Many of you have received a letter proposing a change in the way  transaction fees (commissions) are charged to your investment accounts. This proposal is absolutely not a recommendation for you to adopt what Wall Street calls a "Wrap Account". A Flat Fee arrangement is totally different because it does not include any Investment Management fees, and because each of your individual accounts will continue to be totally different and separately managed... Wrap Accounts are still just Mutual Funds. The flat fee is something to consider within an environment where the amount of trading produces an average cost per trade  that is less than Pay-As-You-Go commissions would produce.  In short, the Flat Fee will most likely decrease your annual commission expense. It is possible that short term investment performance may be better in particularly narrow trading range market environments like today's.

Obviously, the number of trades per year is not predictable. But I have found that the recent environment in the Stock Market has been easier to cope with from a trading standpoint when I can sell more quickly without having to consider the commission impact. In "Brainwashing", I explain that there are times when the "net/net 10% target profit" is simply unattainable and that three 7's are better than 2 tens. In recent months, settling for 2% and 3% gains has been acceptable because of the depth of the correction and the tremendous number of buying opportunities that are at hand. Quicker and smaller profits are easier to achieve in the Flat Fee environment. We have been taking smaller profits in an environment where ten "per centers" are extremely rare!

Please call Ken if you want to determine if a Flat Fee arrangement could potentially reduce your total transaction expenses. (If you received a letter, that determination has already been made.) If your account is mostly invested in income securities, it is unlikely that a Flat Fee arrangement is appropriate. Also, it is a better idea to deduct the Flat Fee from a Retirement Account than from a taxable account. Please call me if you want to discuss this observation, or anything else that you are concerned about at this time.  I know that each of you agrees with my assessment of the current market environment and that you will make every effort to help me take advantage of the abundant opportunities in both the Equity and Income Security markets.  Deposits to your portfolio in any amount will be helpful.