October 10, 2008


Dear Valued Client,

I have been in this business for 20 years and have rarely felt the need to send out special mailings on the status of the markets.  Due to the ongoing storm in the financial world that has been ripping through the markets recently and resulted in action from Washington, I felt it was appropriate to reach out to you now to discuss the status of your portfolios and the state of the markets in general. 

While both the equity and fixed income markets have been languishing for almost a year now, no one was prepared for the unparalleled events that have unfolded recently.  As evidenced by the frantic sell-offs, as well as emergency actions taken by the Federal Reserve and Treasury Department, the scope of the events we have found ourselves in is rare and startling.

As investment managers of your portfolios, we feel the pain just as you do.  We have spent countless hours analyzing the securities we hold for our cli ents and continue to have full confidence in our investment strategies and disciplines.  We are maintaining our practice of buying securities of healthy companies with strong growth prospects, high quality bonds, and attractive mutual funds and exchange-traded funds in accordance with your target asset allocation.  Generally, we advise against straying too far from one’s asset allocation by trying to time market fluctuations.

Over the history of the markets, there have always been cycles of upsides and downsides.  Every historical crisis entails different components, thus making them virtually impossible to predict.  Although the growing credit and real estate problems have been apparent for some time, few could have expected the absolute meltdown that has taken place.

This leaves us asking: When will this meltdown end – and where will it leave us?  The markets could recover tomorrow, or they could get worse.  Whether or not we are at the bottom is unknown; however, as with every market crisis, the bottom will be reached and the market will rise once again.  The resurgence may be fast and unexpected, just as the descent.  In every other financial crisis the country has weathered, the markets recovered and the country survived.  And just like those previous crises, it often happens that at the bleakest moments, the market reaches its floor and turns around.

The recent actions taken by the Fed, Treasury, and global central banks signal better times ahead and the wheels are in motion to set the markets up for a recovery.  While we do not expect to see significant gains any time soon, we continue to have faith that our economy will be resilient enough to clean up the wreckage and bounce back, as it always has.

We do not advocate trying to time the market and recommend staying invested at all times.  While it may be agonizing to see the returns of your portfolios in the current market environment, it would be even worse to miss the market upturn.  We hold faith in the prospects of the securities we invest in, and are prepared to guide your portfolios through the rough times, as well as staying ready to ensure you reap the benefits of stronger, growing markets that are sure to come.  We will maintain our extensive monitoring of the current situation, and will make changes as we see prudent.  We continue to utilize our knowledge and experience every day, while remaining focused on our clients’ long-term objectives.  We believe that having a solid investment strategy and sticking to it is the best way to help protect our clients’ financial future.

Please do not hesitate to contact us with any questions or concerns.  We would be happy to discuss the markets in more detail with you, as well as assess your individual situations and make changes as you wish.

Sincerely,

Ken Schapiro
President
Condor Capital Management