4th Quarter 2009

December 31, 2009

Dear Clients,

2009 has flown by! It feels like just yesterday we were writing last year’s end of the year message to you. Throughout the year we observed both ends of the spectrum; the markets started at extreme lows and are now ending at notable highs.

In the early part of the year we were gripped by fear as major auto companies were declaring bankruptcy, the banking system was failing, unemployment kept increasing, and many homes were going through foreclosure. Some of us were so consumed with fear our long-term goals were forgotten and we sold positions at the worst possible time. Many of you said you would rather have your principal safe (i.e., CDs) than earn money, but what happens when you lose principal to the unforeseen enemy of inflation? It’s time to address potential alternative investments.

Looking forward to 2010 some economists forecast robust growth while others forecast negative growth. Our take is the first part of the year will continue to see a rise in the overall markets. (Year over year comparisons and the quarter over quarter comparisons should be much better than the previous year.) Predicting the second half of the year is more complicated as we believe there will be some noticeable headwinds which will make it more difficult for the markets to advance:

1. The Federal Reserve will be less accommodating, raising short term rates.
2. The government will not renew the current tax rates, thus effectively raising all taxes on individuals.
3. Government spending has to slow down as the economy picks up. If it doesn’t both inflation and the deficit will rise. This will force an increase in interest rates.

We believe developing nations are the silver lining with globalization and innovation. As they strive to catch up with developing nations, they will be the engine of growth. Our investment theme for 2010 includes technology, materials, energy and dividends.

2010 brings on an exciting time for the office. Craig’s wife Melissa is pregnant with twins and Kelly Swantner is expecting a baby boy. (The babies are all expected late April/early May.) We thank you for your continued support and loyalty over the years. You are our most important resource and we try our best to help you navigate the financial world to reach your goals. We wish you a healthy and prosperous 2010.