Year-End Review 2001

Market Review & Outlook

We would like to wish you a Happy and Healthy New Year! The stock market and CCAM had a tough 2001, but we are preparing and ready for a great 2002. It is fair to say that we are disappointed with our returns, but our risk management produced admirable results during the year. In late March and early April, when the Nasdaq was plunging to a 65% decline from its March 2000 peak, our accounts were predominantly in money market funds, allowing our clients to focus on their lives rather than worry about their investments. The tragic events of September 11 will be etched in our minds forever. The chaos surrounding that fateful day is unprecedented in our nation's history. The U.S. markets did not open on September 11 or for the remainder of the week. With massive effort, the exchanges managed to re-open on September 17. The uncertainty surrounding a potential panic-driven sell-off was an immense mental challenge for those that were fully invested. Once the markets re-opened, the reality of plunging equity values brought about near panic selling. Fortunately, most of our accounts were primarily invested in money market and short-term bond funds during that period. A few accounts had a small exposure to health care funds, which turned out to be a sector that weathered the storm much better than most. Again, our risk management efforts allowed our clients to focus on the important aspects of their lives without having the extra burden of worrying about their investments - even though we couldn't blame you if you were worrying.

The future of the market now rests in the hands of the economy. Prior to September 11, we were convinced that the U.S. had already entered a recession. Now, the current economic debate is whether September 11 will prolong the recession or hasten the recovery. There is reason to believe that the panic selling following the re-opening of the markets established a long-term bottom for the financial markets. The abrupt slowdown in corporate and consumer activities after September 11 could either shorten the time required for the economy to reach a bottom or deepen the recession. Other variables to consider include the "promised" government stimulus package and the new found pride in America, which could be catalysts for a quicker than expected end to the recession. If the "quick recovery" economic scenario holds true, then the markets would not be expected to return to levels of last September. But if this scenario proves to be false, then all bets are off. Either way, we will continue to employ our risk management techniques.

That our portfolio returns were negative for the calendar year does not tell the whole story. The major market indices now have back-to-back negative years. Many of our accounts had significant gains in 2000, putting the two-year performance for most of our programs well ahead of their benchmarks. Of course, some were better and some were worse. Our risk management played another important role: that of controlling drawdowns, or declines, in the accounts we manage. During calendar year 2001, the Nasdaq underwent a decline of more than 49%, which was more than 71% down from its all time closing high. The more moderate S&P 500 experienced a decline of more than 35% within the confines of calendar year 2001. Although many of our programs are benchmarked to the Nasdaq, most of them experienced drawdowns less than the S&P 500. Even though most of our clients are "aggressive" investors, we believe that there is a need for investment programs with more moderate objectives. We are therefore announcing two new "moderate" investment programs, which are described below.

Increased IRA Contribution

Don't forget The Economic Growth and Tax Relief Reconciliation Act of 2001 has provided for increased IRA contributions starting this year. Your 2002 IRA contribution can be up to $3000. By year 2008, the limit will increase to $5000. If you are eligible for a 401(k), 403(b), 457 plan, Simple IRA, SEP-IRA, Money Purchase or Profit Sharing Plan, those contribution limits have increased as well. Please call your account representative for more information or if you have any questions.

Reap the benefits of being age 50 or older! The Act also allows for "catch up savings" for individuals over 50. For tax years 2002-2005, those who qualify can contribute an additional $500 per year.

Even if you participate in a qualified plan and your contribution to an IRA is not deductible, don't forget that you can still contribute to an IRA. You receive the benefit of having the assets grow tax deferred.

Fidelity December Statements

ProFunds and Rydex reported incorrect prices to Fidelity for 12/31/01. You will notice that your CCAM invoices and performance reports reflect the correct price for that day. You will be receiving year-end statements from Fidelity, which should accurately report your balances. The affected funds were as follows. ProFunds: Europe, Mid Cap Growth, Mid Cap Value, Small Cap, Small Cap Growth, Small Cap Value. Rydex: Internet, Medius, and Mekros.

Florida Money Show

If you have ever wanted to hear Ron Rowland speak, you're in luck! The folks with the Florida Money Show have asked Ron to host a few workshops, which will take place February 20 - 23 at the Gaylord Palms Resort in Orlando. Call us for free tickets, or if you are already attending, give us a call so we can be sure to meet with you while you're there.

Referral Letters

In December, you should have received a letter asking for referrals of anyone you know who might be interested in CCAM's services. We received a great response, and we sincerely appreciate your help. For clients who sent us three names, we sent you an elegant Cross pen as a way of saying "Thanks!" It's not too late if you haven't sent your referrals in - we are grateful and would like to send you a Cross pen, too.