QUARTERLY LETTER

Published Third Quarter 2003
Muhlenkamp Memorandum 67

Folks, our patience (yours and mine) is paying off.

Since it became clear that the war in Iraq would not be a disaster, the public has become a bit more confident on the U.S. economy and a bit more willing to invest in that economy.

As we stated in recent newsletters, we continue to believe that the economy is recovering from a “normal cyclical recession,” albeit slowly. We believe the strength and timing of the recovery have been delayed by the hangover from the stock market fad (bubble) and by the events of 9/11/01 and the litany of concerns that pummeled the American psyche since, culminating with the war in Iraq.

We believe (and pray) that the litany of concerns is now over and that the bad news going forward will be at a more normal pace. We believe that the nature and timing of the recent cuts in federal income tax rates will strengthen the economic recovery. We’ve been investing your money (and ours) in good companies that are likely to benefit as the economy strengthens and are reasonably priced, in our opinion. This has been a gradual process, which we expect to continue. The key is not to be distracted by the daily market volatility, which we also expect to continue. Patience remains key.

Read our quarterly newsletter, Muhlenkamp Memorandum, for more by Ron Muhlenkamp.