A Great Quarter!

I said in my last letter, “we couldn’t be happier.” I was wrong. This was the best quarter in a long time. It put us solidly in the black for this year and more than erased our 2008 loss.

We put some of our cash reserves to work at the right time and closed our short positions just before the stock market took off. Now that we have enjoyed this rally, we plan to err on the side of safety and continue writing calls against most of our holdings and emphasize dividend income. This strategy has served us well in good times and bad for more than a decade. You should all be aware that my partner, Tom Guyett, has finished his period of understudy and is now as responsible as I for your financial well-being. He has witnessed the brutal setbacks that took place early in this decade and most recently. Tom has played a major role in developing and implementing the strategies that have provided our success.

We will curb our enthusiasm since the economy remains in recession and any significant improvement appears distant. Stimulus expenditures have yet to impact and the housing mess will continue for several years. Although, we are experiencing an adjustment to our expectations and lifestyle as a result of this severe recession (depression?), I am hopeful that changes will take place that are beneficial in the long run. Our nation and our collective households could not continue on the path of excessive spending and borrowing. This is a forced wake up call to fiscal responsibility.

Regulatory and tax reform is likely to follow. Health care, education and the social security system should also be tackled. Historically, major change follows periods of great upheaval. Let’s hope for the best.

As a reminder, here’s a list of products/activities that we feel are usually a bad bet.
A. Long term care insurance
B. Variable annuities
C. 529-type educational funds
D. Trusts

Please discuss these and other ideas before signing on the dotted line.

Remember that we are here for your total financial plans, and thank you for spreading the word to your friends and relatives about our superior results.

Very truly yours,

Michael F. Cantlon