October 14, 2002 (5:00 PM)

It sure has been a long time since we wrote in this space.

We continue to see weakness in most sectors. If you look at our July 24, 2002 writings, you will notice that our views at that time are similar to our current views. We have seen a continued obliteration of the markets this year so far. The DJIA (7850.29) is down a year to date of 21.67 %, S&P500 (832.32) is down 27.24 % and the Nasdaq (1210.47) is down 37.94 %. We continue to look for buying opportunities, and are seeing very few at the moment. We continue to hold our core positions (many of which were recently bought in your portfolios this month and during the end of September). We are beginning to see signs that the worst of the bear market in certain areas may be behind us. Our typical aggressive portfolio is still allocated less than 50 % to US equities. Our typical portfolio had a YTD loss through September 30, 2002 of 6.75 %. For our clients that are focused in fixed income the gains have continued.

We do expect that the gains that we have experienced in the Fixed Income sector will start to slow or possibly even turn into short to mid term losses. If any of you are familiar with our investment book ,(please call or email for a complimentary copy ) you may recall that we were accumulating Fixed Income investments in late 1999 and 2000. We also mentioned our defensive posture and our concern for Nasdaq 5000 on March 11, 2000 . Fixed Income vehicles continue to be a holding place for all of our portfolios, yet the double digit gains which we have experienced over the last 2 years are probably behind us.

We have always been advocates of not being able to time the market. We have established and continue to work with core investments. We continue to look to further those core investments and to establish further weightings in those core positions. We attempted in many portfolios to increase our position in Lucent Technologies (LU $0.68), only to be knocked down by a worsening telecom environment, further warnings and further balance sheet deterioration. Of course in retrospect our focus on Lucent was a poor choice (if we only knew) . Nevertheless, our portfolios remain very much intact (especially when comparing your portfolios to the rest of the worlds investors, and very probably when compared to your 401k and company sponsored retirement plans.

We are seeing various signs that the pain of this horrible bear market is closer to being finished than getting started. Ultimately, like we have always said, the time to invest will be when everyone is selling. We probably have not seen the mass selling in a broad sense that we would like to see. It is quite possible that the selling in certain technology and telecom issues has peaked. Many of these companies are being talked about as being dead forever, yet the transfer of data and voice over the internet and the telecom infrastructure will most certainly grow and there is no way that these industries are forever dead.

We ask that all our clients stay patient. We are constantly monitoring the economy , the companies we are invested in, the Fixed Income vehicles we are invested in as well as potential new opportunities to invest in. If you have any concerns with your portfolios , we ask that you call us. We like to describe investing at this moment with an analogy to a world class surfer. When a world class surfer gets caught in an unusually powerful wave, that surfer does not panic and try to fight the wave with all their might. The surfer will gather their thoughts, adjust their physical and mental being and proceed to monitor the ocean’s conditions for a proper time to once again reach safety above the water. We attempt to invest in the same logical fashion. We would like you to read a section from another section of our website. The following are several quotes from the section called ” Beating The Street ” :

9. Invest regularly.

10. The key to making money in stocks is not to get scared out of them. This point cannot be overemphasized.

11. A decline in stocks is not a surprising event; it’s a recurring event ‑ as normal as frigid air in Minnesota. If you live in a cold climate, you expect freezing temperatures, so when your outdoor thermometer drops below zero, you don’t think of this as the beginning of the next Ice Age. You put on your parka, throw salt on the walk, and remind yourself that by summertime it will be warm outside.

12. A successful stock picker has the same relationship with a drop in the market as a Minnesotan has with freezing weather. You know it’s coming and you’re ready to ride it out, and when your favorite stocks go down with the rest, you jump at the chance to buy more.

Again, if you have any concerns please call us and we will give you our views.