No. of Recommendations: 3
*We own Growth companies At a Reasonable Price (GARP)

*The stock selection process is driven by bottoms up fundamental analysis - Control risk thru industry diversification
-- Apply analytical screens to focus on fundamentals:
*Sales Growth
*Earnings Growth
*Profit margin expansion
*Cash flow growth

Fundamental analysis:
*Top Quality Management Teams
*Generate Free Cash Flow and invest it at attractive rates
*Financial Strength- strong balance sheet
*Franchise barriers to entry, no capital intensive business
*Valuation- Discounted Cash Flow (Terminal Value)

Strong Cash Flow as an evaluation method came up several times.

ESA (educational savings account) now can be used for primary school tuitions and allows for higher contributions, now ( was thinking EDSN)

Higher contributions now allowed for IRA's and other retirement instruments.

Allowable amounts for gifting raised 1k. Estate exemption now 1 Million dollars (used to be $675K)

All of those rate cuts will benefit the banks. Creating a healthy margin/cushion if people should default on loans, the banks are much more healthy than in the past during an economic recession. As interest rates increase, the banks should be poised well for leadership.

One of the problems I have had in the past is that it seems that the very affluent took much longer to be sensitive to economic turns. I was questioning him last year at this time about what I thought was a *recession/bear market* because of index performance. He didnt see it the same way as i did at all. I had already seen the impact of the economy; he and his very affluent clients were still thinking it was a mild correction, ready for an upswing. Brought up, this time, was dismay that all these leaders of these big companies gave very optimistic guidance last january, then six weeks later, said that demand was *flat* at best.

There was a discussion about the *bitterness* expressed by some tech ceo's about no guidance in the big economic picture. Because of huge demand, many had hired and relocated tens of thousands of workers.. educated and capable people.... who were let go shortly after demand began to disappear as the fed *tapped the brakes*. It was upsetting to these tech leaders to have had a hand in creating such chaos for all those families affected by the downturn and firings. That last rate raise in May of 2000 was especially resented as overkill.

This is a very conservative area. No real question was brought up on market sentiment/questions in regards to possible political backlash over the ene thing, the department of accounting and current administration. Accounting questions were discussed and their solution seemed to be in the fine-tuning of fundamental analysis for selection of equities, with a sharp eye on Free Cash Flow.

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