JERSEY BENEFITS ADVISORS INVESTOR'S NEWSLETTER SPRING 2011

MARKET WATCH

As 2011 dawned, concerns about unemployment, economic growth, fiscal responsibility and inflation were topics being discussed when attempting to ascertain prospects for the continuation of our economic recovery. Spending initiatives in several states sparked controversy and healthy debate about programs, as well as the taxes that pay for them, to the point where even the Federal government managed to cut $6 billion from the current fiscal budget, and delay a shutdown of nonessential government offices. Meanwhile, the Dow Jones Industrial Average was on the way to its second largest first quarter gain in its history.

While the issues discussed above certainly are meaningful topics and impact our economy and the markets, the major factors affecting the global economy came out of the blue and weren’t on anyone’s radar. Those issues were summed up by Alan Abelson in Barron’s as he wrote, “The first three months encompassed just about everything shy of Armageddon. A fiery contagion of revolution and civil war in the Middle East and North Africa that toppled governments and sent dictators scurrying; a horrendous earthquake, nuclear meltdown and tsunami in Japan; chronic financial woes that beset and threatened to dismember the European Union, exploding oil and food prices - gad, we get the heebie-jeebies just reciting the lugubrious litany”.

The heebie-jeebies aside, it has been a remarkable quarter insofar as international events and the markets are concerned. Whether this revolutionary fervor will result in populations of Middle Eastern countries choosing less authoritarian Western style regimes, or succumbing to Hamas and Hezbollah remains to be seen. Securing the flow of oil from the area, as witnessed by the military incursion in Libya, forces us all to recognize the realities we face for our dependence on energy from this region. Whether you believe in “drill baby drill” or “green energy”, it is time for us to develop a comprehensive energy policy that utilizes all of the options available for our energy needs. Meanwhile, be prepared to pay more at the pump.

As I stated earlier, the DJIA* had a great first quarter climbing 6.4% and closing at 12,319.73 while the S&P 500* finished at 1,325.83 for a 5.4% increase. The NASDAQ* added 128.2 points and ended the quarter at 2,781.07 for a 4.8% gain. So much for the “New Normal” we discussed in the last issue.

These first quarter gains were achieved, despite a brief pullback in the various indices after the earthquake in Japan. The indices gave up all of their gains by mid March, only to absorb the shock and rebound to current levels. Where things go from here depends largely on earnings, employment, inflation, fiscal policy, monetary policy, international political events and of course, Mother Nature. The recent pullback in March does not even qualify as a correction (a 10% drop in an index), so with all of the issues facing us, one can never rule out a correction in the market coming at any time. The last correction was in July. As I have said many times before, corrections are healthy and present opportunities for deploying more capital. Of course, they are never pleasant.

As the second quarter unfolds, I expect to see oil prices settle down, inflation to remain benign and the Fed to begin discussing higher interest rates. The stock market is still 15% below the peak set in 2007, so a slow, steady ascent from here toward the 2007 highs would be welcome.

ONLINE ACCESS TO YOUR ACCOUNTS

For those of you who wish to access your account information online, the process is much easier than at any time in the past. Even if you have Pershing accounts, annuities or mutual funds with various companies, you can now access everything in one location from our website. Here is the link: Jersey Benefits Group, Inc.. Once you get to the Jersey Benefits website, you can access the link for your account under Securities Products or Investment Advisory. Under either heading go to the first choice, and look for the link for Pershing accounts only or Consolidated Statements. For Pershing only accounts, you need to contact me by phone or email for a password. There is a form to sign. For Clients with Consolidated Statements, you need to call or email to obtain a temporary password.

THE ECONOMIC AND POLITICAL OUTLOOK & MORE

Once again, earnings season is upon us, and the quarterly results of companies will compete with economic news, international events and commodity prices for investors’ attention. Continued improvement in earnings, and a positive outlook for guidance issued by US companies, could further improve the employment picture. Progress in the area of job creation is slowly being achieved.

The Labor Department reported jobless claims in the week ended March 26 fell to 388,000 and the unemployment rate fell to 8.8%, which indicates modest improvement for the labor market. Further evidence of improvement on the labor front came with the March payroll report, released by the Bureau of Labor and Statistics, indicating an addition of 216,000 jobs. The household survey, which is another measure of job growth, reported 291,000 additional jobs added in March . While these numbers leave us 7.25 million jobs down from the total number reported before the recession, any progress is welcomed.

As the government faces another possible shutdown as early as Friday, April 8th, Congress continues to bicker over whether to trim $55 billion more from the current budget. While it would be a small step in the right direction, it remains to be seen if a compromise can be reached. I certainly don’t mean to minimize the impact of $55 billion on the budget, but the reality is when you look at a budget of $3.7 trillion, about 1/3 of which is borrowed, one realizes something has to be done. Either $1.5 trillion needs to be cut, or taxes need to be increased to pay for the spending deemed important to the populace. The alternative is crushing debt on our children, which I don’t think is sustainable.

