With 2008 behind us, we would like to say good riddance. What a dreadful year for equity investors. The fourth quarter continued to discount significant economic weakness and credit strains with stock prices down across the board. There were few places for an investor to hide.Even the safety of cash came into question during the quarter. We have never taken so many questions from clients that were so worried about the safety of their cash.

 As the credit crisis that began in earnest this past spring continues to evolve, 2008 is shaping up to be an incredibly difficult year for the markets. The markets declined dramatically during the quarter and the selling pressure has intensified during the month of October. Through September, U.S. large cap and mid cap stocks are down 20% while U.S small caps have outperformed on a relative basis but are still down 10%. After outperforming their domestic counterparts for the first half of the year, the international benchmarks declined significantly during the quarter. The MSCI All Cap World Index excluding US was down 22% and MSCI Emerging Markets Index was down 27% during the quarter. For the year, those benchmarks are down 30% and 35% respectively.

The IRS published applicable federal rates (AFR) are near record lows, and these low rates present a number of planning opportunities for moving wealth downstream to younger generations with little or no gift tax implications.