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News

Text Box: The market volatility, credit crunch, housing market collapse, and hedge fund debacles make it hard to believe the overall stock market was in the black during the third quarter and year-to-date. While the numbers for the overall stock market were quite satisfactory this year, there was a wide degree of variation across asset classes. Value benchmarks were in the red for the 3rd quarter, with smaller-caps performing the worst. Growth benchmarks did quite a bit better, and for the year growth stocks are ahead of value by a wide margin after seven consecutive years of underperformance. International stocks gained over 4% in the 3rd quarter, extending their run of impressive returns. With the exception of high-yield bonds, fixed-income asset classes had a solid quarter, with investment-grade bonds climbing almost 3%.

Text Box: Both US and International stocks have had a fabulous run over the past 5 years with all of the broad indexes up dramatically. Coming out of the three year bear market (2000-2003) our US stock portfolios had a relatively large weighting in mid and smaller cap stock funds. This strategy proved to be very successful as these funds outperformed large cap stock funds, at times by a significant margin. Over the past year however, we have gradually been decreasing our allocation to mid and small cap stocks in favor of larger cap growth funds for a number of reasons. Small cap stocks have outperformed large caps over the past 7 years so they are now considered quite expensive while large stocks appear to be undervalued. Concerns over weaker economic conditions and a slowdown in GDP growth also make large caps more attractive since higher quality large cap stocks typically fare better in this type of environment. In addition, should we see a correction in the market, large cap stocks are historically less volatile than small cap stocks. This means that we can actually reduce the risk in our portfolios by making this shift. Overall, we believe that large caps are well positioned to outperform going forward. The overall strategy of our Investment Committee is to create a diversified portfolio of high quality funds that will provide the best risk adjusted return possible. We do this by identifying and monitoring exceptional funds in all of the different market capitalizations (large, mid and small stocks). In addition, we identify fund managers that select “value stocks” of undervalued companies and managers that identify “growth stocks” of faster growing companies. Some of our funds employ a strategy where they blend the two styles of growth and value.

BAI

Our Current Equity Investment Strategy	1
Have You Stretched Your IRA?	2
The Weight on the Curve	3
Clients Provide Outstanding Response to Survey	3

Text Box: Practice Management: Fred was invited to speak at the NAPFA conference and moderated a “Successful Practice” panel discussion on various topics including client service. BAI was ranked in the Top 10 of Financial Advisors nationally based on asset growth in 2006. The article appeared in Financial Advisor Magazine. Chris & Maria were both named to the Consumer Research Guide of America Top Financial Planners for 2006-07. Fred was named to the top 100 Wealth Advisors by Worth Magazine (Oct. 2006). For the 6th year in a row, Burt Associates Inc. was selected to the Wealth Manager Magazine Top Wealth Managers List. Christine was named to the Professional Advisor Council of the Montgomery County Community Foundation 2006—2007.

Text Box: Burt Associates 6010 Executive Blvd., Suite 900 Rockville, MD 20852