Client Letter

The following is a letter we recently sent to our clients:

This has certainly been a volatile time in our markets! We have seen enormous price swings throughout the quarter, and some huge swings intraday. These market moves have been the result of some historic changes on Wall Street. Starting with the collapse and sale of Bear Stearns to JP Morgan Chase, we have seen Lehman Brothers go bankrupt, Fannie Mae and Freddie Mac bought by the government, and AIG effectively get taken over by the government. We have also seen the largest bank failure in history (Washington Mutual) while other smaller banks have faced a similar fate. Finally, as the 4th quarter begins, we have the White House and congress agreeing to a $700 billion bank rescue plan. There is much angst whether bailing out the banks and Wall Street is a good idea, but ultimately the biggest beneficiary may be those on Main Street who could benefit from looser credit and stronger bank balance sheets.

This is the economic and financial backdrop that we have faced as we focus on the management of your, and our, portfolios. While these events are tremendously important, we have tried not to lose sight of our objective: to manage your money for the long term growth of income and principal. Note the emphasis on long term. While we would like to buy something and see it go up in price immediately, we recognize that is not realistic. Rather, we expect the stocks and mutual funds we purchase to go up in price significantly over a time frame we measure in years, not in days or in hours. To accomplish this, we look for companies that we want to own well into the future. The prices of these good businesses have been subject to a great deal of fluctuation in the short term (for the reasons we described above) but we view that as an advantage for long term investors. It occasionally provides the opportunity to buy very good businesses at very fair to downright cheap prices. Since inaction carries no penalty, we can afford to wait for the stocks that we want to own to reach the prices we want to pay. If not, we will find something else.

We do not have a crystal ball to tell us when the economy will perk up and stocks will rise again. But we will continue to build our portfolios with high quality, well managed companies that we will be pleased to own for many years.

We want you to know that we have been working on updating our website. In the next few days, you should see the results. While the look of the site similar, we have added a section called the Harvest Newsroom. Here you can find a link to our blog that will provide you some of our thoughts on stocks and the markets. Also, in the Newsroom you will find a section highlighting some of our favorite websites and a list of books that may help to provide some perspective on what is taking place in the markets today. We plan to regularly update all of these sections. We also hope to include some articles and maybe even videos on important financial topics. Suggested improvements and topics are always welcome.

We also want to take a moment to thank you all for choosing to work with us. We both love what we do and are hesitant to call it work. We are fortunate to work with you and are always available. Please feel free to call us (610-240-4740) or email us (jim@harvestfp.com or john@harvestfp.com).


Best wishes!


Jim Wright
John Fattibene