Greetings,                                                                                                                                         July 11, 2007

It is the custom of these mid and year-end recaps to detail the most previous window of time past in order to entertain the principle that change is the only thing that remains constant. Therefore, it is our somewhat ornery delight to transcend the streaming data to bring you some timeless truths against the backdrop of the seemingly constant changes in the economy.

For the years of 2000 to 2002, bonds and real estate held their own while the stock market took its beatings. However, from 2002 through June 30, 2007, bonds have been the worst performing sector. For the same period, real estate has remained an excellent source of growth in the economy until the last 5 months. With the term ‘subprime’ forever etched into our consciousness as a result of the last several months, that term will likely carry the weight of most of the short-term concerns for both the bond and equity markets.

However, for the long-term successful investing mindset, money managers will likely find opportunities as ‘bonds’ and ‘real estate’ become synonymous with the ‘black plague’. You will recall this similar trend for the stock market during the 2000-2002 downturn as the short-term investors flocked to bonds.

International and emerging markets have continued to shine as a portion of the world’s economies are building infrastructures to support their future expected growth. The BRIC economies (Brazil, Russia, India and China) have been growing at a 5%+ clip according to the chief economist at International Strategy & Investment Group, Ed Hyman. In sharp contrast, the U.S. GDP is estimated to run about 0.6% this year.

A recession is defined as ‘six months of negative economic growth’. Since the average expansion part of the cycle usually lasts three or four years (the average recession lasts about 15 months), many managers have been fighting the ‘feeling’ that the current expansion season has run its course. However, money managers refer to “disciplined domestic economic engineering and robust global growth” as the reason for a continued strong outlook for the U.S. economy.

Cycles are an inherent part of the investment markets. Successful investors will continue to take the cycles in stride. Therefore, the underlying theme is to remain consistent in our efforts to not chase past returns, time the market, or project favored sectors. The best way to fund one’s current lifestyle for the long-term is to maintain a broad stance across all sectors of the domestic and global economies.

Your trust is our most valued asset. And, as always, we hope that you will feel comfortable to call or request an appointment if you have any questions.