2nd Quarter 2009

June 29, 2009

Dear Clients,

As we end the second quarter and move into summer, we have good news to report. The markets, that hit bottom in March of 2009, have moved up sharply these past several months with many of the major stock market averages gaining 30% plus. With such good news in the short-term, it is very hard to predict what the markets will do in the coming months. 

After strong upside moves, markets tend to trade down as investors take their profits. This is very normal and ordinary.  We believe that this will continue throughout the summer. A 15%-20% downside correction from here would not be that bad.  One positive aspect is that it would give us the opportunity to invest money that has been sitting on the sidelines. For money currently invested or recently invested over the last quarter, we suggest you ride through this dip if the markets do indeed go down.  It is extremely important not to lose long-term perspective or get caught up in daily movements.

Longer term, we see the markets in slow growth. Leading economic indicators that predict the future are trending up not down. Banks and other financial institutions are now able to raise capital without the help of the government. The balance sheets of the major banks have passed the stress test conducted by the government. The credit markets that froze up at the end of last year and the beginning of this year are now starting to function normally. The yield curve, although steep, is not inverted and long-term rates are not overly high.  We will continue to hear about rising unemployment, housing defaults, credit card missed payments, commercial real estate collapses, government bailouts and a plethora of other problems as the economy heals itself. 

Here are our four basic rules for investing money in this market:

1.                Stay focused on your long and short-term goals

2.                Be diversified in different asset classes

3.                Match your income with your expenses

4.                Be in touch with us regularly

Have a great summer,

Craig J. Rosenblatt, CPA                                                        Jay K. Rosenblatt, CFP