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There’s an old Chinese curse: ‘May you live in interesting times.’

Unfortunately, the times are REALLY interesting. So, I thought I’d take the opportunity to bring you up to date on some of the ‘interesting’ things we see, what we’re thinking about…

The first quarter of 2008 saw some of the worst market losses in five years. Those who were well diversified were further frustrated by parallel losses in international equities. Even some conservative funds were negatively impacted by the mortgage credit crisis and the rapid write-downs in mortgage holdings.

Headlines announce the continuing slide of the dollar against foreign currencies; high energy costs and an increased global demand for commodities are creating substantial inflationary pressures. The airline industry is under intense stress; four smaller airlines have failed in the past week!

For my long-standing clients, none of these events should come as a particular surprise. Though it is never fun to be investing in the face of such fierce headwinds, I’d like to make the case that when the storm has passed, great opportunities will be awaiting those who have had the fortitude to stick to a long-term, carefully considered plan.

I feel your pain, figuratively and literally. I am fully invested and eagerly await the buying opportunities to come. One should consider that the worse this gets the better the long term opportunities will be. I do not have a crystal ball; I cannot tell when this will end. But if history is a guide, when the pain begins to know no limits, it will have just ended.

Meanwhile, I discussed protective diversification measures with all my clients when times were better. Often it was a difficult idea to sell. But today those measures have mitigated client losses in the face of market declines.

Be aware that we’re taking action. I am actively reevaluating the appropriate asset allocations for all risk tolerances. Valuations have adjusted substantially and the time appears ripe to reposition and benefit from this correction. This is the environment that separates the ‘investors’ from the ‘speculators’ and ‘novices’.

This too will pass.