2nd Quarter 2010

July-2010

Dear Clients,

The lazy days of summer have finally arrived.  Nothing to worry about, just relax, enjoy the outdoors, think of vacations, barbeques and family gatherings.

But wait, every morning when you turn on the TV or read the newspaper, the headlines say:

•     Oil spill may last until August or longer.

•     Unemployment is still 9.5% and more in some States.

•     California is facing another $20 billion deficit.

•     Wars in Afghanistan and Iraq continue to cost billions of dollars.

•     Healthcare costs are still rising.

•     Washington and California legislatures are at odds with each other over policy.

•     Economy is facing a possible double dip.

It is common to feel fearful when the market drops and hopeful when it rallies. As tempting as it is, what you don’t want to do is react to the everyday ups and downs of the stock market.  It is important not to let short-term market fluctuations interfere with your long-term goals.

With this in mind, let us quickly explore where we believe the market is now and what we believe you should be doing.  The market appears to be range bound and the S&P is trading between 1150 on the upside and 1010 on the downside. This trading range may go on for an extended period until a resolution occurs.  Which way will the resolution direct the market?  We are not sure, but we are going to give you some reasons for a positive resolution.

1. Interest rates are so low that money will seek its highest return. There are many companies in the market that pay high dividends.

2. Corporations are making money and accumulating record amounts of cash. Expenses have been cut and bottom line earnings are going up.

3. Globalization.  Many companies are International players and no longer rely solely on American spending.

In conclusion, we recommend you stay committed, have conviction and be diversified.

Enjoy your summer,

Jay K. Rosenblatt                                                        Craig J. Rosenblatt