I think we are all happy to see 2008 be over!  Let’s hope that this New Year brings a recovery not only in the stock markets around the world but in our broad economy, especially real estate.  As you know, we constantly evaluate the circumstances affecting our economy and the world markets.

In our analysis of the market and its longer term projection, we look back to the process of several Bear Markets, including the last one of 2000-2003 and how long it took to complete the bottoming process.  In 2001, that process began with the sharp drop on 9/11, which, as it turns out, was not yet the bottom.  As a matter of fact, it took another 10 months before the 9/11 S&P 500 low of 944 was retested.  Then, not only was it retested, but a lower low was established at 775 in July of 2002 and retested again in October, 2002.  Even then, it was not until April of 2003 that the market broke out of this bottoming trading range.  That range took 18 months before any “sustainable” bull market emerged.  Even if the huge “crash” of October 2008 was the bottom, we may have another 12 to 15 months before we work our way out of the current trading range.  However, the good news is, this process may present an excellent opportunity to utilize this trading range to take advantage of both the up and the down side movement.  Until our indicators show a much stronger direction we will remain mostly in cash, but stay on watch because it could be very soon. 

We are in the process of completing our quarter ending reconciliation of your investment portfolio and will be completing the quarter report and forwarding it to you within the next few weeks.  Even though our managed accounts were down a little for the last 3 months, I am sure that you are pleased we managed to avoid most of the huge loss of value that the markets sustained during that period!  I believe we will be able to reverse a good portion of last years losses by the end of 2009 as many of the attempts to repair the problems are beginning to work.

Please be aware that the tremendous market volatility made it necessary for us to do an unusually large volume of trading in your account last year.  We have arranged with the custodian to provide detailed gain/loss analysis reporting, which you will receive along with your 1099 statements.  With the detail provided in the Realized Gain/Loss Reports, it will not be necessary for your accountant to re-enter these data!  When you have your tax return prepared, be sure to give those reports to the accountant.

On January 12^th my friends and clients, Bill and June Gordon, appeared with me on the Nightly Business Report (NBR) on PBS television in a segment they were filming about investments in annuities.  We are making arrangements with PBS so that we can display the video on our website.  Until then, you can see video of the program by going to the following page on NBR’s section of PBS.org.  http://www.pbs.org/nbr/info/local-player.html?s=nbre07s1c30q4c4.  Our segment begins approximately 16 minutes into the program.

As always, if you would like to talk with me don’t hesitate to call.