effects on the financial markets are unsettling and disruptive, but the long term ramifications are encouraging.

This week the losses in the market have effectively wiped out the gains of February and even eaten into some of January’s gains, but so far there has been no significant damage to our client portfolios. Our conservative investment philosophy that emphasizes market position, earnings, dividends and asset diversification gives our investors  a measure of safety and protection of principal that has held up under all but the most severe market declines. We don’t think this current situation will result in anything like the financial bloodbath of 2008.

After the first month of 2011, we see that the investment environment for the year is off to a good start. January saw a modest increase in the financial markets, the first time in four years that the month trended upward.

After visiting the state capitol in January and the nation’s capitol last weekend, we can assure you of two things. The first concerns our weather. Rain and chilly weather may not be all that great but  none of us want to see what they are going through back east. The second concerns our state’s and our country’s finances. Don’t go to Olympia or Washington DC expecting to visit your money because they don’t have any. I never remember a time when the huge deficits that began to accelerate in the 80s have moved to the front and center of the lawmakers’ consciousness, but of course there is absolutely no agreement on how to solve it.

Good news? Winter is now half over, the sun is now setting after 5:00 PM, and pitchers and catchers report for spring training in two weeks.

In a year when the Seahawks can make the playoffs with a losing record anything is possible, so in the spirit of optimism let’s hope that the unemployment rate will continue to go down and the financial markets will continue to go up. The business environment is slowly getting better and the unemployment rate at the end of December had dropped to 9.4%. That’s not very comforting but at least it’s going in the right direction – down. Now if we could only get freezing temperatures, sideways rain, sleet and snow for the Seahawks game tomorrow in order to make those visitors from Louisiana who play indoors as miserable as possible, who knows what could happen?

The stock market surged today with the S&P closing over 1220.  The S&P is the most reliable indicator of overall market strength, and closing over 1220 is an indication of surprising market strength over the last 23 months.  When President Obama took the oath of office on January 20, 2009 the S&P 500 closed at 805.22.  That means the index has increased by over 50% in just under two years.  This is not politics, just a fact.  People can argue endlessly over the whys and the wherefores but no matter what the reason we'll take it and hope it continues.

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An important question we receive concerns insurance coverage when renting a car.  If you have an auto policy then you have liability coverage in case you injure someone or damage their property. This coverage is required to drive any vehicle on public roads. However, should you also purchase rental car coverage ?  READ ON...

If you have comprehensive and collision coverage on your own auto policy, coverage extends to a borrowed or rented vehicle in most cases. However, we recommend to our clients that they buy the insurance from the rental company for several reasons.

Here are two important ones:

You may have to pay rental fees on the damaged rental vehicle for the time it is in the shop being repaired (typically 2-3 weeks).

Your credit card can be charged thousands of dollars for the Diminished Value of the rental vehicle. 

    For more information, contact us anytime for your auto or home insurance needs.