Hello everyone again,

I just realized I forgot to give a quick update on the outlook for fixed income, mainly CDs, in my last missive. I just got notice that one of my CDs is maturing at the end of this month. I had timed it in the hopes that at about this time, the stock market would be ripe for buying. As you can probably guess from my last missive, I will be having none of that!

There are at least a small few of you who followed my advice late last year and grabbed long-term CDs that were yielding almost 8% at that time. You will not find such rates now (not even close!), and those CDs have given you a better return than stocks have so far this year.

Anyway, the rapid reduction in interest rates makes CDs much less attractive. In fact, I am sure these meager returns will encourage more and more people to start risking their hard-earned cash in the market to speculate on greater returns. Regardless, focus on where rates are headed. Rates have almost bottomed and should be picking back up by year's end or early 2002 as inflation becomes a clearer threat to the economy. So, here is how I am playing things:

1. I am not rolling over any CDs into long-term ones. This would lock me into tiny rates just when rates will start picking up again.

2. Instead, I am going back to my 3 or 6-month rolling plan. At the maturity of each CD, I will re-evaluate the rate and market landscape and move appropriately.

3. If the Fed only lowers 25 basis points, or none at all, I will renew for a 6-month CD since the Fed will likely have further rate cuts later. If the Fed does more than 25, I will only renew for 3 months, and play a wait-and-see with the Fed since they may not cut rates any further.

Hope this helps!