Since my last weekly update (October 3rd), the markets have experienced a very steep decline. Thus far in the 4th quarter, the broad market has lost between 2.36% (Dow) and 5.58% (Russell 2000) while our flagship All Season strategy is down 0.72%. This is an excellent point in time to discuss perceptions of risk which I will elaborate on at the annual meeting. In addition, in this update, I’ll discuss the state of a few of our longer term indicators and close with my best guess for the rest of the year.

Notice to 529 (and other passive) Investors

Many of our short and intermediate term indicators have reached an oversold state much as they did in April of this year. In similar situations in the past couple years, this has been an excellent time to add to passive investments. Remember, if we are limited to passive investing, our MO is simply to buy low and we are approaching one of the buy low moments. This is especially true if we are only allowed to make contributions annually as in the case of 529 or other educational account registrations. I do want to insert one word of caution for this particular buy. A market that has reached an oversold condition, as it stands today, can remain oversold for long periods of time and prices can continue to fall. I see the current oversold reading as the last opportunity in 2005 to buy stocks at a discount. That does not mean that prices will be higher one or two years from now. Again, this should be the last opportunity to buy low IN 2005. Disclaimers aside, write checks to your passive investments now and I would try to have them in by the end of the month.