Subject: Schwab Investing Insights Brief: Time for Caution

From: "Charles Schwab & Co. Inc." <[email-masked]>
Date: Thu, 20 Jul 2006 13:43:41 -0400

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Schwab Investing Insights(R) Brief

July 20, 2006

We are pleased to share the July issue of "Schwab Investing
Insights Brief" with you. In response to strong client feedback,
we are increasing the frequency of this newsletter to monthly.
So look for your next issue in August, and in the meantime,
enjoy July's issue of "Schwab Investing Insights Brief."

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MARKET OUTLOOK
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Time for Caution

By Jeff Mortimer
CFA, Senior Vice President, Chief Investment Officer, Equities, 
Charles Schwab Investment Management, Inc.
	
The stock market took investors on a stomach-churning roller
coaster ride in the second quarter, hitting multiyear highs in
early May, only to plunge to fresh lows for the year, then
rebound, and then drop again.  We expect that volatility to 
persist for a while as geopolitical tensions, high energy 
prices, a slowing housing market, and uncertainty over the 
path of interest rates, inflation and the economy continue to 
rattle investors.

Is the bull market that began in 2002 over? We think it might
be, which means the market could get worse before it gets
better. Although valuations, earnings growth and overall
corporate health remain favorable, we see mounting signs that
these supportive conditions may be beginning to deteriorate.
Plus, we're in a seasonally weak quarter for stocks. (See the
Schwab Market Perspective at http://www.schwab.com/MarketInsight 
for more on our six- to 12-month outlook.)

What to do? Our advice to clients can be summed up in a single
word: caution. Don't abandon your long-term asset allocation
plan. But if you want to be more proactive, since June we've
advocated trimming back from your strategic allocations to U.S.
and international equities by as much as 5% each, while
increasing cash by as much as 10%.

Read the entire article.
http://cs.schwab.com/s/r?l=42&m=nl07201343410bncqb78m6m7qlpjm8s66f6s8gk9

CONTENTS
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Time for Caution
http://cs.schwab.com/s/r?l=42&m=nl07201343410bncqb78m6m7qlpjm8s66f6s8gk9

Profiting from Others' Foibles
http://cs.schwab.com/s/r?l=45&m=nl07201343410bncqb78m6m7qlpjm8s66f6s8gk9

The Myth of Insider Trading
http://cs.schwab.com/s/r?l=64&m=nl07201343410bncqb78m6m7qlpjm8s66f6s8gk9

Merger Mania and Your Portfolio
http://cs.schwab.com/s/r?l=43&m=nl07201343410bncqb78m6m7qlpjm8s66f6s8gk9

Think Total Return
http://cs.schwab.com/s/r?l=48&m=nl07201343410bncqb78m6m7qlpjm8s66f6s8gk9

Letters to the Editor
http://cs.schwab.com/s/r?l=53&m=nl07201343410bncqb78m6m7qlpjm8s66f6s8gk9

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