The price of gold has been flat for the quarter, but not without some volatility. In February the price swooned 7% but has since recovered its losses. Gold, silver and other commodities are positions which should be part of an investment strategy. Owning the physical commodities themselves is cumbersome and expensive, so my recommendation is to gain exposure through commodities funds, ETF’s or stocks of companies that mine or handle commodities. Obviously, we never want to put all of our money into one asset class, because concentrating risk is usually a recipe for disaster.

My philosophy is and always has been to diversify across as many sectors of the economy as you can afford, and dollar cost average into your portfolio often. While this strategy can’t guarantee against losses in the short term, as most of us have experienced over the last three years, patience and discipline do produce rewards. Thanks again for your continued confidence in me, and know that I truly appreciate your business. Feel free to call or email with questions.

* THE S&P 500, THE DJIA AND THE NASDAQ ARE UNMANAGED INDEXES THAT ARE WIDELY USED AS INDICATORS OF MARKET TRENDS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE OF THESE INDEXES DOES NOT REFLECT FEES AND CHARGES ASSOCIATED WITH INVESTING. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.

DOLLAR COST AVERAGING THROUGH A SYSTEMATIC SAVINGS PLAN IS AN EXCELLENT WAY TO BUILD AN ACCOUNT WITHOUT A SIZEABLE INITIAL INVESTMENT. SAVING A PORTION OF OUR PAY EACH MONTH IS VERY IMPORTANT. COMPANY SPONSORED PENSION PLANS ARE ONE METHOD TO SAVE AND SHOULD BE USED FOR RETIREMENT. OTHER SYSTEMATIC INVESTMENT ACCOUNTS, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES CAN ALSO BE OPENED, AND DEBITED DIRECTLY FROM YOUR CHECKING OR SAVINGS ACCOUNT. FOR MORE INFORMATION, JUST CALL TO SET UP AN APPOINTMENT. REFERRALS ARE ALWAYS WELCOME.

COMPANY INFORMATION:

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL 33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advi-
sors.

Third Party Administration and Insurance
Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J. 08226
Phone: 609 827 0194
Fax: 609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits
Advisors.

LD 40098—04/11

JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER SUMMER 2009

MARKET WATCH

As we close the books on the first half of 2009, there appears to be a cup half empty, cup half full scenario going on, depending on your point of view. The markets closed mixed with the S&P 500 winding up at 919.32, a 1.8% gain for the year and up 35.9% from the low of 676.53 in March. The DJIA finished at 8,447.00, which is still -3.8% below the beginning of the year, but still 29% above the low of 6,547.05 set in March. The Nasdaq posted the best year to date gain of the major indices when it closed at 1,835.04, which is a 16.4% increase for the first half of 2009.

While these gains from the lows in March indicate a fantastic recovery for the markets, they represent only a portion of the returns necessary to restore the indices to their former highs. For example, the DJIA would have to gain 67.7% to get to it’s former all time high of 14,164.53 and the S&P 500 would have to add 70.3% to reach it’s former high of 1,565.15. Of course the NASDAQ, which went to the moon in 2000, would have to increase a whopping 175.1% in order to reach the heights it attained before the dotcom bubble burst. While these numbers are troubling, they speak volumes about percentages and compounding. The sad fact is that it takes a 100% gain to recover a 50% loss, or put another way: if you start with 100 dollars, and lose 50%, you have 50 dollars. It will take a 100% gain to return the 50 dollars to the original 100 dollars. Isn’t math just so unfair!

The point here is not to make you feel despondent, but rather to help keep things in perspective. Yes, this was a great quarter and perhaps this recession could be over or at least in its final stages, but there are a great deal of challenges ahead of us. After having witnessed the near implosion of the world’s financial system, the creative destruction of the auto industry in the US, and a tanking of the stock market to levels not seen since the mid 1990’s, looking for positive signs makes sense. If you’ve been investing through all of this turmoil, it is like you had the opportunity to go back to 1997 and put in new money. These gains are real and will continue to positively impact your portfolio going forward.

REFERRALS AND THE MERGER OF TFA & ISI

Has the advisor of any of your friends or relatives left the business, or have any of your other investment representatives been absent during the recent market turmoil?

Do you feel as if your representative only wants to talk to you when all is well with the world? I am here to talk to you about the state of the market, the performance of your investment portfolio, and your retirement plans, regardless of what the market is doing.

With the merger of Transamerica and Intersecurities, I look forward to continuing to provide you with quality investment products and individualized service.

Please feel free to refer any of your friends or relatives who may looking for a new advisor to me. Thank you!

