First Quarter 2012 J.K. Financial, Inc. Performance Report Cover Letter (Clients)

Dear Investor,

Enclosed you will find your Q 1, 2012 Performance report for your perusal. As a review this report summarizes your transactions for the latest 90 days and also contains tax basis for all investments.

With the weight of the world on their shoulders, capital markets have moved dramatically from negative to positive emotions in less than one and a half quarters. Just as we were penalized last year for having negative influences resulting in very meager returns, investors have turned on a dime and declared victory resulting in overly optimistic returns in the short term, in our opinion.

Just as we made purchases when times were dark, we are sticking to our allocations and rebalancing. Given current market enthusiasm, that means selling investments that have gone up and are again out of balance as most capital markets moved in double digit form through the end of the first quarter.

While we had thought the possibility of a pay-back year was in the cards for the meager returns from last year, it is very likely market participants have once again overshot, this time to the high side. Given the election, international and domestic concerns we would not be surprised to see a pullback of 5-7% which we believe would be healthy for the capital markets and participants. We think it is a good idea to keep from being too attached to possible continued returns of this magnitude in the near future, i.e. next two quarters.

If the capital markets continue to rise with such speed and enthusiasm without major further positive data points we will follow our discipline and rebalance possibly in an even more aggressive manner.

We hope you have seen that we have a very special private client event later this month with Robert McTeer, Former Dallas Federal Reserve Chair and fellow Greenspan FOMC board member. The event is April 28th at 2 pm, and being the first of its kind, we think very timely and especially exciting given the political and economic situation of recent.

In closing, thanks very much for your continued support and we look forward to an interesting year as many items unfold.

Have a Super Spring!


John A. Kvale CFA, CFP

Enclosure (First Quarter 2012 Performance Report)

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