Investor's Corner for February 27, 2004

Investor's Corner Newsletter

By Will W. Woodard, III, CFP®
President, Dare Capital Management & Advisory
February 27, 2004

"One time a farmer hired a day laborer to help dig potatoes. "What'll ya pay me sir?" asked the laborer. "Why, I'll pay you exactly what you're worth," answered the farmer. The laborer put down his hoe and said, "Sir, I don't believe I can work for that."

Wayne Erbsen, "The Outhouse Papers", from Our State North Carolina, November 2003.

Global financial markets steamed into 2004 on the back of a Santa Claus market rally that stretched well into January. The leaders were largely lower quality, high beta stocks, prompting more than one pundit to dub the market action "Son of Bubble" (referring to the now-infamous events of 1999-2000). Over the past several weeks, however, a bit of the fluff has blown off the speculative names, and the broader market looks to be taking time to digest the substantial market-wide gains of the past year.

In this issue of Investor's Corner:

Reader Mail

Four Investment Themes for 2004

Charts

Worthwhile links

1. Reader Mail - Dear Will, I am having trouble deciding what to do about implementing a retirement plan for my small business. Help! Signed, Charles

Dear Charles, Thank you for writing. Make no mistake about it-the ability of a business to deduct contributions made to owner or employee retirement accounts is one of the best things "out there" in tax and retirement planning. As such, it is an area in which every business owner or employee should familiarize himself/herself.

Business owners have significant incentive to contribute to retirement plans. For proprietors and corporation equity-holders, the business can contribute pre-tax dollars to the owner's account, and the contributions can grow tax-deferred. Employees can make pre-tax salary deferrals up to certain income levels and also have the benefit of tax-deferred growth.

Several structures offer variations on this theme: 401(K) plans (including one-owner 401(K) plans), SEP-IRAs, SIMPLE plans, and even defined benefit plans for certain eligible employees or business owners.

As with anything related to the US Tax Code, "significant restrictions may apply". Give me a call or consult your tax professional when you need more specific information. Hope this helps! www3

2. Investment Themes for 2004-Here are four investment themes for investors to consider in 2004:

A. The 15% Tax on Dividends and Long-term Capital Gains - Every once in a while Congress does the US taxpaying Proletariat a good deed, and the 2003 Tax Bill came through with a couple of real gems: A 15% tax on qualifying dividends, and a 15% tax on some long-term capital gains. In a low (and potentially rising) interest rate environment, many equity (and even some fixed income) investors will look at conservative, dividend-paying stocks as a way to get a tax-advantaged return (the paying company's dividend) with some potential for capital gains as well.

B. Commodities and Natural Resources - Equity investors may be able to increase return while lowering portfolio standard deviation (a measure of risk and volatility) by including a commodity index or natural resources fund in their equity asset allocation. It is considered an economic truth that commodities increase in value in a rising interest rate environment, and wouldn't it be fun to be able to smile as natural resource prices (oil, copper, steel, gold, etc.) continue to rise?

C. Exchange Traded Funds - Exchange Traded Funds (ETF's for short) are an investment vehicle with some very interesting features, including low expense ratios, ongoing asset pricing, and the ability to diversify across sectors and markets with one purchase.

D. The Flight to Quality - After a year when some of the lowest quality, most speculative stocks in the market outperformed, many professional investors are looking to well-managed established, companies that have leadership positions in their respective niches to outperform the broader market this year.

3. Charts:

A. This chart of the MS-Wilshire Real Estate Investment Trust ETF shows strong gains over the past year.

B. The S&P 500 has returned 25% over the past year.

4. Worthwhile links:

CERTIFIED FINANCIAL PLANNER™ Board of Standards - http://www.cfp.net/default.asp

NAPFA, the National Association of Personal Financial Advisors - http://www.napfa.org/

The Financial Planning Association - http://www.fpanet.org/public

The FPA's Hampton Roads chapter - http://www.fpahamptonroads.com/

Dare Capital Management & Advisory home page - http://www.darecapital.com/

Whew! That's enough for this issue. Feel free to call or write with questions or comments, or to inquire about my firm's services as they relate to your individual situation--Remember, you deserve to have a positive, rewarding and fulfilling relationship with your financial advisor. If you do not have that, consider making a change!

Best wishes for a rewarding 2004 for you and your loved ones, and good investing,

Will W. Woodard, III, CFP®
Dare Capital Management and Advisory
PO Box 1138
Kill Devil Hills, NC 27948-1138
252.480.0156
will@darecapital.com
www.darecapital.com

Will W. Woodard, III, CFP® is president of Dare Capital Management & Advisory, a Registered Investment Advisor and fee-only financial planning firm with offices at 2518 S. Croatan Hwy, Suite E, Nags Head, NC 27959. Dare Capital Management & Advisory offers ongoing investment management services and fee-only financial planning. Mr. Woodard, his firm, or his clients may own the investments mentioned herein. Contact Will at (252) 480-0156 or learn more about the firm at Will@darecapital.com

The fine print: This newsletter can be reprinted or forwarded--however, it is requested that reprints of any material in this newsletter include credit to Dare Capital Management and Advisory (252)480-0156 and an email link to will@darecapital.com. Thanks for spreading the word!

All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Will W. Woodard, III and Dare Capital Management and Advisory, and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. Mr. Woodard, his firm, or his clients may own the investments discussed in this newsletter. Past performance is no guarantee of future returns.

The information presented herein and the company's web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future results may vary for many reasons.