For the first time in two years, we have fabulously positive figures to report.

However, our positive figures are no more meaningful than the negative numbers that have dominated most of our reports (and the reports of most investment advisors) in the last 18 months. In fact, numbers are not meaningful at all. We can fabricate almost any number we want, or give any impression we desire, merely by picking a favorable start date. That is why you must read these reports in context. You must read this report, and many previous reports, perhaps all previous reports, to understand our results, our philosophy, and the importance of looking long term. All our reports, positive and negative, are on this web site. The more you read them, the more you will understand that we strive to improve net worth over the long term.

At the end of June, 58 portfolios showed a composite rate of return of 12.16 % for the six month period commencing December 31. The common stock portions of these 58 portfolios returned 16.21 %, compared to 14.89 % for the Standard & Poors Index of 500 stocks. These figures are not annualized. If they were annualized, the resulting numbers would be in outer space.

Of course, we are happy with these numbers. More importantly, we are happy that our clients are beginning to feel more positive about the market, and more secure about their personal financial lives. We hope that the positive trend continues. We believe that most severe bear markets are followed by periods of sustainable growth.

Sadly, we again report the departure of a client. Over the years, we have reported clients gained, and clients lost, thereby providing a well rounded picture of our business. We give more details about clients lost, because this information is most useful to individuals who contemplate investments in the stock market, and especially to those who contemplate doing business with us.

The client lost is an émigré who invested with a large trust department about 1995, and invested additional funds with us in June, 2000. At some point during the decline of 2002, he and his wife decided to liquidate all stocks "when we can recover our original investment." His target value was reached in June, 2003, and he ordered complete liquidation, suggesting that his funds will go to real estate "where returns are higher and more predictable."

We do not report results of portfolios invested exclusively in tax-exempt bonds, and these results are not included in our composite. We believe that tax exempt bonds are an asset class that is not comparable to diversified growth portfolios. In private discussions, we provide anticipated rates of return both to clients and to prospects. These returns are above average because we purchase tax exempt bonds at prices lower than available to most individual investors.

jwg, 7-14-2003