Legacy Wealth Planning

Martin McClellan

July 1, 2010

Greetings All:

The midpoint of 2010 has arrived. The first six months of this new decade have been anything but boring. We've witnessed events that may forever change the face of free-market capitalism. We traversed the depths of anxiety/frustration and the height of hope. The world is on edge as we ready for the half number two of Twenty Ten. As you all know, I have to look for the positives of all this, most the time against the grain of all the media sources flooding into our lives, even though the positives are small, they are there.

I have to believe in the “capitalistic” nature of our Nation and I do not have a crystal ball. What I do know is that I talk with many of my clients throughout the month and over the past 6, here are some common themes/concerns that have surfaced.

We are heading into a Socialist society! For an economy allegedly being strangled in its bed by the Administration, U.S. capitalism seems to be delivering data the supports recovery. Numbers published by the Federal Reserve a few weeks ago show that corporate profit margins have just hit record levels and federal spending, about 25% of the economy this year, is expected to fall to about 23% by 2013. I pay little attention to the percentage numbers tossed around. My focus? Corporate America is working hard to become profitable and it appears that reining in Government spending is a priority. None of this is supporting data for Socialism.
The markets are panicky because of the US Deficit! Well…maybe they should but the reality is that they are not. If they were, the interest rate on government bonds would be skyrocketing. That's what happens with risky debt: Lenders demand higher and higher interest payments to compensate them for the dangers. But the rates on U.S. bonds have been plummeting recently; The yield on the 30-year Treasury bond down to around 4%. By historic standards that's incredibly low and not indicative of panic.
Inflation is just around the corner! This is not evident either. On the contrary, the Fed Report mentioned above is also saying that inflation is expected to average just 2.3% a year over the next three decades. I have no idea how they come up with that forecast but I thought I would at least share it with you. I think we might consider low inflation or maybe even the opposite…deflation; a drop in prices.

With all that being said and knowing that we are watching unemployment, interest and inflation, here are a few other things that I am watching as an indicator of market direction:

The CRB Spot Commodity Index. Not a commonly followed index but the analysts watching it say that if it stays above 370 that is good. Yesterday, June 20, 2010 it closed at 422. The thinking here is that if the global economy is to keep growing, industrial consumers from Shanghai to Shreveport will need to buy raw materials. A drop below 400 in the near term would raise caution and if it did decline to 370 or less, this would raise a serious concern.
The Euro. Above $1.15 (that is 1 Euro = $1.15) shows that the European Union is deemed to be healthy. Between 2004 – 2006 the Euro was in the $1.18 to $1.20 range. In this area, multinational organizations that pay their bills in Euros should step in and buy. Below $1.15 by the July-August timeframe would suggest the European Union's problems may be intensifying. Yesterday, June 30, 2010 the Euro was at approximately $1.22.
New lows on NYSE. If in any given day the number of new lows on the NYSE exceeds 218 this could create concern. Again, Yesterday, June 30, 2010 it was at 131.

Surprisingly, none of these three triggers came even close to being hit on Tuesday, June 28, 2010, despite the Dow's 268-point decline.

I will end on this note and I want you to simply realize from all this that I am watching many things more closely now than ever before. Do not hesitate to call upon me if needed. I am here

Regards,

Martin McClellan

Managing Partner

Financial Advisor

Legacy Wealth Planning

This research material has been prepared by LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

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June 8, 2010

Greetings All:

Let’s take a breath. May did not fare so well. Why? The markets again are interpreting the European financial crisis as the end of the financial world. That is so far from the truth it is frustrating. According to a report from a Federal Reserve official, “the European debt crisis isn't likely to throw the global economy back into a recession”. He continues, “The turmoil will probably fall short of becoming a worldwide recessionary shock”, and further, “in the past when countries defaulted on their debt, the episodes generated financial turmoil, but they didn't throw the world economy into a downturn. Take Russia’s default in 1998 as a case in point” (James Bullard, president of the Federal Reserve Bank of St. Louis). He doesn't think the European crisis will spread into a broader financial contagion like the 2008 reaction after the collapse of Lehman Brothers.

