VTSMX closed Friday, 6/27/08, the penultimate trading day for the month, @ $31.23, down $1.15 or -3.55% for the week and down -8.58%, -12.26% and -12.59% respectively for the month, year and since inception @ $35.73 on 8/27/07

Munchie.....$10,218.64/$10,008.17, up $210.47 or +2.10% for the week and up +2.29%, +6.02% and +2.19% respectively for the month, year and since inception 

Dry............$9,098.01/$9,494.69, down $396.68 or -4.18% for the week and down -6.72%, -5.94% and -9.02% respectively for the month, year and since inception

Roger.........$8,924.61/$9,170.06, down $245.45 or -2.68% for the week and down -7.20%, -7.45% and -10.75% respectively for the month, year and since inception

Flakey........$8,496.73/$8,811.56, down $314.83 or -3.57% for the week and down -10.84%, -13.68% and -15.03% respectively for the month, year and since inception

Ted............$8,373.99/$8,584.12, down $210.13 or -2.45% for the week and down -8.35%, -10.76% and -16.26% respectively for the month, year and since inception

Santa..........$7,206.54/$7,491.38, down $284.84 or -3.80% for the week and down -10.33%, -21.11% and -27.93% respectively for the month, year and since inception

VTSMX down -16.59% since inception @ $37.44 on 11/1/07

FGHVX.......$8,697.99/$8,893.86, down $195.87 or -2.20% for the week and down -8.39%, -9.71% and -13.02% respectively for the month, year and since inception 

MSTSX.......$5,358.64/$5,247.29, up $111.35 or +2.12% for the week but down -7.51%, -31.33% and -46.41% respectively for the month, year and since inception

Another miserable week for most of us save for Munchie who managed to wring substantial outperformance and an actual GAIN from his collection of tiny microcaps.  Nice goin' Munchie!  Kudos also to Ted and Roger for outperforming the index by managing to lose less than the beleagured market which finished the week just shy of official bear market status as it's down nearly 20% since the historic high last October.  I predict that the market will be in bear territory sometime early next month and may continue to go even lower before a turnaround which may be months in the offing.

There will be no good news for our economy or the market till at least Q1 or Q2 of next year.  Even if congress and the states approve additional off shore drilling the pump price for gas and the tab for home heating oil will remain high for the foreseeable future due to  rising demand, constrained supply and limited refinery capacity. 

At best increased drilling reduces pump price by $0.10/gallon at most at least five years on so the solution to high energy costs lies elsewhere but that is a topic for discussion on some other forum.  This is not just my opinion BTW but that of nearly every credible economist who has held forth on the topic.  Even if our gutless wonders in congress tightened regulation of the speculators in the crude futures market there's no guarantee the big oil would pass on the savings from any substantial reduction in crude price to the consumer.  In fact because of limited refinery capacity they might not be able to do so because the supply wouldn't be there to meet consumer demand.

The fed will not come to the rescue either as it's bound to defend our falling dollar and deal with inflation by raising rates.  They're in a classic Catch-22 'damned if they do, damned if they don't' situation.

No relief is in sight on other fronts either.  Housing remains in the toilet, domestic automakers already on life support may be 'circling the drain', airlines teeter on the precipice of bankruptcy,  job losses mount, unemployment is rising, retail sales remain flat to down save for the temporary bump from the tax rebates, consumer debt is mounting and confidence is low.  No wonder more than 80% of the electorate thinks the country is headed in the wrong direction.

The one bright spot remains our export sector which is enjoying modest success due to our falling dollar which makes our goods cheaper to peddle overseas but this alone will not save us from what I predict will be months of very slow growth at best accompanied by inflation.  I'm not the first to predict this but the operative for some time IMO will be STAGFLATION. 

I'm not certain that Paul Volker's Reagan-era remedy of draconian high fed interest rates will be the panacea this time around but it must be kept in mind as an historic precedent.  Wherever lies the fix I'm fairly certain that it will involve tighter regulation of the credit and financial markets accompanied by a sane, long term strategy to achieve energy independence.  And THAT will take some time to achieve.  As Bette Davis (or was it Joan Crawford?) once said in her tinsel town classic: "Hang on boys, it's gonna' be a BUMPY RIDE!".

Have a great weekend, guys.

Peace and love,

Flakey