May 2004

Investment Advisory Bulletin

The past three months’ investment results were characterized by good results in

February, break-even in March, and across the board losses in April.  Overall the markets lost 2.1% during this time.  However the spread in losses was remarkable.  The biggest losers were precious metals and technology funds losing 12.3% and 10% of their values respectively.  Real estate had an 8% rise in February and March, offset by a 12% loss in April.  As is common in a market decline, growth funds fell further than value funds with growth falling 4% compared to value funds falling 1%.

As I reviewed investor accounts for the quarter, I found that the biggest losses were in concentrated positions.  Quite a few of my clients have a considerable amount of their portfolio concentrated in a few assets due to personal preference or some pre-existing investment pattern.  In general, I try to diversify these investments.  This quarter the largest losses came in the concentrated positions which remain.  Diversified, managed funds appeared to have fared better on average then undiversified funds and certainly did better that those concentrated positions of which I saw a small sample.

As always, it is difficult to forecast the near future.  However, at this time I believe that we should hold investments for the next quarter or two as the political campaign plays itself on out and as the national economy continues to strengthen economically.  Rising prices, especially in interest and energy related industries are a major concern.  However, in spite of these concerns, I still believe that we should remain fully invested and broadly diversified into equity investments to take advantage of any market up ticks which can and hopefully will happen in the coming few quarters.

As we work through these continued turbulent times, feel free to call me at anytime with your financial and investment issues.  Have a great summer!

~ Roger D. Werner