Yes, I agree we are in a fragile time but didn’t the huge market correction of the past two years demonstrate to us just how erratic the markets can act to the downside? The global economy shrank by 0.6 percent in 2009, its first dip since World War II but the global economy is now showing signs of growth and we are also seeing signs of recovery here at home. Europe's problems are occurring as the global financial system remains fragile but are their problems enough to warrant the trillions of dollars in lost market value since the recent market highs in April? My vote is no.

I know it is not easy but it is important to remain focused on the long term and not get caught up in the minute-by-minute or even daily gyrations of the stock market. Right now, interest rates are low, inflation is tame and jobs do appear to be coming back. All bode well for the long term.

Europe still is dominating the uncertainty but the financial magnitude is nothing like the US banking crisis we just experienced. The European Union and the International Monetary fund and developed a financial plan worth about $1 Trillion but European Governments will now have to prove that they are able to better co-ordinate fiscal policies, to adjust liabilities related to the welfare state and to provide flexible support for private entrepreneurship before this “bail-out” money will move their economies forward vs hobbling it with more debt and no source of income to reduce that debt. In a word…uncertainty and this is what is gyrating the markets. I suspect it will all work out but there is going to be many repercussions. It is kind of humorous as if you ask, why, you would probably get the answer… It was caused by a cascade of failures in technical, human and regulatory errors. I think this applies to just about every malfunction going on today.

I emphasize still, we stay the course. I am watching, evaluating and assessing the risk of all this global economic activity daily. I still feel the over-reaction, while scary and frustrating, is just that…an over-reaction and will work itself out over time. Let’s focus on the income you are getting from your investments, evaluate its appropriateness and stay in close contact when you have concerns.

My best to you and your family.

Regards,

Martin

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May 5, 2010

Greetings All:

With all the small pockets of positive economic activity still maintaining forward momentum, we did just end the month of April on a somewhat downbeat tone. As many of you know, I am being very cautious at these market levels and the recent volatility increase (4 of the past 5 days the Dow Jones Industrial Average has had movements of over 100 points and 2 of those days have been significantly weak) I think my caution is warranted.

Presently my focus is on three key economic issues; Inflation, Interest Rates and Unemployment. All of which now seem to be fairly stable. The most worrisome indicator, unemployment, seems to have leveled off and now appears to be back into the single digits. Watching these closely help me in guiding you but these are the foundation for my observations.

Other areas of course are real estate. In a previous month’s letter, I shared with you some concerns that I had with the commercial real estate markets. In a recent report I just received from The National Real Estate Investor (an industry publication) they are stating that there are, “signs of life returning to commercial real estate finance”. In this same publication, their expectations were for about $25 billion in new issuance of commercial mortgage-backed securities by the end of this year; possibly a calming of the fears that the commercial sector could be facing future weakness. We are seeing improvement in residential real estate as just today the National Association of Realtors said its index of sales agreements for previously occupied homes rose a stronger-than-expected 5.3 percent in March. Again, I am cautious in my accepting of such information but it does demonstrate potential.

Other numbers that have been released since my last letter showed increases in worker productivity and just today the Commerce Department said orders to U.S. factories rose 1.3 percent in March; Analysts expected a drop. Unfortunately much of the positive news here at home is being overshadowed by the events unfolding in the Euro Zone, specifically with Greece. Albeit the latter is certainly interrelated to the US, I think the volatility stemming from it is a bit over done. Does it warrant concern? Absolutely.

It is quite eye-opening to me in that 10, no…5 years ago, I could come into this office and match any investor with an amount of cash to invest with the appropriate investment. Today, it may take a week to scrutinize and evaluate any investment from a high quality US bonds right up to an investment in stock. With that being said, there may be times when you begin to feel that there is too much cash in your account but know I am diligently looking for places to invest wisely on your behalf.

Opportunities exist; I just have to hunt-n-seek what is best for you. Still maintaining my optimistic but cautious approach and receiving many comments of appreciation for this effort. I am offering potential new clients a trusted “second opinion” so if you think of anyone that may be interested, send them my way. Until next month, my vigilance continues…

Regards,

Martin McClellan

Managing Partner

LPL Financial Advisor

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

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April 9, 2010

Greetings All:

As I usually do, I went back to last year’s letter to see what was going on 12 months ago. Last April, I forwarded to you a letter written by LPL Financial regarding its financial practices and corporate methodology in handling your assets and investment accounts. In a time where many financial institutions were failing or on the brink thereof (and hiding from the public), LPL Financial had the foresight to come out with a piece sharing their beliefs and philosophies with you. This was comforting to many and I thought, highly professional. Looking back over the past 4 years, yes…Legacy Wealth Planning has now been in business for 4 years…I am glad that we made the choice to work with LPL Financial.

