September 15 Email Commentary to Clients

These are extraordinary times in the financial markets and there may be questions about what this means for you and I am anxious to answer them. Please be assured that I am closely monitoring your account in this volatile market environment, taking whatever actions I deem appropriate with respect to any securities transactions on your behalf. In the meantime, please consider the following important points and if you have any specific questions, I encourage you to call me:

  1. We were fortunate enough to sell months ago any mutual fund(s) which were heavily invested in the financial services area.
  2. As for the mutual funds which we own in our portfolios now, none of them had the following securities as one of their top 25 holdings: AIG, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch and/or Bank of America. Nor did we own any of these securities in our managed portfolios.
  3. Some of our ETF portfolios own the KBF Bank Fund which makes up less than 1% of assets and it does not own AIG, Fannie Mae, Freddie Mac, Lehman Brothers and/or Merrill Lynch. KBF does own a small position in Bank of America which may form into a financial services powerhouse with the acquisition of Merrill Lynch.
  4. Attached is a US News and World Report “The Lessons of Black Monday” which sheds’ light on why informed long term investors shouldn’t panic during these times.
  5. I have received phone calls asking about how safe Charles Schwab is after the news about Lehman Brothers so I attached two pieces explaining Schwab’s financial condition and how assets are treated when Schwab is the custodian.

The news lately has been focused on mother nature’s way of creating havoc with its hurricanes, but investors are now being battered by Wall Street’s hurricane which did less damage than feared so far. As bad as it seems, Wall street has survived much worse and will make it through this one as well. As I email you this update, the stock markets are off their lows of the day which is a good sign and I am thankful that we don’t own any of the companies which are in jeopardy.

I will stay in close communication with you as we move forward. If you have any questions about current market conditions or your portfolio, please do not hesitate to contact me.

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