Investment Recap Third Quarter 2009

The stock market had its best quarter since 1998 ending with a gain of over 16%. Our stocks performed considerably better. Clearly both the bond and stock markets have returned to health as worries of a financial meltdown, the collapse of our banking system, etc. have been alleviated. Many of the more negative pundits point to the discouraging news on the labor front, the de-leveraging of the banking system, and some still questionable economic indicators, to find reason for caution. We, on the other hand, have had our expectations buoyed by both economic releases and factors such as the record $4 trillion plus of cash in bank deposits and money market accounts (now earning a paltry .01%) poised for reinvestment in the market.
As noted in our last letter, we have reason to believe quarterly earnings will be better than expected. Valuations are fair, and there is room for further upside in the markets.
We are pleased to announce that Jeffrey Travis, CFA, has joined our firm. Jeff has previous experience as the portfolio manager of a local small capitalization technology fund and spent the past two years associated with the start up of a local investment firm. We are pleased to add Jeff’s considerable research talents to our staff (we now have a total of five analysts). Thank you for your continued loyalty and support during what has truly been an extraordinary time in financial history.