Over the past 4 years, much has happened and it all seems like it has gone by in a blink! While a year ago this country was at a low point in its belief in our financial system, many processes, both private and public, have been implemented so that today our economic horizon is less clouded and recovery seems to be taking hold bit by bit. Presently I think many are focusing on three things happening on the front pages of every news publication, 1) Job Stimulus, 2) Health Care Reform and 3) Financial Industry Reform. What I am gathering from those I talk with is just how believable and rational any one of these National issues truly are; how realistic are these plans and will they work?

To answer this question this with any sort of confidence and knowledge, one would have to sit down, read the political scribe, digest the information, research for the truth between the lines and then summarize it so all can understand. I wish I had that time. It is frustrating, for example, that the Health Care Reform bill is over 2000 pages in length and it is acknowledged by many politicians voting on it that they have not read the entire thing…How could they? I wonder if that will ever change and I wonder how one can vote on our behalf (Senator Reid?) without having a complete knowledge of all the words in the bill. What I do know however, is that there is tremendous “rumor” abound regarding all three issues and those are getting reported as fact. Please be careful in what you read as I suspect a majority of it is author conjecture based upon whatever political philosophy they are reporting under; I know they have not read the entire documents in question.

That being said and all the “skepticism” abound, our Nation and economy do seem to be making some progress in light of the confusion (maybe read: lack of trust in information provided) that still exists. I was driving around town this weekend with my daughter who is planning on taking her driving test this week and I saw some very interesting things (obviously her driving is good enough for me to relax and observe the world around us). I saw several construction jobs afoot. I observed a number of new vehicle purchases as evidenced by the temporary paper license plates. The businesses that we stopped at to visit were…busy. The mall parking lots seemed to have quite a few vehicles in them…more than last year at this time for sure. Bottom line: I was impressed at the amount of activity I was seeing. This gives me some confidence in our ability to positively influence recovery and further, conviction in my ability to disseminate the information allowing me to provide to you the quality, unbiased and accurate investment information you require.

One big concern is now that the residential real estate market has crashed and begun its recovery, what about the commercial real estate market? I can say that this is an area of concern for me but I have yet to assemble an argument for just how it may play out. What I can tell you however,,, I am watching it and many other things quite closely on your behalf.

As we have seen over the past, nothing is certain and change affecting us negatively is always possible. However in saying that I do want you to realize that I have learned over the past two years that negative affect can be minimized by me being highly cynical of the status quo and demanding deeper explanation of “news” that affects the markets and investing. This cynicism has provided me the opportunity to serve you better. Thanks for that opportunity.

Sincerely,

Martin McClellan

Managing Partner

LPL Financial Advisor

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Greetings All, March 2, 2010

In trying to gain a perspective of “attitude” in today’s world, I have been watching some of the news channels, reading various newsprint and magazine publications (sources that I generally do not frequent) and if left to their biases, I am amazed that any of us even get out of bed in the morning! What is good out there? I say plenty.

The day’s headlines magnify the negativity but if you look past that, other images develop. For instance, yesterday you saw that manufacturing spending and construction spending to show modest growth. Chip giant Intel is predicting a rebound in demand for PCs this year and auto makers have been raising sales estimates and recalling some workers. Warren Buffett in a recent interview stated, “the economy is improving but at a very slow rate and consumers are still not spending much, so job growth will remain slow.” But take from that that progress is being made.

What else? In the recent earnings release period home improvement companies Lowes and Home Depot released earnings that were positive and exceeded expectations. Retailers Sears, J C Penney and Macy’s also bested market expectations. While I am not advocating you buy these stocks, I simply am using them for example purposes that good things are happening out there in our economy.

This nation’s economy got bashed. Many mistakes were made in magnitudes unfathomable from a “common sense” point of view. Damage was done, however, I repeat… we are a nation of people that move forward even though the media wants to tear that down for sake of profit, and we are… repairing that damage; albeit slowly!

