Quarterly Investment Update – 1st Quarter 2006

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April 3, 2006

Dear Friends and Clients,

The First quarter of 2006 has passed without a meaningful pullback.. This has been very positive for the overall outlook for stocks. Looking ahead into the remainder of 2006, 2007 and 2008 until the time the next presidential election rolls around, most analysts feel that the market’s tenacity is a very bullish omen. But I would have to admit that I am a little surprised that we have not had any type of meaningful correction. Overall, the quarter ended on a positive note with all the major stock averages going up. The Dow and the Standard & Poor 500 Stock Index both gained 3.7% for the quarter. The NASDAQ Composite Index was up 6.1 % for the quarter.

Last Tuesday, The Federal Reserve Board decided to increase short-term interest rates, again, by another typical Greenspan -era rate of ¼ percent to bring the federal funds rate to 4.75 per cent, its highest level since April, 200 I. This is the 15th consecutive quarter -point increase and the door. was left open for further rate increases. Once the news release at 2: 15 p.m. came out, the major markets immediately went down but the Dow Jones Industrial Average closed down only 95 points for the day. Furthermore, NASDQ declined less, on a percentage basis, than the Dow. By the next day, the stock markets quickly rebounded but ended down for the week. Now whether this was one of the last or close to the last interest rate increases should be decided in the near future as the economic gurus’ determine the rate of growth of the economy. We certainly hope that this increase is one of the last because our long-term treasury bonds should get a boost once interest rates stabilize. However, there maybe other factors beyond Chairman Ben Bernanke and the Federal Reserve Board’s control including increases in the price of oil as well as geopolitics, especially in China, that may push interest rates even higher.

During the quarter ended March 31, 2006, we continued with our strategy of balancing our portfolios in favor of bonds or bond-like substitutes, especially in those taxable portfolios that virtually consisted of all value and growth type of equity stocks. As conservative, long-term investors, we have continued to reduce our over-weighted industry sectors of stocks and mutual funds that have substantially appreciated in value to raise cash. We’ve been purchasing long-term bond funds, zero coupon bond funds, limited partnerships, preferred stocks and convertible bonds as well as selected individual stocks to achieve our goals.

In addition, we have been re-balancing the IRA portf9lios from a very aggressive equity strategy and using the proceeds to buy into some long-term treasury bonds. We feel that long-term bonds have stabilized enough and can provide us good income and less risk to all of our portfolios. So even though we invest in primarily selected individual stocks that have value and growth characteristics, we feel that this is a good time to reduce our risk by investing some allocation of our total portfolios in income-producing security classes such as bonds and, we feel confident that this step will give us more assurances as conservative investors to achieve our goals.

All in all, we continue to have a positive outlook for stocks but we will continue to take defensive measures and to use any correction as an opportunity to buy more of our favorite stocks and mutual funds.

Again, thank you very much for the trust and confidence you have placed in our firm and it is always appreciated. Please contact me with any questions or comments.