Welcome to the July 30, 2008 issue

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We are recommending the sale of US Global Eastern Europe in the Moneyletter Venturesome and Moderate portfolios. We are recommending the sale prematurely because the risks of the fund have suddenly risen. The fund has a substantial allocation to Russian equities, and the Russian government, after a speech given by Mr. Putin late last week, appears once again to have a specific, large private company in its sights. It seems that the rules concerning private property are flexible in that country. We do not believe that it is prudent to maintain a position in a fund heavily invested in Russia. We will substitute Royce Global Value for the Eastern European fund in both portfolios.

Turning to the market, this has been a most confusing week. The market has moved up and down in large moves without any apparent news or event calling for a large response. Monday’s huge sell-off occurred out of the blue. But then the sharp rally of the last two days equally had no obvious cause. To us it suggests that the market is in the process of making a bottom. As we have said, we firmly doubt that the rally will develop into the next bull market, but the rally could lift the market to a higher plateau for trading over the rest of this year. In any case, we are encouraged by the market action and the results so far of this earnings season.

There is no change in our recommended asset allocation

New Fund Ratings – For domestic stock funds, Royce Low Priced Stock is now rated Buy. Three funds are now rated Hold: Aston/Optimum Midcap N, Laudus Rosenberg L/S, and Fidelity Convertible Securities. Five funds are now rated Sell: American Century Growth, American Century Vista, Vanguard Mid-Cap Growth Index ETF, Brandywine Blue, and U.S. Global Holmes Growth. For international stock funds, Emerging Markets 50 ADR is now rated Hold. Four funds are now rated Sell: Metzler/Payden Europe Emerging Markets, Third Avenue International Value, U.S. Global Eastern Europe, and Vanguard International Growth. There are no other changes.

Vanguard Mid-Cap Growth is in the Vanguard family Conservative portfolio. We will switch the fund into Vanguard Small Cap Growth ETF. Vanguard International Growth is in the Vanguard Venturesome portfolio. We will switch the fund into Vanguard International Value.

The Economy –

The Stock Market –

Bond Market –

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

The next Hotline is scheduled for Wednesday, August 6th at 7pm.

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