My focus continues to be one of value and income. It is a daily watch over the myriad of complexities effecting our markets and economy. I have become more of a protector of assets and that has caused me to be much more careful in my recommendations to you. I am often asked why my letters do not provide more specific investment information and advice. Reason? Everyone is different. Each client has different needs and objectives and unlike a money-manager or mutual fund manager (they manage specific to one discipline), my investment style adapts to each individual client situation.

Please give me a call at your convenience to discuss those matters of importance to you and I will do my best to shed light upon your queries. Now more than ever, a thorough discussion of investment choices must take place. As an example, today I was discussing with a client “ratings” and that client said, “Rating? Who provides that rating? The same organizations that failed to rate the Municipal bond insurers properly?” A detailed conversation then ensued as in the past this would never have created such a great exchange of information. So…no matter how simple or small you may think your query, it may in fact be more pertinent that you know. Let’s talk more!

My Best to You All,

Martin

Managing Partner

LPL Financial Advisor

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February 2, 2010

Greetings All,

Where were we a year ago? Worries of recession; worries of bank failures; unprecedented levels of pessimism. My message? “We are a Nation of innovators and entrepreneurs; creators and developers; movers and shakers and the zero value that society is placing on our Nation is incorrect”. We have survived the recession (?). Some smaller banks are still in trouble but pessimism has been somewhat calmed.

These words preceded the DJII low of March 2009 however, since we have been moving forward in a positive manner. Last month, the market was weak but in complete contrast to the economic news. Consumers were reported happier, investors more confident (less pessimistic anyway), housing seemed to be improving in some pockets of the nation, even corporate earnings were besting expectations yet we still deal with a “non-committal” market. Why? Today, UPS released earnings that were better than expected and homebuilder DR Horton also had better than expected results. Again I say, “why”?

I can only theorize but it’s fair to say that regardless of all the positives investors are scared when the Federal Government is content with increasing our debt limit into multiples of “trillions” of dollars! I would say that we are questioning the “stimulus” talk. Finally, people are not working and that seems to be being overshadowed as to its importance. All of which are keeping us skeptically optimistic.

A year ago I brought to your attention that there was more resolve and determination from business than ever. Corporations were getting lean via layoffs, spending cuts, restructuring, etc.; it was corporate recognition of poor business habits and inefficiencies. Now looking back, the results of this corporate resolve have shown success but we need more. We need to see corporate expansion and investment in the growth of its future (as I have mentioned several times in previous letters). Unfortunately we are not seeing this to the levels that may create sustained economic growth (recovery) as the main driver of this needed corporate activity is in “lending” and banks are not opening up like we had expected; a critical component to the perceived stall in the market and economic recovery at this time.

We are moving forward. I know that we are in a better situation today than we were a year ago. As an investor we have learned throughout all this turmoil. I hope that the education received is not short lived as I would hate to see that cliché, ”history repeats itself”, rear its ugly head down the road. I am continuing to focus on fundamental value and income in my recommendations; ideas to weather coming storms.

As always feel free to give me a call at any time.

Martin

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January 4, 2010

Greetings and Happy New Year to All:

Twenty Ten! Day one of business and we are starting out on a positive note. The markets staged a remarkable recovery in 2009, coming back from the brink of disaster thanks to unprecedented rescue efforts by governments around the globe. The question facing us now…How will the markets stand on their own in 2010?

It is very interesting to note that it wasn't just the “big” large cap stocks that rallied. Encouraged by government stimulus the strong market performance saw not only stalwart recovery in the biggest of companies and safe investment categories but also strong resurgence in the most volatile of investment categories.

What we leave behind, I hope, is an unprecedented level of skepticism and pessimism. What we can look forward to in Twenty Ten, is, “ the economy may be able to maintain enough momentum preventing a sudden dip back into recession”. What I am reading into this is that although most still expect a slow recovery, optimism is replacing some of the negativity of recent past. Corporate earnings for 2009, which we will see released starting next month, are expected to be strong thanks to aggressive cost-cutting BUT (and I keep harping on this)…we must begin to see growth in revenue and net earnings for a recovery to be meaningful. Here is something to ponder…. Did individual companies better their stock prices in 2009 because the investor was relieved that they simply were not going out of business? If that is the case, I would expect that the investor will be more discriminating in 2010 demanding better bottom line results demonstrating growth in revenue and earnings (as opposed to cost cutting measures), before they continue their support of that company. We must therefore watch closely corporate performance as we move into and through this next year.

