The story is changing rapidly, but it appears that Lehman Bros (the #4 investment bank) is about to file for bankruptcy and, Merrill Lynch (the #3 investment bank), is being forced to sell itself in a shotgun wedding (with heavy pressure from the Feds). Last week saw the disappearance of Fannie Mae and Freddie Mac and, of course, Bear Stearns disappeared in the spring.
 
         These are very scary times and we are very aware of the potential for chaotic pricing in the weeks ahead, but nothing that has happened, or that is likely to happen, is unexpected and we are well prepared to ride out the storm and prosper. This is of a greater magnitude than the difficult period surrounding the breakup of the technology bubble but, as was also true then, we will avoid most of the potential carnage.
 
         The portfolio in the year to date has a return of -2.7%.  Certainly not pleasing on an absolute basis but, accepting the fact that markets do fluctuate, it looks rather good compared with indices and assets all over the world that are down by 15%+. It leaves us in a very favorable position when conditions stabilize. Our flexible and conservative portfolio also is well structured to deal with further disruptions.
 
        I realize that when the markets are constantly in the news that this can be stressful. Don't hesitate to contact us with any questions or concerns.