We Couldn’t Be Happier

The March rally has offset our difficult January and February. The indexes are still badly in the hole, but, that’s not you. The first two days of April are way up, so don’t let the news media get you down.

The world economy is in serious trouble. The excesses of yesterday will haunt us for a long time. There are some early signs that perhaps the worst is behind us. Undoubtedly, 2009 will be the worst year, economically speaking, in decades. However, it is important to remember that the financial markets are forward-looking and may be signaling a light at the end of the tunnel.

On the other hand, we could be experiencing a false rally which could fail and put us through additional pain.

Our strategy had been to eliminate our short positions and push our call writing to the maximum. This call premium is very substantial now, amounting to about 10% in most accounts. This provides us with a cushion of 13% (when we consider dividends) against another market slide. If the slide does not come, this cushion will accrue as your gain. If the market rises, your gain will be even better.

Since we have avoided major damage in the first quarter of 2009, we are in a position to benefit nicely when things improve. This is why we “couldn’t be happier.”

Tom and I know that most of you suffered through debilitating fear and anxiety and we appreciate that you have not panicked and jumped ship. Your faith in us and your courage has been rewarded by relatively minimal losses compared to most investors. We believe we are poised to participate in investment returns which may be greater than earlier expected since we are starting from such a low base.

Thank you for placing your trust in us. Please share your good fortune with others who might benefit from our services, and try not to suffer each negative statistic that the media puts forth.

Very truly yours,

Michael F. Cantlon