The market should continue to benefit from the Federal Reserve's pledge to keep interest rates low for an "extended period" and the Federal Government's stimulus dollars that continue to pour into the economy. My concern is what happens to the markets when all this “aid” is eliminated? Only time will tell but if we work closely together and are vigilant, we will see the potential path the markets may take and be able to act appropriately (read: instead of react). We must pay close attention to hints from the Fed regarding 1) how it's going to proceed and 2) any signs that the Fed’s exit strategy may prove disruptive. A positive, however, does present itself here….Whatever the Fed does this year, may not be an issue for the markets until 2011 giving us the necessary time to digest a tighter monetary policy (read; time for us to see a smooth and understandable recovery).

Nice segue…What about JOB’s? They are definitely related to corporate improvement. We must see the job market improve but keep in mind the present weakness here is helping to keep inflation low and thus a supporting factor for low interest rates. As the job situation improves, this may be a sign that the Fed must begin to make a more aggressive policy. Improvement in the job market is not going to be a “surprise” as we see job numbers on a monthly basis, thus a highly visible indicator that we must pay close attention.

Moving forward: I am going to watch the job numbers very closely as this number is going to tell us whether corporate America is investing in itself (as I have mentioned in previous letters, a critical component to this recovery). My expectation is that for the first half of the year the job numbers may continue to worsen but by second half of the year start to stabilize and hopefully by end of year start to improve. If there is any acceleration in the job market recovery, then we must pay strict attention to the Fed. Concurrently, we must watch the housing and retail numbers which should parallel the jobs data; as jobs stabilize and improve, so should housing and retail (Remember housing would also include banking and their willingness to loan money; another critical component to recovery).

As you can see, investing in 2010 is not going to be easy. You are going to need a good guide and I appreciate the opportunity you have given me in so being that guide. Remember though, I need your support and input so please keep in touch with me as often as possible as I will with you. Remember to pass along my name and contact information as there are many of your friends and family that are not getting the kind of insight and service that I provide. I would like to show them the quality of financial advice that exists and better their situation if I can. Your referral is very much appreciated.

My best to you and your family as we enter this new decade, have a great day and remember the most important thing in life is to enjoy you and your family!

Regards,

Martin

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November 1, 2009

Greetings Everyone:

Wow these months are just flying by. I swear I just hit the “send” button on October’s letter and it is now November. The pace is incredible and keeping up with it is exhausting. What are the headlines now? Well…it is now official, the recession is over, say the media pundits. The Gross Domestic Product for the US grew at a 3.5% clip during the third quarter. Guess we can all just relax…it is over? I do not think so. There is much work to do and all our steps going forward must continue with caution, strict evaluation and patience.

What is good out there? Well… the third quarter growth is good. The markets have recovered very convincingly since March of this year. Earnings reports are showing some actual revenue growth (not just cost cutting measures). Some of the housing numbers have improved or are improving and overall we are in a better position when compared to last year at this time! Basically global government stimulus and the growth demand in China have fueled this present recovery.

What we need to see for this recovery to continue is more important than this present global government stimulus. We need to see corporations begin to spend and invest in their growth and stemming from this, we need to see the consumer become confident and content again with their employment and financial situation; a symbiotic relationship of great magnitude – corporate and the consumer are now critically dependent upon each other. As the “consumer” you will be the gauge as to how this all works out.

I remain optimistic that employment and housing will continue to stabilize and serve to drive economic growth. We are in the middle of earnings season and companies have shown great resiliency as nearly 80% (Wall Street Journal 11/02/2009) have beaten consensus analyst expectations for earnings. Helped again by significant cost controls but there has been some top-line revenue growth in many sectors. Companies do look poised to benefit from the economic growth (read: recovery) as we move into 2010.

I am still focusing upon strict diversification utilizing value and income investments. My contention remains…investments must be fairly valued and pay some sort of dividend/interest. While money markets are considered safe, the yields are basically zero thus you are loosing purchasing power. While it is okay for a time, we need to consider what your cash position really needs to be and move funds out of money markets accordingly. I have found some interesting ideas and I am contacting clients as appropriate.

