Welcome to the MONEYLETTER Hotline for February 13, 2008

This week has been much better for the stock market after last week's shock. U.S. stocks rose for a third day today, representing the longest stretch of gains this year so far. A rally in technology and energy shares led the way.

After recent reports provided bad employment news and a surprising drop in nonmanufacturing activity in January, the economy needed something positive this week to ease the growing fears of a recession. Investors got it today in the form of the retail sales report for January, which showed an unexpected rise of 0.3%. Compared to the December report - which showed a 0.4% decrease in retail sales – this was welcome news indeed.

A 50 basis point reduction in the fed funds rate is still a virtual lock, at or before the next Fed Open Market Committee meeting on March 18th. Some analysts and traders see another 3/4% cut. Despite the Fed's action, borrowing costs for many homeowners and businesses with greater default risk have not declined. This development makes it tougher to sell properties and shake off the effects of the housing crunch.

We continue to favor patience as we wait for the effects of Fed policy and the economic stimulus package, which was signed by the President today.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, Fairholme Fund is now rated Buy. Three funds are now rated Hold: American Century Ultra (the fund is closed), Fidelity Growth Company (closed), and Wells Fargo Advantage Growth. Two funds are now rated Sell: GAMCO Growth AAA (closed) and USAA Growth. For international stock funds, three funds are now rated Buy: T. Rowe Price Latin America, Fidelity Latin America, and DWS Latin American Equity S. One fund is now rated Hold: US Global Eastern Europe. There are no other changes.

The Economy – In addition to the 1/2 to 3/4 percent rate cut seen on the immediate horizon, futures traders are indicating 1/4 point rate reductions in April and June as well in an effort to stave off recession. Accordingly, we look for a very weak economy this quarter, with a pickup as we go through the year.

The Stock Market – Rising prices at gas stations helped the retail sales numbers in January. This pushed the Dow higher so far this week after a 4-1/2% decline last week.

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

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