Update on Harold April 29

We are pleased to report that Harold is home from the hospital and feeling much better. The pneumonia turned out to be a strain that is common for patients recovering from Lymphoma. Once identified, and the treatment was adjusted accordingly, the results were favorable.

He met with his oncologist this afternoon and received another favorable report. All signs continue to point to a full recovery from both the Lymphoma and the pneumonia. In fact, we expect Harold in the office this afternoon.

He and we, continue to be very grateful for the outpouring of support he has received from you. We are also thankful to all of those who provided outstanding care and support during the past few weeks at the University of Maryland Medical System. Thanks to all of you!

Market Update

Greg had the opportunity to attend a 3 day continuing education meeting this week. The meeting provided the opportunity to talk with other advisors about how they are handling the current market environment and to hear several of the industries brightest minds speak about the economy and stock markets.

Highlights included a presentation “Inside the Financial Crisis”, with two former Federal Reserve Governors and Paulson’s deputy who were “at the table” and instrumental in decisions during the crisis. J.J. Johnson presented the “View from the Hill” and focused on how regulatory changes may shape the financial industry and subsequently the stock market and economy going forward. Finally, Bruce Johnstone, Managing Director of Fidelity Investments spoke about the stock markets, the domestic and global economies.

Attending education sessions such as this allow us to stay on the cutting edge with regard to strategies and ideas. These sessions also provide new ideas about how we can improve and continue the high level of service and advice we strive to provide to you.

Our current assessment of the economy and stock markets remain essentially unchanged from the last time we wrote. Boiling it all down, we believe that 2010 will continue to be a year of potential economic recovery coupled with potential stock market recovery.

However significant pressures and risks remain and make 2011 very questionable.
There are indeed positive signs out there. Consumers are spending, restaurants are full here in Howard County and help wanted signs are popping up.

However, as we said on April 16, consumer spending may not be able to sustain the current pace of growth through the end of the year. In fact, we anticipate a slowing as we move into the fall. We MUST have improving jobs and growing incomes to sustain the economic growth. Our view is that the current cycle is one which we would call cyclical and is not permanent and sustainable.

We continue to hold to our belief that the likelihood of a double dip recession in 2010 diminishes day by day. Yet, 2011 remains a wildcard.

The factors which could influence the economy and stock markets in 2010 and 2011 are as follows:

• The government stimulus winds down.
• Tax rates increase?
• Fed will tighten?
• Healthcare costs?
• Cyclical increase in earnings? Will earnings a year from now will go to lower/slower levels?
• Supply and demand could catch up with the Fed as they print more and more money. Over time the purchasing power of the dollar could continue to diminish.
• Fed may be forced to act sooner if GDP surprises or if China stops buying bonds.
• World event risk.

The fact that there is a mix of positives and risks should not surprise any of us coming out of one of the greatest financial events our country has ever experienced. There could be a push and pull for some time between positive factors and underlying risks.

In light of the current environment we do not anticipate dramatic or significant changes (based on current data and assumptions) in our actively managed accounts in the coming months or quarter. While not dynamic or interesting, cash reserves remain a critical component in our actively managed allocations due to the potential risks outlined above.

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Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us. Generally accounts less than $150,000 are not actively managed. An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.

Important Disclosures

• Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us.
• No diversification can completely protect against market risk or other risk factors with investing. A diversified portfolio could still lose money.
• An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.

Foreign investing carries additional risk such as currency risk, political risk and different accounting standards.

*Lowe fs is a registered investment advisor.