Dear Friends & Family,

“The key to good investing is not the brain, it’s having the stomach.” (Peter Lynch, paraphrased)

The past six months have been very difficult times in the market. Investors are justifiably worried about the extent to which the turmoil in the financial sector may spread into the general economy. Will it be simply a slowdown in growth, or will we actually tip into a recession? No one can know for certain, of course. However, history has shown that the best stock market returns often occur when corporate earnings are falling. Economic slowdowns cause the Fed to lower interest rates, which sets the stage for the next boom. The Fed has begun acting decisively to rejuvenate the economy. While it may still take some time for the markets to settle, the stage has begun to be set for future opportunities.

The mantra that we keep hearing these days is “going green.” Here is a suggestion for a smart way to recycle old computers. Costco has good news for members who have outdated, unwanted electronics. Through the Trade-in & Recycle Program on Costco.com, computers and certain other small electronics can be recycled free — and in some cases, you will be paid for the item. This program covers PCs, LCD monitors, digital cameras, camcorders, game systems, and MP3 players. Check it out: go to Costco.com, click on “Electronics,” then on “Trade — in & Recycle.”

A reminder: many of the limits associated with retirement plans will increase in 2008. The annual contribution limit for defined contribution plans will be $46,000. The contribution limit for IRAs and Roth IRAs will be $5,000 (an additional $1,000 may be contributed by taxpayers born in 1958 or earlier). We recommend you contribute early in 2008 to IRAs and Roth IRAs. If you have any questions, please call us for additional information.

We will be holding our College Planning Seminar in two locations next month — one in Bethesda, MD, on February 27th at noon and 6:00 p.m., and the other in Alexandria, VA, on February 28th at 6:00 p.m. Please contact Julie for more information and to reserve your spot.

We leave you with a quote given to us by one of our clients… thank you ?

“Please don’t allow the media to do your thinking for you.”

We look forward to speaking with you in the coming month!!

Sincerely,

Katz Family Financial