Some clients have raised the issue of asset allocation and whether or not their particular situation is still consistent with their goals and risk tolerance. Interestingly we have found that due to this past 18 month market period, asset allocation is completely out of whack but in order to adjust those allocations, selling investments at losses (investments that have gained significantly since March) would have to be implemented and the mutual decision to avoid taking unnecessary losses in this situation had arisen in a majority of the situations. So we hold and watch. This makes my job much more challenging than ever before but a challenge I feel is necessary in optimizing portfolio values over the long term. As clients bring in new money, I am however utilizing more fixed income (bonds) than ever before in an effort to manage short term risk more efficiently.

Turkey Day is forthcoming and I wish you all the best of family times as we enter this holiday season. Thanks for your continued business and faith this past year and if you have any questions or needs remember, I am just a call away.

Regards,

Martin McClellan

Managing Partner

LPL Financial Advisor

Bonds are subject to market and interest rate risk if sold prior to maturity.

Bond values will decline as interest rates rise and are subject to availability and change in price.

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October 1, 2009

Greetings:

Another month gone and a good one it was. Or was it? August saw strong market movement but it was sideways as the S&P500 crossed above the 1000 point mark 4 times and it went below just as many. Then, on the first day of September, a considerable chunk of the market was taken and again the S&P500 dropped again below that fated 1000 point mark. It seems to me like the market is posing for a fashion shot but forgot to bring its clothes and realized it can not go anywhere without its luggage!

I personally am looking at each account and trying to evaluate areas where possibly cash can be raised in order to minimize equity risk but at the same time I am evaluating where that money may be placed in order to best position for poor money market returns and potential market opportunities. So…I have no real “rock solid” stance at this point but there are many out there who do have quite an interesting position so I thought I would take this opportunity to share some of the investment viewpoints with you (These are various author quotes, author names and publications are not important, just the words are what I want you to see):

“How long can we see stocks and bonds trade up in tandem? It just doesn’t make sense, period. I suppose if I was a conspiracy theorist I would have a logical explanation like the Fed is buying stocks or some other government controlled entity. However, I am not that demented, but I do think something stinks to high heaven here.”

“I think we're in a recovery, but the recovery is going to be sub-par; we are likely to see growth of 3-4% per year for the next several years, but this will not be enough to get the economy back on the track that it was on for the past few decades.”

“…this market is not priced to optimism, and is still plagued by lots of doubts and fears. If the economy can mount even a modest recovery, as it appears to be doing, then it will pay to be optimistic.”

What sums this all up is this quote, “it's virtually impossible to forecast what you're going to see if you can't even explain what you're currently seeing.” Everyone has their opinion but they either have all the confidence in the world in the processes leading to recovery or they have no confidence what so ever…Bottom line? They just do not know and they have to fill their pages or air time with something which turns out to be a plethora of mindless pontification!

What am I doing right now might be of use. The answer is variable…for my clients that are actively trading stocks, we are raising cash. For those older clients, we have lowered the equity exposure and increased the income but are not doing anything now with the equity side; if the market goes down, their equities will follow but in a smaller proportion when related to their overall allocation. For my younger clients, I am still advocating the consistent saving pattern that they presently have implemented into the allocation of assets that we have determined suitable for them.

See you next month with hopefully equal levity and stable to improved market performance. Remember we are here every day trying to figure out this puzzles short term implications so you do not have to but if you want to give it a try and travel along with me, just give me a call and I will give you my most up to date information, advise and assessment of the World.

Have a stellar September, and remember to enjoy the Ribs, Balloons, Airplanes, Motorcycles and most of all, Family!

My Best,

Martin McClellan, Managing Partner

LPL Financial Advisor

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August 1, 2009

Greetings All:

A year ago, I was in utter dismay at the market, the intense selling and the dropping in our portfolio values. It was so disproportionate to the then “state of the world” but in looking back, I am not so sure the overreaction was all that “disproportionate”. Today, the market is experiencing intense buying and thus the DJII market has been moving up, back over the 9000 level, and now… we are wondering if this movement is lopsided! What is consistent is there is still tremendous uncertainty. My belief? That the markets did massively over-correct and what we have seen since March is a “filling of the gap” so to say based upon future optimism – real or imagined - that is yet to be determined.

