Hello from Sycamore,

In early fall of 2008 we sent you a brief history of the frequency and amount of market declines. Since the Dow Jones Industrial Average has declined about 3.5% this January, we thought it would be a good time to refresh history and remind us all of what to expect.

Market declines are normal and more common than most of us realize. In fact, they are so common that when we go an extended period without one, we (as your investment manager) begin to get uncomfortable.

Since 1900:

1) A correction of 5% or more occurs about three times each year* and lasts about 48 days**.
2) A decline of 10% happens about one time each year* and lasts about 115 days**.
3) A 15% drop can be expected about once every 2 years* and will likely last about 217days**.
4) A bear market is defined as a drop of 20% or more (generally a wonderful time to buy) and we should expect these about every three and one half years*. These generally will last about 338 days**.
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(Capital Research and Management Company is source, 3/2009)
*Assumes a 50% recovery of lost value except for the most recent decline.
** Measures market high to market low.

While we certainly do not look forward to market declines, we’ve learned that they are a regular part of investing in equities. They’ve been with us for the last 110 years and will likely be with us for the next 110.

We sometimes refer to corrections, or fast run ups in overall market value as “the emotion of the market”. Underlying fundamentals such as earnings and dividends generally are not the reason for these fluctuations. Frequently, it’s something that could only be loosely tied to your portfolios fundamental value.

While we monitor uncertainties such as market fluctuations, changing political winds and recessions (to name a few), they are not our primary focus. We cannot predict or control their occurrence. We choose instead to concentrate on items where we have some control. One of our main goals is to have your portfolio invested in companies that tend to do well through bad times as well as good.

The last two years or so have been a very strenuous time. It’s difficult to not allow short term memory to override our long term perspective.

Thanks for your business and trust,

Sycamore Financial Group

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Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.