winter 2008 Edition
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we ’ve survived worse times

Stacey LaneDear Friends,
In my role as a certified financial planner, I’ve heard from many friends, family members and clients who are concerned and confused by the October $700 billion rescue plan. If history is prologue, it might be helpful to remember that we’ve survived worse times.

After Sept. 11, 2001, stock exchanges closed for almost a week, and posted enormous losses upon reopening, especially in the airline and insurance industries.

The recession of the early 1990s hit much of the world in 1990–91. On Black Monday in October 1987, an unprecedented stock collapse peeled 22.6 percent off the Dow Jones Industrial Average. The collapse, larger than that of 1929, was managed well by the economy and the stock market quickly recovered.

In 1933, the national unemployment rate was about 25 percent. Currently the unemployment rate is about 6 percent.

What is also significantly different about the crash of 1929 and the rescue plan of 2008 is citizen engagement. The $700 billion plan began with a three-page memo written by the Secretary of the Treasury. Protests in 41 states and thousands of emails to Congress delayed its adoption.

When it was finally passed, it had grown to 110 pages and included protection for taxpayers and promised a share in any profits. It cut the payment of $700 billion in half and made future payments dependent on Congressional review. It limits excessive compensation for CEOs, and ensures strong independent oversight and transparency to protect the taxpayer. Finally, it allows the government to review mortgage agreements to assist home owners.

American investors and mortgage holders demanded and won tighter controls and regulations on Wall Street. This is very good news. Going forward, new guidelines will make long-term investing and home ownership safer.

The effects of the rescue plan will not be known immediately, but we should expect a recession either later this year or early in 2009; it is expected to last 9 to 10 months. What is a prudent course of action knowing that the credit markets are significantly tighter?

For older donors looking for a safe haven, charitable gift annuities remain a solid choice. Willamette annuity payments are fixed and guaranteed for life and are secured by the full faith and credit of the University. In addition to the security of a guaranteed return, gift annuities yield an income tax deduction, and annuities funded with appreciated property will result in substantial capital gains tax savings as well, all while supporting the Willamette program of your choice. In today’s market, the fixed payments of a gift annuity are an attractive feature as part of an overall retirement portfolio and are especially advantageous for those alumni over age 70. Younger donors can reap the same benefits from a deferred annuity. For donors considering this option, I encourage you to contact Willamette University’s Office of Gift Planning soon. Gift annuity rates at Willamette will decrease Jan. 1, 2009.

If we have learned anything over the past 50-plus years, it’s that investing is about the long term. Markets will fluctuate, but there are ways to plan for the future and means to make prudent investment decisions. For investors, this is not the time to sell; it is time to stay the course, stay diversified and, if one is not already in place, to develop a long-term strategy.

Warm regards,

Denise Callahan Signature

Peg Moreland ’75

Chair of the Financial Affairs Committee
Board of Trustees
Willamette University

Peg Moreland is vice president of family wealth management for a securities firm in Chicago.