Portfolio Update - 12/31/08

By proceeding, I acknowledge that I have read and understood the Disclaimer, Performance Reporting Disclosure and Copyright Statements . Dear clients, We finished off the year strong yet I was unable to get your accounts into the black for 2008. Our losses were far less than the great majority of investors, yet I am disappointed in having experienced any losses at all. Here is how my performance has stacked up compared to the averages:

1. Trailing 2 and 3 year returns are cumulative total returns and not average annual returns. The figures represent the cumulative average returns for all participants in each respective strategy.
2. We implement our Focus Portfolio inside of IRA accounts and margin accounts. In margin accounts, we are able to short sell individual securities providing us with greater opportunities to profit when stocks prices decline. The risk with short selling securities is substantial as it can result in losing more than a 100% of your initial investment. The performance dispersion of our margin accounts is greater than in our IRA accounts due to margin requirements, tax-loss selling and ability to borrow shares to sell short.

Despite the losses this year in our primary strategies, we are blessed to have experienced gains over the past 2 – 3 years. Few investors can claim this feat. I am hopeful for the future based on my performance in the past quarter since I implemented my new trading measures. I will provide an in-depth explanation in my annual report. I hope to mail it to you by Wednesday, January 7th. All the best, Matt