ECONOMIC OUTLOOK

As I mentioned on the preceding page, there is some evidence, as well as historical precedent to indicate the recession may be over or in the fourth quarter, to use a sports analogy. As I noted in previous newsletters, the two longest recessions, since the Great Depression, were the recessions of 1973-75 & 1981-82. Each of those recessions lasted 16 months. March of 2009 was the 16th month of the current recession. As I’ve mentioned before, there are always numerous opinions on these matters, but it is more than likely no coincidence the markets, which are leading indicators, began recovering in March.

While I’d like to believe this is not a head fake, but rather a real recovery, I’ve read enough opinions by numerous bears to remain reticent. This doesn’t mean not being invested, but rather it means cautious, disciplined investing. With the government running GM, TARP funds in the financial sector, Korea and Iran defiantly rebuking Obama’s olive branch, Congress salivating over health care and over a trillion dollars of stimulus in the system, a lot could go wrong. Inflation is one evil that comes to mind.

Obama says he doesn’t want to run GM or the health care system. The specter of public housing conjures up horrendous images of what public health care would look like.

PRIVACY POLICY, MERGER UPDATE & INSURANCE

PRIVACY POLICY

At Jersey Benefits Advisors and Jersey Benefits Group, Inc. protecting your privacy is very important to us. We want you to understand what information we collect and how we use it. We collect and use information from you on applications and other forms as well as information about financial transactions with us and from non-affiliated third parties. This “nonpublic personal information” is obtained in connection with providing a financial product or service to you.

We do not disclose any nonpublic personal information about you without your express consent, except as permitted by law. We may disclose the nonpublic personal information we collect to persons or companies that perform services on our behalf.
We restrict access to your nonpublic personal information and only allow disclosures to persons and companies as permitted by law to assist in providing products or services to you.

We maintain physical, electronic and procedural safeguards to protect your nonpublic personal information at all times.

MORE ON THE MERGER

Transamerica Financial Advisors, Inc. is excited to share some important news with you. Pending final regulatory approval, Transamerica Financial Advisors will merge its operations with St. Petersburg, Florida based InterSecurities, Inc., an affiliated firm that has been offering financial services for almost 25 years. We anticipate the merger will take effect in September 2009. As part of the merger, the resulting entity will retain the Transamerica Financial Advisors, Inc name and continue to be a full service, independent broker-dealer and registered investment advisor. Most importantly, the relationship you have with your registered representative or investment advisory representative WILL NOT change.

INSURANCE SERVICES

Have you reviewed your insurance policies lately. Whether it comes to insurance on your life, health or investments, the need for insurance is something that should not be overlooked. Changes in status, such as a marriage or the birth of a child are times when insurance levels may need to be adjusted. Also, during times of peak earnings and peak responsibilities, a look at the protection you are providing to your family, in the event of an untimely death, is an unpleasant, but necessary task. Just as the insurance on retirement income, provided by annuities as part of an investment strategy paid off during this downturn, planning with life insurance helps your family when an unanticipated death occurs.

John H. Kaighn

Jersey Benefits Group, Inc.

Fed Cuts Interest Rate 75 Basis Points

The Federal Reserve, after reviewing the significant global stock market declines on Monday and again on Tuesday, which were at least partially caused by increased fears of a US recession, lowered the federal funds rate by 75 basis points, or three-quarters of a percentage point this morning and indicated further rate cuts were likely. This surprise reduction in the federal funds rate from 4.25% down to 3.5% percent is the most significant one-day rate move by the central bank since it cut the discount rate by a full percentage point in December 1991, a period when the country was struggling to get out of a recession.

In addition to cutting the federal funds rate, the Fed said it was reducing the discount rate, the interest it charges to make direct loans to banks, by a similar three-quarters of a percentage point, pushing this rate down to 4%. Commercial banks responded to the Fed's action on the funds rate by announcing similar cuts of three-quarters of a percent on its prime lending rate, the benchmark for millions of business and consumer loans. The action will mean the prime lending rate will drop from 7.25% down to 6.50%.

The Fed's interest rate moves came after significant declines in Asian and European markets on Monday, while the US markets were closed in observance of the Martin Luther King Holiday, and again overnight and into this morning as global markets continued their sell off. By midday, the U.K.'s FTSE 100 was down 0.3 percent at 5,560.90, Germany's DAX was down 1.7 percent at 6,671.82, while France's CAC 40 dropped 1.3 percent to 4,681.07.