Here are my concerns; 1) the market has been surging forward because the corporate earnings releases have been better than anticipated. The problem is that the earnings expectation is zero and thus any positive is “better”. Also, the better results have come from cost cutting not growth within the company, 2) the growth of this nation comes from the movement of money. Movement from those who have (Banks) to those who need mortgages, business expansion, vehicles, etc. Well, I have talked with a few bankers of late and they are scared to make loans to anyone and this reality is not consistent with what we are hearing from our poorly informed media, 3) you and I as investors, still lack faith in the administration and its “stimulus” promises. If we had complete belief, we would have a more confident outlook on investing for the long term. Don’t get me wrong, I do not think that the plans that lay ahead are going to fail, I simply am not sure that the results intended will meet our nations expectations in the time frame that we desire.

We have to be mindful that this is a very risky environment. The economy and markets are as challenging as anything we’ve seen in the modern era. We need to recognize the historic proportions of the situation and the risks that exist. But with volatility comes opportunity. It’s my job to make the appropriate investment recommendations and it is your job to make sure that I am completely clear on your financial situation, thoughts, feelings and beliefs. This helps me to accurately recommend investments that are suitable to your risk tolerances and asset allocation. A team effort that is more important now than it has ever been.

A year ago, I posed this question, “how long is this going to last?” At the time my answer was three fold: 1) the financial institutions come clean with their balance sheets, write-offs, capital issues, etc. and the market becomes confident in its belief of such data, 2) home value declines bottom out and 3) oil prices recede. Have we made it? The market seems to think so but I am still cautious. Financial Institutions are on the mend, but as mentioned earlier, scared. Some housing data points toward recovery and oil…wow did it recede? Again a gross over-reaction and a continuing volatile aspect of our economic recovery however all have somewhat occurred and the market did react favorable. So…with vigilance, I move forward in my recommendations and advice to you.

What am I looking for right now… a) investments with strong management and ability to navigate through these tough times, b) investments with strong value provided by its dividend or coupon payment and c) investments that simply make sense (example: utilities rather than autos or airlines). The emphasis is on value but we must also consider safety and finding appropriate alternatives to the incredibly low returns on money markets( read: cash).

I want to take this opportunity to thank you for your continued business in supporting the work that I do for you. You, along with the rest of my clients, have been very stoic throughout this entire period and that patience should be rewarded. Many things still have to happen for this Nation and World to get back on track but those “things” are happening.

Please do not hesitate to contact me at any time with questions or concerns. I have enjoyed the challenge over the past 18 months and feel improved as a result. The greatest compliment you could provide me, if deserved, would be in referring new business to our office. If the opportunity arises, please share the investment value that I and Legacy Wealth Planning provide with your family, colleagues and friends.

Best,

Martin

Martin McClellan

Managing Partner

LPL Financial Advisor

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June 1, 2009

Greetings All:

One year ago, this month, I posed this question, “What is going on out there?” At that time it was believed that the economy was not collapsing but growing slowly; that turned out to be completely wrong, inflation was accelerating; yes, wrong again and the thinking in the markets was they have yet to adjust should a recession should occur; you guessed it, that one was correct. So I pose the same question again and find it is quite a different scenario.

First we have to look at the banking industry which basically shut down toward the latter part of 2008 and into 2009 basically choking off any hope that the USA would return to its capitalistic nature and grow like a weed in a garden. Now, as it is perceived, indications are that the credit markets, the core of the banking industry, have strengthened on the back of the massive reflation efforts orchestrated by central banks worldwide. This has created a thawing of the credit system and money is starting to flow back into the hands of borrowers. However, although the convalescence process seems to be well on track, it still has a way to go before confidence in the world's financial system returns to more "normal" levels, liquidity starts to flow freely again, and the economic recovery can commence.

If we look back one year, the fact that the economy did not grow in part was because there was no capital available to fuel its growth. This was partially caused because the banking industry made such horrible decisions leading up to 2007-2008 that providing new money (liquidity if you will) for those that could use it responsibly was not possible; the banks simply did not have it and if they did, they were keeping it for reasons of self preservation (which we know in many cases failed).

