Dateline: January 22, 2008 (20 kb)

As a result of bond insurer downgrades, we have a concern that longer-term bonds held by trusts that issue short-term variable rate demand note participations may experience a decline in value that causes the unwinding of such trusts. If these trusts were to be unwound, there could be a dislocation of capital that would put pressure on tax-exempt money funds. We are, therefore, reallocating client excess cash positions to Treasury money market funds.

Subprime Mortgages, Financial Guarantors and Municipal Bonds: November 8, 2007

During the past several months there has been much turmoil in the credit
markets focusing mainly on structured investments related to mortgages, and in particular, subprime mortgages. Mortgages are often packaged into pools and securitized in the form of RMBS (Residential Mortgage Backed Securities), which may be packaged into pools in the form of CDOs (Collateralized Debt Obligations). Financial guarantee insurance companies such as AMBAC and MBIA have historically provided credit enhancement to various forms of debt obligations including municipal bonds and structured investments such as RMBS and CDOs. Over the last several weeks, the share price of AMBAC and MBIA has declined significantly due to the concerns of the potential contagion of credit market risks to the financial guarantors.

2007 Year End Review (24 kb)

The housing bubble, the write downs and impairment of fixed income securities collateralized by residential mortgages, and the ensuing crisis in the credit markets touched all forms of investing during calendar year 2007 and have profound implications for investing going forward.

2007 Third Quarter Review (120 kb)

The third quarter of 2007 will long be remembered for the subprime mortgage crisis and the seizing up of the credit markets. The uncertainty in the credit markets, reflecting an increase in loan foreclosures and delinquencies, caused much concern with regard to the systemic risks that they portend and the impact of such risks on the broader global economy. Consequently, the equity markets experienced substantial volatility.

2007 Second Quarter Review (120 kb)

2007 First Quarter Review (116 kb)

Liability Risk Management - Think "Downside" (20 kb)

A discussion of techniques which may be employed to manage exposure to future personal liabilities and creditors associated with certain professional, business and fiduciary activities.

Estate Planning - Some Simple Steps(20 kb)

A discussion of various strategies for managing estate tax exposure through lifetime gifting to one's heirs.

Senior Executive Compensation (24 kb)

A discussion of strategies available to executives whose compensation is concentrated in employer equity.

Topical Matters Memoranda are all in .pdf format and requires the Adobe Acrobat Reader to view or print.

* Analysis, views, and opinions reflected in any materials contained in this Web site are not intended nor should they be relied upon as specific investment advice or investment timing for any particular individual. KLS provides investment advice to its clients based upon analysis of personal and specific client circumstances and investment markets.

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