“January: This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, October, September, April, November, May, March, June, December, August and February.” – Mark Twain

Seriously though, 2006 was another upstanding year for all of us. And if you believe the consensus, 2007 looks to be more of the same.

I am inclined to go along with the crowd as we have fewer threatening storm clouds than usual. Interest rates have stabilized. The slowdown in residential real estate continues, but seems less of a threat to our economy. Similarly, oil is still expensive, but our economy seems to have adjusted.

Inflation has been benign, and, despite massive liquidity, will probably be kept in check. The weakened dollar could become a problem if foreigners decide they do not want their investments in a shrinking currency and therefore reduce exposure to U.S. securities.

Tom and I continue to locate viable equity opportunities which provide a very fair risk-adjusted rate of return. Corporate profits will continue to rise, although at a slower rate. Dividend growth and stock buy-backs will buoy the market.

We reviewed all accounts prior to year-end and mitigated taxable capital gains wherever possible. Many old-time clients have built up substantial embedded capital gains with no further offsetting losses to be found. Unfortunately, the “devil” must some day get his due.

Very truly yours,

Michael F. Cantlon