Japan's Nikkei 225 index tumbled 5.7 percent, its largest percentage drop in nearly 10 years, to 12,573.05, a day after falling 3.9 percent. Australia's benchmark index sank 7.1 percent, its steepest one-day slide in nearly 20 years. Hong Kong's Hang Seng index, which slumped 5.5 percent Monday, finished down 8.7 percent on Tuesday. In China, the Shanghai Composite index lost 7.2 percent to 4,559.75, its lowest close since August. Indian Finance Minister P. Chidambaram urged investors to remain calm after trading in Mumbai was halted for an hour when the stock market there fell 10 percent within minutes of opening. The Sensex rebounded some to close down 5 percent after plunging 7.4 percent Monday.

Early market reaction to the Fed's rate reduction was not positive, as the DJIA opened off 450 points. However, as the morning wore on, the losses subsided to a more palatable 150 points off of Friday's close. Whether this will be a complete capitulation and subsequent end of the bull market remains to be seen. Closing values of 1,252.12 in the S&P 500 and 11,331.62 in the DJIA would indicate a 20% decline for those two indices from their highs in October 2007. Even if a recession is avoided, I think global markets are making a huge statement regarding the theory of decoupling, that is, the belief global markets and economies could continue to thrive during a downturn in the US.

The positive news for the day is the European markets seemed to like the Federal Reserve's interest rate decision, because even though they were down at midday, they managed to end on the plus side, for the most part. European policymakers offered no hint on Tuesday they would rush to join the United States with a stimulus plan to inoculate their economies from the ravages of a global stock market rout. The economy is sound and fear and panic should not drive decision making, European Central Bank officials said after the U.S. Federal Reserve's surprise move to slash interest rates.

Jean-Claude Juncker, the senior finance minister for the euro zone economies, said he was keeping a close eye on developments but right now saw no danger of U.S. driven turmoil spilling over to cause a global recession. "When financial markets act irrationally, and are driven by herd behaviour, when stock markets demonstrate short-termism, there is no reason for finance ministers to do the same," Juncker told reporters on arriving for Tuesday's talks. Someone should show the above quote to the alarmist politicians in Congress and the White House before they overstimulate the economy, increase food stamp subsidies and who knows what else. Washington's overreaction and the election year grandstanding could further damage the economy or inflate a bubble in another sector by easing credit too much. Sometimes, less is better, especially when it comes to political demagoguery and bogus spending programs appealing to special interest groups.

John Kaighn

Jersey Benefits Advisors

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Happy Memorial Day

The summer months, which usually are considered the doldrums by those in the investment community, could provide some interesting outcomes as we head into the Memorial Day weekend and what many see as the onset of the summer season. This is also the start of the summer driving season, and gasoline is already hovering around $3.00 a gallon. As hurricane season also begins to heat up, I hope there are no direct hits on the oil infrastructure, or the possiblity of $4.00 a gallon gasoline I've read about could become a reality. Meanwhile, the Dow Jones Industrial Average continues to set record after record, and now the S&P 500 is is less than 5 points away from its all time record of 1,527.46 set in 2000. If the Federal Reserve holds interest rates steady at the FOMC meeting in June, they will have held rates steady for a year, something the Fed does not do often. The Fed has held its target for short-term rates at 5.25% since June 2006, after raising it steadily for two years to tame inflation. Banks use the rate as a benchmark for pricing consumer and business loans. These issues could be setting the stage for a very interesting second half of 2007.

For well over a year now, I've been writing about the dual concerns of a slowing economy and inflation. Fed policy has been concerned with remaining hawkish on inflation, while some economists, investors and journalists expected rate cuts as early as September 2006. The midcycle slowdown economists predicted seems to be exactly what has happened, with the bottom being symbolized by April's paltry retail sales figures. While many thought the housing slump would drag the economy into a recession, it seems the builders and subprime borrowers are the ones bearing the brunt of the pain. Most homeowners remain solvent and able to meet mortgage expenses. As long as the employment numbers continue to hold steady, consumers should be able to continue to meet obligations and make discretionary purchases.

Where the economy goes from here no one can predict with certainty, but there are reasonable hypotheses one can make based on the data. This economic cycle is in the mature phase of the current expansion and the mid cycle slowdown was like a breather, before growth picks up again. Expansions don't last forever, so at some point in the future we will have a recession again. With that said, it looks as if the second half of 2007 will be a time when growth reignites and inflation will continue to be the number one concern of the Fed. With the productivity of workers declining, and the pool of skilled workers drained, labor will begin to demand higher wages. Usually, when the economy slows down unemployment ticks upward, but that hasn't happened during the first two quarters this year. Some economists think this is because the slowdown in housing hasn't worked its way down to the employment figures. Others think there is a possibility the economy is actually growing faster than the GDP numbers indicate. As we head into the Memorial Day weekend, one thing is certain, gas is going to cost you about $3.00 a gallon. As far as interest rates are concerned, the jury is still out. Will the Fed raise, cut or hold? Will the S&P 500 EVER break 1,527.46? Time will tell. Enjoy the holiday!

For more information visit:
http://jerseybenefits.com
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