07/30/2007

Deja Vu All Over Again

Hello:

Headlines read: Houses losing value! Orange County (CA) Bond Trouble! Liquidity Drying Up!

It seems like the early nineties all over again.

Both coasts are having the most trouble with real estate values just as it was in the early nineties. However, it is the Orange County Employees Retirement System (OCERS) instead of the Orange County Investment Pool (OCIP). Fine line? We hope not. Last, but not least, it is the liquidity supplied by questionable mortgages this time as opposed to liquidity supplied by questionable bond offerings in the early nineties. Whatever engine slows liquidity, we see reduced credit availability on the personal level and on the commercial level resulting in slowing consumerism and reduced number of mergers and acquisitions.

What's the bottom line? Just when you are tempted to stray from asset allocation strategies , it is time to be more committed to classic portfolio management methods. We thank all of you for your patronage and for following our advice and recommendations. Not only does asset allocation make your portfolio healthier, in the long run, but also, we believe, it delivers greater peace of mind.

In terms of stock market evaluations, currently, we are near mid-April levels on the S&P 500, however, we are still bullish on this maturing market and continue to be cautiously optimistic.

Do your donors have questions? We would be happy to do a presentation for you. Contact us at 800.727.0941.

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager