Welcome to the May 07, 2008 issue

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Despite today's poor action, the markets have been rewarding since the last Hotline. The economic reports have been positive overall and we now know that the economy entered May acting better on many fronts than had been expected. As a result of the reports talk of recession has quieted down, and there is now a consensus that whatever is facing the economy, a deep recession is not one of them. In addition, the economy has held its own, more or less, before the stimulus package has had a chance to perform its work.

But a problem has arisen and that is oil prices. We think that oil prices had a lot to do with today's disturbing market slide. We can see no good reason for the selling except oil prices and profit taking. The market has been acting well, supported by the relatively good economic and earnings reports. We believe the market will continue to act well provided oil's relentless upward trend is broken. The U.S. consumer has been holding up much better than expected, but oil prices are capable of turning that around.

Meanwhile Asian growth continues with China's last quarter coming in at 10.8%. We continue to view equities as the top asset class for investment now.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, two funds are now rated Buy: Fidelity Leveraged Co. and Neuberger Berman Partners. Five funds are now rated Hold: U.S. Global Holmes Growth, Laudus Rosenberg Value L/S, American Century Select, Bridgeway Aggressive Investors 2, and Janus Contrarian. Fidelity Growth Discovery is now rated Sell. For international stock funds, MSCI Emerging Markets is now rated Buy. Two funds are now rated Hold: T. Rowe Price Emerging Europe & Mediterranean and Janus Global Research. There are no other changes.

Fidelity Growth Discovery is in all three Moneyletter and Fidelity family model portfolios. In the Moneyletter Venturesome and Moderate portfolios we will switch the fund into Jordan Opportunity Fund. In the Conservative portfolio, the switch will be into Janus Enterprise. In the Fidelity family portfolios we will switch the fund into Fidelity Leveraged Company Stock Fund in all three portfolios.

The Economy —

The Stock Market —

The Bond Market —

The Select Portfolio — U.S. Global Gold Shares is to be sold and to be exchanged for T. Rowe Price New Era.

The next Hotline is scheduled for Wednesday, May 14th at 7pm.

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