Remember the precarious economy of earlier this year? It’s still here, and may be getting worse. Mid-2008, the savings rate in America was approaching zero. Today, the savings rate just eclipsed 6.9%. The velocity of investing and personal spending in America has been dropping precipitously. The level of investment will go down, as people put more in their bank accounts to protect their families and their lifestyles. They will continue to invest less of their spendable funds in the markets because of their discomfort with the economy, the political scene and their concerns about the future.

People are worried for many reasons. Their friends and family are losing jobs that they may have held for many years, and the proof is in the unemployment rate, which was in 4.7% last July, and crossed 9.5% in June 20091. In multiple states, unemployment is already at 11% to 12% levels, and it is expected that the national unemployment rate will cross the 11% plus level by the end of 2009. Governors of highly populated states, including California, New Jersey and Michigan, are reaching out their hands to the U.S. government for more money to bolster their ailing economies and help balance their state budgets. Other areas of national needs include the auto industry, which still needs billions; and Medicare and Medicaid, both of which need bolstering to support the growing ranks of the unemployed and less fortunate Americans who
don’t currently qualify for support in our existing systems.

Get the picture? Times are tough and getting tougher! You will notice more “how to” articles accompanying our letter to help you succeed even in these challenging times. “A Battle Plan for Refinancing Your Mortgage” is a very timely article to take advantage of the low interest rates we are currently enjoying. Consider taking advantage of a newly-passed tax credit to trade in your old clunker for a more economical vehicle, discussed in “”Own a Clunker? It’s Time to Do the Math for Cash.” Evaluate the opportunities in reverse mortgages in “Seniors Drawn to Mortgages That Give Back.” If you find you’re up at night worrying about the times, the economy or life in general, review the enclosed article, “When Sleep Leaves You Tired” to give you a chuckle.

As may well know, Bloomberg Wealth Manger invited Pennsylvania Capital Management to enter the fray of their annual competition for the top wealth advisory firms in the United States in 2005. Out of the many, many wealth advisory firms in America, they rank the top 500 firms. I am pleased to report that once again, for the fifth year in a row, PCM achieved the top 100 status, placing 73rd best for 2009. We’re very excited to bring this achievement to your attention, and we thank you for your continued trust and confidence in the value added capabilities we bring to you and your family.
If you have any questions, or would like to set up a telephone or in-person meeting to reevaluate your current financial positions or any portfolio holdings, please call our Client Service Team at
215-881-7700.

Best regards,

Irvin

1 http://www.bls.gov/news.release/empsit.nr0.htm accessed 7/10/2009.