Welcome to the MONEYLETTER Hotline for January 16, 2008

The correction deepened and worsened this past week. It deepened and worsened not only here in the U.S., but in stock markets all over the world. The fear of recession and of plummeting profits radiated out from the U.S. markets to markets everywhere. Never mind the realities. The old view, that when the U.S. market cracks all the other markets will crack even harder, still prevails.

There is no question that this week's domestic economic reports were not pretty. Yesterday we were told that retail sales fell in December. This followed on the heels of last week's feeble employment report. At the same time, American Express and Tiffany indicated that consumers were showing the economy's troubles were affecting the previously free-spending consumer. Putting the retail sales number and these reports from the financial sector together, the market shuddered. The number one nightmare is fear of a rapidly deteriorating consumer sector. The Fed's latest summary of activity based on data through January 7th is not as gloomy as the market is, as far as the consumer is concerned. We lean toward the Fed.

Turning to the markets, the real question, looking down the road, is whether the economy is headed for a meaningful fall. We do not see it, as both the Fed and Washington are winding up to deliver meaningful stimulus to the economy. We are going through an extremely difficult patch for investors. But no one sees any value in a recession. We believe patience now will be rewarded later.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, Jordan Opportunity is now rated Buy. Turner Midcap Growth is now rated Hold. TCW Small Cap Growth is now rated Sell. For international stock funds, Driehaus Emerging Markets Growth (closed) is now rated Buy. Oberweis China Opportunities is now rated Hold.

The Economy – The economy has slowed sharply. Forecasters are now looking for zero growth this quarter. At the same time most of the economic reports are showing that the economy still has a pulse, albeit one running at a very slow rate. Positive news is coming from the inflation numbers. December's consumer price numbers, out today, show that consumer prices remain well behaved. If the Fed wants to provide stimulus – and they do – the inflation numbers will not hold them back. The economy needs stimulus to prevent an unneeded recession. We believe that the Fed will cut rates by 1/2%, with a chance they may do more.

The Stock Market – As we said earlier, fears of a substantial and prolonged slowing in the U.S. has sent markets abroad tumbling. We believe that the very stimulus tonic to be applied here will also pick up the Asian markets. The economies there are slowing some, but we expect strong growth to continue. We remain favorably inclined toward Asian markets.

The Bond Market --

The Select Portfolio – There is no change for this portfolio.

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