Subject: Schwab Investing Insights Brief: Risks and Opportunities

From: "Charles Schwab & Co. Inc." <[email-masked]>
Date: Thu, 18 May 2006 20:37:28 -0400

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Schwab Investing Insights(R) Brief

May 18, 2006
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MARKET OUTLOOK
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Risks and Opportunities

By Liz Ann Sonders
Chief Investment Strategist
Charles Schwab & Co., Inc. 
	
At this point in the U.S. equity market cycle, we believe the 
risks to the downside are about equal to the opportunities on 
the upside. As the market hits multi-year highs in the face of 
powerful economic and geopolitical crosscurrents, our advice is 
to stick with your long-term allocation to U.S. equities, while 
continuing to overweight international markets and underweight 
U.S. bonds.

For example, if your long-term plan calls for a moderate 60% 
allocation to stocks (45% U.S., 15% international) and a 40% 
allocation to bonds, we would suggest sticking with the 45% U.S. 
equity exposure, but having a 25% allocation to international 
(including developed and emerging markets) and a 30% allocation
to bonds.

The positives: mojo and more 

First, let's look at the positives for U.S. equities: strong 
corporate earnings, healthy economic growth, ample liquidity, 
reasonable valuations and investor sentiment. There has been a 
lot of skepticism associated with multi-year highs on most of 
the major equity indices, as illustrated by falling levels of 
bullishness in most investor sentiment surveys. It is 
historically unique for bullishness to be waning at the same 
time as the market is performing well, which is generally a good 
thing from a contrarian sentiment perspective. Our best guess is 
that the market has the mojo to push a bit higher (in the case 
of the Dow, probably to all-time highs). 

Read the entire article.
http://cs.schwab.com/s/r?l=42&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

CONTENTS
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Risks and Opportunities
http://cs.schwab.com/s/r?l=42&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

Playing Defense
http://cs.schwab.com/s/r?l=43&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

Odd Couples
http://cs.schwab.com/s/r?l=64&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

The A-List
http://cs.schwab.com/s/r?l=45&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

Callable Bonds: Why Now?
http://cs.schwab.com/s/r?l=84&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

Disaster-Proof Your Finances
http://cs.schwab.com/s/r?l=89&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

Letters to the Editor
http://cs.schwab.com/s/r?l=53&m=nl05182037280bncqb78m4q8jmkdyt78q54bdl7s

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