The stock market produced one of its worst returns in history. For the nine months, the S&P index of 500 stocks was down 28.99 % (17.70 % down for the three month period ending September 30).

Our results are better than the index because we diversify, but first let's look at that portion of our accounts invested only in common stocks. The common stock portion of our accounts, as a composite, declined 16.85 % for the quarter, down 25.54 % for the nine months. (In previous quarters, our composite result for common stocks was much better than the S&P. However, advisors know that "results gravitate to the mean." Therefore, we expect our results to more closely match the S&P, given time. Advisors generally express satisfaction when their results are better than the S&P, which is the case for us.)

When we measure the results of entire portfolios, including fixed income securities and cash, our composite return for the quarter was (12.28) %, and for the year (17.67) %. These numbers are much better than the S&P average, and reflect our policy of diversification. These two numbers are the most important for our clients, because the numbers reflect the net result of dealing with WP&M.

Portfolios invested only in tax-exempt municipal bonds were stable to slightly up in value. Bonds are a unique asset class. Investors in this asset class expect relatively low volatility, plus the right to return of principal at maturity. However, the resale value of bonds changes. Investors who sell bonds prior to maturity might receive a slightly higher value, but generally receive a slightly lower value due to transaction costs.

Nancy and I feel concern and empathy for all investors involved with the present market. This is a very difficult time. (JWG, 10-30-02)