Second Quarter 2009 Performance Report Cover Letter

The rebound that smartly began March 6th continued almost without pause throughout the remainder of this most recent quarter. As we have mentioned numerous times, “patience” was justly rewarded.

 For the Quarter Ended June 30, 2009, the S&P 500, our favorite equity index, rose 15.22%.

 So now what?

 Expecting this type of performance to continue at this pace is not possible. Due to the much publicized “deleveraging”, or lowering of loans, liabilities, and debt, slower growth in the near future is our expectation. 

Slower growth is not a terrible thing. The highs and lows of the markets recently were exacerbated by much of this former leverage, and hopefully as companies and our country rebuilds, and repairs, we will have a stronger foundation moving into the future.

Undoubtedly you have heard the calls for inflation and we have mentioned this as well. We have just completed a four part series in our blog at if you would like greater detail on the subject. For now we continue to see no immediate threat, but still believe possible changes to accommodate inflation in the future may make sense.   

We continue to be cautious with regards to Fixed Income investments, both in quality, and length to maturity (long term Fixed Income Investments have significant risk.) We understand that shorter termed, high quality Fixed Income investments are not yielding large amounts at this time, but feel much better being safe, and earning slightly less return for that safety.  Fixed Income rates will most likely rise in the future as our economy stabilizes.   Just as patience was rewarded in our Equity investments, we feel patience will also be rewarded in our Fixed Income investments as well. 

Thanks so much for your business and confidence. The last three quarters have been tough for everyone, and while we never know what the future holds, time is our friend in the current economic environment.






John A. Kvale CFA, CFP

Enclosure (2009 Quarter 2 Performance Report)

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