A letter from Bart Boyer, Chairman and CEO

The longest and most severe recession since the Great Depression is coming to an end! GDP for the second quarter was -1% compared to a brutal -6.4% in the first quarter. That momentum should carry the economy into positive numbers the third (current) quarter. That would follow our chief economist, Jim Smith, predicting the recession ended May 15. We won’t know the exact date of the end for months, but it looks over to us. Also, many economists are joining Dr. Smith and are predicting 2-4% positive growth for the third quarter, a normal +3% or so year in 2010 and better yet in 2011!

As we anticipated, the $7 trillion on the sidelines in short term fixed income investments is beginning to flow into the market. A modest move of 5-10% of these balances would have a significant upwards impact on stock prices. Already the S&P is up more than 50% from the March 6 intraday low of 666.79.

We are thrilled that the vast majority of our clients avoided the fear trap and have participated nicely during the recovery. Nothing goes straight up, there will be profit taking corrections for certain, but we believe there is much more to come on the upside.

Over the last 100 years there have been three terrible decades for the economy and stock markets, the 1930’s, 1970’s and the current decade. Unless this year is better than +38.4% (very unlikely), this decade will go down as the worst ever – even worse than the 1930’s. Terrible decades have historically always been followed by well above average outperforming decades (plural). After the 1930’s, the next three decades were outstanding. After the 1970’s we had the 80’s and 90’s, two of the best decades ever, with each having six years of +18% or better returns. We believe it is a high probability that the next 20-30 years will be above average, even with one in every three or four years negative.

Thanks again for your patience and the opportunity to be of assistance. We’ve all just suffered the worst decade in stock market history and are well positioned for better times ahead.

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