Welcome to the MONEYLETTER Hotline for January 30, 2008

The Fed gave the market what it wanted today, but the market's celebration was brief and ended before the trading day was over. It would appear that the market turned its back on the Fed, but we think that interpretation is wrong. Worries over the financial system spread immediately after the Fed action. The financial system's troubles are the No.1 bugaboo for Wall Street. When the worries were ignited, they overwhelmed anything else. Looking out beyond today's market close it is the rate cut that matters. But the market's horizon is short to begin with nowadays and has become ultra-short once the credit woes surfaced.

We view the rate cut as positive, not only because of the cut itself, but also because it tells us that we are dealing with an activist Fed, working to recharge growth despite the ongoing free-fall in housing. Until credit conditions take a turn toward normalcy, the Fed will be cutting rates. Although this is not the Fed's intent, the Fed's action today and the implication of its action are market friendly. It may take some time, but the conditions for a strong rally are being put in place. Overseas markets continue to stumble over concern about a recession here. The worries will remain until the economic news brightens here, as it will over the coming months. We believe patience now will be rewarded later.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, four funds are now rated Buy: Oakmark Equity & Income (closed), Janus Contrarian, Laudus Rosenberg Value L/S, and Federated Kaufmann Fund. Three funds are now rated Hold: Fidelity Trend, Brandywine Advisors, and Fidelity OTC Portfolio. Two funds are now rated Sell: Kinetics Small Cap Opportunity and Fidelity Aggressive Growth. For international stock funds, Emerging Markets 50 ADR (ETF) is now rated Buy. Five funds are now rated Hold: Fidelity Emerging Markets, Fidelity China Region, Driehaus Emerging Markets Growth, Fidelity SouthEast Asia, and US Global Eastern Europe. Oberweis China Opportunities is now rated Sell.

The Economy – The economic news was not all grim. New business investment orders were surprisingly strong last month after being awful for the prior two months. Some of the strength is being attributed to overseas orders. It makes no difference. Our investment goods producers are seeing their business pick up. The new numbers on last quarter's activity, while very weak, carried some positive news for this quarter. Housing is taking its heavy toll, but the rest of the economy is holding up so far. We look for a very weak economy this quarter, with a pickup as we go through the year.

The Stock Market – By and large, market professionals remain skeptical about the market outlook. Their skepticism is understandable, but we believe they underestimate the power of the stimulus now being applied to the economy. We believe that buying opportunities are being created as interest rates fall. We continue to favor equities.

The Bond Market --

The Select Portfolio – There are no changes for this portfolio.

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