Dear Investors,

You spend many years – perhaps decades – saving money for retirement. We believe you should invest this money very, very carefully. Your retirement investments should, first and foremost, be safe. Secondly, they should also provide you with competitive rates of return.

The last 18 months have been difficult for nearly all investors, in nearly all markets around the world. The economic collapse we have witnessed was both foreseeable and unexpected. Yes, I could see how our economy could collapse in the way it has. At Secure Retirement we follow the same investment discipline employed by Warren Buffett of Berkshire Hathaway. For five years, Mr. Buffett and I were watching, with horror, the insane growth of derivatives on pools of mortgages, and considering the economic devastation that would hit our financial system if the whole thing came tumbling down. But while I can always see several scenarios that could lead to catastrophe, we hardly ever actually hit an economic wall head-on. This time we did.

We take risk control very seriously at Secure Retirement. By the end of 2008 we had only 22% of our combined accounts in stock funds, 36% in bond funds and cash, and 42% in guaranteed fixed annuities (mostly for older or more conservative clients). The cash came primarily from stock fund sales we made the second week of September. As a result, while 2008 was the worst year for the stock market since 1931, going down an agonizing 37%, not one of our accounts at Secure Retirement experienced such debilitating losses. While all of our accounts held up much better than the stock market, many of our older clients did not lose a single penny. Again, we take risk control seriously, and our risk control methods work.

We have now spent the last six months researching how we should invest going forward in this economy and market. Part of our job is to safely take advantage of opportunities to make gains that exceed our clients’ retirement income needs. Fortunately, it doesn’t take much imagination to see that a once-in-a-lifetime economic collapse like this will offer some wonderful opportunities for intelligent investors.

Our stock and bond market research is now completed. Since risk control is the guiding principal at Secure Retirement, we always focus intensely on making sure our clients have enough of their money in safe, income-producing investments. Due to the economic collapse, this is actually an unusually good time to own the right bond funds. This year our bond funds are well-positioned to safely give us 7-9% in interest, plus the potential for price appreciation. We also have even more conservative options that are poised to deliver very competitive returns, with the principal guaranteed. For information on our income-oriented accounts, please see the following links: Bond Funds; Annuities.

In terms of our stock market investments, I believe we have found a small group of funds that will make our clients 20% a year or more over the next five years. In fact, I am quite confident of this. And the “leader” of this group, Warren Buffett, claims the stock investments we own to be essentially risk-free when owned properly. As is nearly always the case, I am confident we will again find out he is correct.

Our final risk-control measure for the stock side of our portfolios involves the actual companies we own. I still seriously doubt that we will have a complete economic crash. And as always, if we see it coming at least a day or two in advance, we will act to fully protect our clients against any stock market - related losses. But I cannot succeed as a fortuneteller, as I typically cannot predict what the stock market will do on a short-term basis. However, I can predict with strong conviction that the companies whose stock we own will continue to succeed.

As a result of opportunities that arise during and after severe recessions, when we come out of this economic decline the best companies will be worth significantly more than when they went in. Knowing this, the most successful investors in the country have always achieved their largest gains right after recessions. This has been true for Warren Buffett, who has made over 20% a year for 52 years, Ian Cumming and Joseph Steinberg, who have made 26.2% a year for 30 years, Eddie Lampert, who made 29% a year for 25 years, and Ken Heebener, who has made more than any other mutual fund manager in the history of the country. And it has been true for Bruce Berkowitz, who we consider to be the best stock investor in the country at this time.

After every severe recession, the legendary stock fund managers we use at Secure Retirement have always delivered their largest gains. None of us know when this recession will end, or how difficult it will become before it is over. But it will end, and our companies and stock funds will make large profits. I am pretty sure about these two economic events – in fact these are the only predictions I can make accurately, and wisely act upon.

Since beginning Secure Retirement seven years ago, 200 families have entrusted their retirement money to our care. I am pleased to share that our cautious approach has led to having a wonderful group of satisfied clients. Should you wish to meet to discuss your particular financial needs, please call us at (925) 855-4300 to schedule a complementary meeting.

Sincerely,
Richard Morey
President, Secure Retirement