Fourth Quarter 2010 Performance Report Cover Letter

Dear Investor:

Enclosed you will find your Fourth Quarter 2010 Performance Report.  This report summarizes the last 90 days activities and consolidates multiple accounts into one report for a total comprehensive view. 

As 2010 concluded market participants took a very positive attitude pushing our favorite domestic stock index well into double digit figures. Double dip, commercial/residential real estate, and unemployment worries all failed to emerge as predicted by many early in the year.   

Looking forward to 2011, the following key items are most important in our view for another successful year:

  1. Unemployment to decline: Thus far in the recovery, unemployment has been stuck stubbornly near 10%. We feel progress needs to be made in order for our economy to continue growth. A lower unemployment rate would signal companies are being more aggressive, continuing to have earnings growth, and a more positive expectation moving forward.
  2. Interest Rates must behave: Interest rates have been very cooperative throughout the recovery. If interest rates begin to move dramatically higher, our expectation for a positive year would greatly diminish and we would take investment actions accordingly.
  3. China’s continued growth: We believe our recovery cannot continue without a healthy China. If China overshoots in slowing their growth, leading them into a recession, our positive view for domestic and world growth would again be greatly muted.

If these items cooperate we would expect another good capital market year, although not near the post mid-term election average we have written about in our last newsletter and expanded upon in our latest newsletter, but still a respectable, investor pleasing, year.

We will be sending a separate tax report by mid February that will summarize taxable items and help in your government tax filing requirements should you have a taxable account. We have included our latest private policy statement for your review. Also, we want to take this opportunity to offer our latest ADV filings; Requests for review will be accepted via phone, mail or email, and mailed immediately upon request.


John A. Kvale CFA, CFP

Enclosures (Fourth Quarter 2010 Performance Report, Private Policy Statement)

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