3rd Quarter 2010

October 1, 2010

Dear Clients:

As we close the books on the third quarter, we reflect back on one of the best quarters in history and look forward with optimism.  Even with the headline fears of a double dip recession, high unemployment and a declining dollar, the S&P 500 index was still able to produce a 10.7% return for the quarter.  As Warren Buffett once stated, “Be fearful when others are greedy and greedy when others are fearful.”

Our last letter correctly predicted the S&P market would trade between 1150 on the upside and 1010 on the downside.  Just recently we broke out of that trading range to the upside and though it is difficult to predict where the market will go in the future, we are encouraged by global economic expansion.  Even with this optimism, though, we must consider the headwinds that may side track us going forward.  The first issue is the mid-term elections. Although we are unsure which party will be victorious in November, the markets may be negatively affected.  The second issue that needs consideration is tax policy.  At this point in time we are unsure whether the Bush tax cuts will sunset or not.  If they do sunset, the tax on capital gains will increase and this will negatively affect the markets. Markets hate uncertainty and until these issues are resolved we will continue to see a lot of volatility.

One of the top questions clients ask us is how can we make money with no risk. Unfortunately, this magic pill does not exist. The only way to reach for financial freedom is to diligently save during your accumulation years and strategically distribute during your retirement years. If you are in the accumulation phase of your life, think about increasing the amount of money you are contributing. (One less Starbucks coffee a week could grow to a significant amount of money.)  If you are in the distribution phase of your life, review your distribution rate with us to determine whether or not it is appropriate to ensure your accounts last your lifetime. A distribution amount needs to be a flexible. Just like in business, in years your account outperforms you can have a raise, but in years your account underperforms, you must be willing to take a pay cut.

As always, we thank you for your business.  We encourage you to call and set up an appointment to come in or just say hello.

Sincerely,

Craig Rosenblatt, CPA                                               Jay K. Rosenblatt CFP®

Financial Advisor                                                       Financial Advisor