What to Do?

Our economy and most of the world is in the midst of a severe recession. Values of homes and stock portfolios have fallen sharply, retail sales are in a serious slump and unemployment is rising rapidly. What should you do, faced with this scenario?

First, do not panic, economies suffer recessions on a regular basis and recover on a regular basis.

Second, evaluate your own situation. Is your job secure? Do you have cash reserves to tide you over a rough patch? Are you carrying an uncomfortable amount of debt?

Third, attempt to reduce your spending by 8%. Doing so will go a long way toward erasing the impact of losses experienced.

Fourth, be patient and keep faith in your financial planners. If you refer to our letter of a year ago, you will see that we correctly “took to the mattresses” before midyear 2007 to preserve your capital. The actions we took substantially limited our losses to a fraction of the 30-40% experienced by the major averages.

Tom and I believe that at least most of the excesses have been wrung from equity values. This leaves us with the opportunity to enjoy above average returns going forward, as both dividends and call option premiums are at lucrative levels and stocks seem fairly priced.

Despite the adverse climate, we are very happy to be able to serve our clientele in this most challenging of times. Our success in avoiding the worst, positions us to take advantage of a marketplace that suits our talents and experience. Please call us with questions or problems.

Non-tax clients are reminded that our fees are tax deductible if you itemize on Schedule A. Tax clients are reminded to provide us with paperwork in February.
Very truly yours,

Michael F. Cantlon