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In the Key of G: "What a Long Strange Trip It's Been…"

For those of you unfamiliar with the verse in the title, its from the classic Grateful Dead song that perfectly describes 2008 so far.

The year- and month-to-date have seen significant market selloffs in all segments, including Ag and Energy. Gold has held its own.

As we are looking at what to do in situations like we have in 2008, we are selling Tech and buying Ag, Energy and (on selloffs) gold.

It has been a stressful and difficult time so far, but our favorite sectors continue to have strong earnings and increased earnings estimates. Bunge, Potash, Haliburton, Transocean, Schlumberger…all have earnings that are growing in the 20% to 30% range. Additionally, as we increase exposure to these companies we are doing so at absurdly low valuations, making them great long-term investments.

I know its tough to hear the news about the 20% decline in the stock market, but much the decline is an overreaction. By taking advantage of this and buying the companies that have strong secular growth stories behind them and getting the earnings growth at cheap valuations, our clients will continue to outperform the market in the long-term.

Hang in there. I suspect that the market will selloff after the Fed announces a rate cut on Wednesday. It will probably be less than the market hopes for and we’ll see a decline. It will be short lived and an opportunity for us to buy our favorite companies in our favorite sectors for great long-term returns.

Mark