Welcome to the August 27, 2008 issue

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The summer season is ending, and we cannot say that, from an investment point of view, we are sorry to see it go. The market headed straight down during June and though July 15 th. Since then there has been a modest recovery in the Dow, and a very pronounced one in the Nasdaq. In fact it is that Nasdaq recovery that is showing up in the performance numbers of the leaders in our fund tables.

As the summer ends we have seen more than one sign that a bottoming process is taking hold. The housing market indicators we received this past week are telling us that buyers are appearing for housing. Of course, the huge stock of foreclosed homes is undoubtedly drawing interest. Equally, if not more important, are the home price numbers which show that the rate of price decline is slowing noticeably. Moreover, almost half the metro areas in the report had price increases in June.

Aside from housing, today’s durable goods new orders number was very good news. The orders number we look at was up 2.6%, a big rise, and has been up three out of the last four months. Export orders surely played a big role. The point is an important segment of our manufacturing base is doing well. This is needed as the effect of the tax rebate fades. So far, the economy has held up better than expected. We continue to favor stock funds.

There is no change in our recommended allocations.

New Fund Ratings – For domestic stock funds, two funds are now rated Buy: Powershares QQQ (ETF) and Heartland Select Value. Two funds are now rated Sell: Asto/Optimum Midcap N and CGM Focus. For international stock funds, six funds are now rated Buy: Oakmark Global, Fidelity Worldwide, T. Rowe Price Global Stock, Artisan International Value (closed), S&P 100 Global (ETF), and USAA International. FTSE/Xhinua China 25 (ETF) is now rate Sell. There are no other changes.

The Stock Market – There was absolutely no volume this week. Next week will tell us much more about the near-term trend. Despite strong headwinds, we are cautiously positive.

The Bond Market –

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

We wish you all a restful Labor Day. The next Hotline is scheduled for Wednesday, September 3 at 7pm.

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