~Investment Advisory Bulletin~

August 2003

GOOD NEWS!

After three full years of a bear market, the stock market tentatively turned up in April and in the past three months has shown a very strong positive performance.  The average stock fund is up 12% with growth funds taking over the lead role at the expense of value-oriented funds.  Bonds, which had been doing quite well last year reversed their pace and lost .7%.

At this moment the markets are favoring small and medium cap growth companies with both domestic and international funds doing well.  However, as I have mentioned repeatedly in this newsletter, one of the keys to investing is adequate diversification.  Accordingly, while we are shifting our emphasis, I believe it is still very important to keep both income and value positions.  This market has a way of turning on a dime and we need to be able to have all positions covered.

Many business writers comment on the capitulation of individual investors mired at the bottom or near the end of a bear market.  I have had several clients who have pulled out of the stock market in the past twelve months when the tension of a drop of a depressed and volatile market has struck home.  The unfortunate thing is that these individuals are selling out after they have suffered the losses in the bear market and should be ready to realize the gains in the coming return to good times.  In the past four months the market has risen just over 20% - a gain which they missed out on.  Based on history the good times should continue for a year or two.  Although no one can predict the future (and we ought not to try to predict market direction) it does seem that a person should at least stay in the markets once they appear to have turned positive.

This has been an exhilarating few months that we have just seen and I look forward to continued prosperity for you in your investments.  Please call me at any time that I can be of any assistance or whenever you have issues you would like to discuss.

-- Roger D. Werner