The picture is very different today as there is now a better flow of money moving in the economy. Global shipping has improved; some foreign countries are beginning to increase development and spending; our Nations financial industry is improving (read: being watched and regulated more closely); possibly the weakening of housing prices and unemployment have slowed,,, all of which are signs, small as they may be, that efforts being made toward recovery are working – Albeit, depending upon which media source you are most comfortable with, this view could be completely contrary but I am looking at things the media does not report on.

We have seen our equity markets improve dramatically since the beginning of March but everyone is skeptical of those improvements. We see huge government intervention in this strengthening and this has created extreme concern for many; a lack of trust and belief that, “we are from the government and we are here to help”. Personally I am not sure if all the government action is sincere or as some believe a ploy toward Nationalization, however with the spirit, pride and determination of the “people” of this nation, I can not believe the latter to be feasible. Only time will tell.

We talk about stock markets but another investment area that I think is often overlooked due to its “boring” nature is the fixed income markets; bonds. There are some compelling reasons right now to look at investment grade bonds; both taxable and tax-exempt. I would love to share some of these compelling reasons and yield ranges with you but the legal disclaimers required would make this letter 60 pages long….so lets just talk about appropriateness and possible returns for you in person when you get a chance.

Right now, we have to focus on obtaining the best possible returns for our investments…they exist but we have to discuss the options in detail to make sure that they fit your investment goals and asset allocation. I can say that I am feeling a bit more confident that improvement in both the economy and markets are possible, more so than say 3 months ago, but remember, I am basing my view on things that are not reported by the “consumer mass media” outlets that we are all belabored with!

As I said one year ago, “the future is still unknown and will always be”. If we work together, communicate, evaluate our investment plan for suitability and adhere to a disciplined investment strategy, we are working toward success. The world is still chaotic (this I believe will always be) so working closely together continues to be a valuable benefit you have that others that “self invest” do not. Let them know of me here at Legacy Wealth Planning. I know I can improve their investment experience. Please do not hesitate to contact me for any reason at any time.

Regards,

Martin

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May 5, 2009

Greetings All:

I am going to focus this month on the positive goings-on presently occurring in our world. First, it seems that the panic and chaos in the markets has subsided. The government actions employed seem to be creating hope but not without concern. On the flip side of this, the attention that is being directed to this government involvement is more intense than I have ever seen. The minute someone in a control situation announces a policy or procedure implementation, everyone right down to you and I, have instant access to its interpretation. However, we still have to sift through the sensationalism and politics in order to understand completely how it will”actually” affect us.

China has also implemented stimulus and not that I am an expert on their politics I am seeing things like the shipping industry and exports begin to ramp back up. This also extends to other areas of intense infrastructure development like India and the UAE that have had to pause during all this economic strife.

Domestically, it seems that home sales are beginning to show positive movement, construction numbers are coming out better than expected. While both home sales and construction are not “growing” like before, the weakness in these sectors has calmed! You know, I still hold to the fact that we are a forward moving Nation and the population is increasing, technology is improving and innovation is still occurring…this to me means that more homes, buildings and factories have to be built, more workers will have to be employed and progress will once again become a dominant trait of this Nation.

What about investment positives? I am seeing some of the best corporate valuations I have ever seen in my 20 years in this industry. I am seeing many quality American companies now trading at multiples never before witnessed by myself and yields in both the equity (preferred stocks as well) and bond markets are as diverse in quality as I have ever seen; meaning that the investor has some good choices as to risk vs. return when trying to implement and/or maintain their present investment strategy and asset allocation. BUT…

We all are still very uncertain and skeptical about moving any of our money. This too will take time; time to build trust, confidence and knowledge within the “new” system(s) and how our investments will be effected by these new systems if they once again fail us. This is why more than ever, a trusted advisor is critical in navigating the myriad of information you must consider prior to investment decisions being made.

The important actions that we can now focus upon are what opportunities presently out there will be best for you. As usual, I am optimistic but cautious, however, looking forward I think these traits will be of great value to you as my client. This value is certainly something that I want to impart to others so please do not hesitate to share my name with your family and friends. The greatest compliment you can provide is in a referral; especially now as a result of the increasing complexities within the investment world thus showing your confidence in my ability as a trusted professional financial advisor.

Regards,

Martin McClellan

LPL Financial Advisor / Managing Partner

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Past performance is no guarantee of future results. The market for all securities is subject to fluctuation such that upon sale an investor may lost principal. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.

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Opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.