Sage Advice Quarterly Market Review 3Q2006

As expected, economic growth has downshifted abruptly from the first quarter’s blistering 5.6% pace. When a similar slowdown occurred a year ago, the then-Fed chief Alan Greenspan declared that the economy had entered a temporary “soft patch”, suggesting a growth revival was around the corner. This time, the slowdown is being characterized by the current Fed Chairman, Ben Bernanke, as a “transition phase”, suggesting the economy is going through a normal transformation that typically occurs in the mature stage of an expansion. Just as Greenspan’s prognosis turned out to be correct, we believe that Bernanke’s perception will also be validated.