The economy and financial markets generally continued to improve and stabilize through 2010. It would appear that there are fundamentals in place to indicate that this general trend should continue into 2011. However, there is also no shortage of risks to this optimistic outlook. Some of these risks include:

• the potentially disruptive effect of the European Union's sovereign credit issues,
• real and perceived threats to continued U.S. economic growth as federal and municipal governments grapple with their fiscal deficits,
• a stubbornly high unemployment rate and residential real estate inventory,
• several geographical areas of potentially significant international global conflict.

It may be that economic growth may continue to improve even in the face of the adverse development of some of these risks. Certainly, fiscal and monetary policy on a global scale continues to be accommodating. While this may eventually lead to inflationary pressures, the nature of this recovery has somewhat mitigated his concern. Further, corporate balance sheets are relatively strong and continued improvement in consumer demand may result in expanded business plans. Whether this expansion is in the form of additional hiring, research and development, merger and acquisition activity, or capital expenditures, the ripple effect throughout the economy could be substantial.

However, weighing the effect of the positives and the negatives in the short term is a fickle activity. Most importantly, portfolio decisions should not be based upon a prediction of economic and market behavior over the short to intermediate term. Although we remain optimistic, we continue to suggest an investment policy that anticipates both what may go wrong as well as right. This is the reason the investment policy we employ continues to shun anticipatory strategies in favor of one based upon longer term statistical probabilities.

Equity markets across the globe continue to provide strong returns once again last quarter. The table below reflects the returns and corresponding growth component weighting for each of the indices that are used as a benchmark within our model growth component.

Past Quarterly Commentaries

Q3'10

Q2'10

Q1'10

Q4'09

Q3'09

Q2'09

Q1'09

Q4'08

Q3'08

Q2'08

Q1'08

Q4'07

Q3'07

Q2'07

Q1'07