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June 7, 2008 Dear Reader, In May, the market continued its attempt to rally, but instead of moving up it went significantly down. The mortgage crisis and oil prices affected the actions of investors and well as the financial professionals. Our next InvestWELL Report will be released on July 5, 2008. (following the Labor Report which is generally recognized as a "market mover"). Derek Polcyn, President In This Issue: Investment Idea Quiz Our Results Market Highlights Behavioral Finance Indicators Answer to the Quiz

Investment Idea Question: What is the meaning of Return on Investment? Answer: The Return on Investment (ROI) is often used to compare benefits of different investment alternatives. Here is the formula: ROI = (Gain on Investment / Cost of Investment) * 100 An investment with a higher ROI is preferred over a lower ROI.


Quiz A year ago you bought a stock for $20 per share. Now it is up by $3. What is your return on investment? A) 5% B) 10% C) 15% D) 20% Answer to the Quiz at the bottom of the newsletter


Our Results (Cumulative %) Investment Strategy – MEMBER SECTION InvestWELL Picks continues to outperform the market (as defined by S&P 500 index.) and the margin of out-performance has recently increased slightly. Chart 1.


Market Highlights During the last month, the US equity market attempted to rally but retreated instead (Chart 2 & 3) The market still needs to consolidate before making another attempt to advance. Charts 2 & 3. S&P 500: 3 Years and Last Month Charts courtesy of StockCharts.com During the last month, the Canadian market was able to once again outperform the US market largely due to increases in oil prices (Charts 4 & 5). Charts 4 & 5. TSX Canada: 3 Years and Last Month Charts courtesy of StockCharts.com Last month, the US economy lost 49K jobs while the unemployment rate jumped from 5.1% to 5.5%. The payroll numbers are weak but these are not numbers indicating a recession (however, nobody can tell what the future will bring, especially the economists). In Canada, following two months of small increases, employment was unchanged in May, and the unemployment rate remained at 6.1%. It appears that the slowdown from south of the border is starting to make its way to Canada. In the US, the inventory of unsold homes on the market recently jumped 10.5%. At the current sales pace, that represents an 11.2-month supply of houses -- nearly double what the real estate industry considers to be a health level. Even for an industry where pay has always been sky-high, the numbers have become stratospheric - like a $161-million (U.S.) retirement package for Stan O'Neal after he was ousted from Merrill Lynch or $200-million in signing bonuses and pay granted to Citigroup brand new chief executive officer. Actually, the amazing part is that many of these extremely highly-paid individuals are leading companies that have seen profits and share prices tumble due to mistakes related to exposure to sub-prime mortgages. Academic studies have shown that corporate insiders tend to be far savvier about the prospects of their companies´ stocks than the average investor. According to Mark Hulbert, a publisher of a well-known newsletter gauging insider activity, the latest readings show that insider buying is continuing at a healthy pace. In other words, insiders remain bullish on the shares of their own companies, a sentiment which bodes well for the overall market. We have had a number of our readers asking us about the basics for ethical investing. We are listing 3 important starting rules that may serve as a guide: Decide what is important for you. It is often a good idea to use negative screening as a starting point. Simply make a short list of investments that are unacceptable to you e.g. tobacco stocks. Find your ethical ally. Find an advisor that specializes in ethical investing and consult with him / her. Pick from the leaders. Pick companies which are industry leaders that will likely be ahead of others as new trends develop.


Opportunities and Risks – MEMBER SECTION Behavioral Finance Indicators (see explanation) Here is a direct quote from the Behavioral Section in last month’s Member newsletter: "Overall, we believe the market fundamentals are eroding. We do not believe it is a good precursor for an upward move, especially with the usual summer slowdown approaching". It appears that our prediction came true. MEMBER SECTION Charts 6 - 8: Advancing/Declining Line, AAII and Equity Put/Call Ratio Charts courtesy of StockCharts.com and DecisionPoint.com

Answer to the Quiz C is correct. ROI = (Gain on Investment / Cost of Investment) * 100 = ($3 / $20) * 100 = 15%. The holding period was one year. Hence, it is also a one-year ROI.

Thank you for reading InvestWELL Report. This is a non-member version of InvestWELL Report. Please sign up for our membership to receive the member version of the InvestWELL Report. Invest WELL Financial.com


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