Broker Check

Responding to the Financial Market Turmoil

October 2008

Dear friends and clients,

With the challenging times of the current market, how should you respond in regards to your investments?

First, we understand that the market’s volatility and decline is having both a financial and emotional impact on you. We want to reassure you that this tumultuous market will pass as has been the case after every other financial crisis; the Great Depression, the Crash of 1987, the 1989 U.S. Savings and Loans crisis, the dot-com crash and the 9/11 terrorist attacks.

As we know by now, the credit crisis is worse than most experts forecasted. It is having a profound global effect on the economy and the stock market. There is currently an extremely high level of uncertainty and fear which is driving the markets down and forcing them to act erratically. Some analysts believe it is possible that market uncertainty and volatility will continue into next year.

At this time, it is important to keep an eye on your long-term objectives and not to make short-term decisions that will negatively impact your long term goals. First, we believe that the investment vehicles we have used are quality investments. With the current market decline, there are now asset categories which are undervalued and present appreciation opportunities with an up market. We are looking at your accounts and your objectives and trying to position you to take advantage of these opportunities. To move into cash or extremely conservative positions at this time will most likely ensure that you won’t participate in the growth when the markets turn around. Missing these gains coupled with the current losses would produce a double whammy on your portfolios. It is also important to make sure that your portfolio is diversified beyond equities and fixed income. Non-correlated asset categories which might compliment your portfolio include real estate (via REITs) and managed futures.

In closing, give some thought to these two quotes from Warren Buffett:

"Be fearful when everyone is greedy and greedy when everyone is fearful."

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well”

We will continue to be here to serve you. Please call or email us if you would like to discuss any concerns or questions in the meantime.

Thanks for your continued trust in our ability to serve you.