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Special Update #1

Dear Cients,

Like you, we are trying to deal with the travesty which has been perpetrated on our nation. There are not words to describe our feelings, our anger and our shock at what has occurred.

There is, of course, great uncertainty about what will happen in the days ahead. What actions will our government take? When will the markets reopen? What will happen when they do? How will this affect the economy? The questions go on and on.

Below, I will update you with what thoughts I do have at this point and what happened to our futures funds yesterday.

Fund Performance:

This letter is written on the day after the tragic terrorist events which devastated our country. As noted above, the markets remain closed in the US, and we are not sure when they will reopen. The overseas markets have remained open, however, and almost all of our Advisors participate in markets outside the US.

The Diversified Fund and the Alternative Fund gained over 5% on September 11th, with all of that gain occurring in the foreign markets. In the aggregate, our Advisors were on the right side of interest rates (short), stock indexes (short) and the energy complex (long). Both Funds are profitable for the month.

Presumably, when the US markets reopen, possibly tomorrow, they will have to readjust to align with what has happened in the foreign markets. That could mean additional gains.

I have communicated with Campbell and Winton in the midst of this tragedy, and both indicate they will likely reduce their trading positions when the markets reopen, due to the extreme uncertainty and volatility in the markets right now. Obviously, we are in an unprecedented period, the markets could do virtually anything, and I am in agreement that positions should be reduced, at least temporarily, if the Advisors see fit. I will keep you apprized of any significant developments.

The Long/Short Growth Fund was virtually unchanged yesterday and is up apprx. 1.6% for the month.

The Economy:

As you know, I have been optimistic that the US would avoid a recession. The Bank Credit Analyst has had a similar outlook. However, it remains to be seen if the tragedy that occurred yesterday will put this country into such a funk that consumers retrench to the point that we do have a recession. Consumer spending is over two-thirds of GDP. Hopefully, our nation will be resilient and our economy will not go into recession. However, only time will tell.

I am certain that the Fed is already prepared to take whatever actions are necessary to keep the markets from tanking severely. I would not be surprised to see rates cut another 50, or even 100, basis points quickly if needed to stabilize the markets.

Postscript to the Tragedy (written late last night):

As the tragedy unfolded today, I hoped throughout the day that we would hear reports of many other airplane hijack attempts that failed, maybe 5-10-15 others that were attempted, but failed. But at the end of this day, we know of only four hijack attempts, and all were successful. All four ended in disaster, three of which in disasters of historic proportion.

The gutless terrorists who craftily planned these atrocities have to be thinking tonight, HOW EASY IT WAS, HOW WELL IT WORKED, HOW AMERICA IS CRIPLED. . . & . . . WE CAN DO IT AGAIN.

Our world has changed. I don't think it will ever be the same again. I don't know how it will change, but it will. September 11 (911) will be a day we shall never, ever forget.

Like you, we at ProFutures are praying for our country, our leaders and those who lost loved ones in the disaster yesterday. Our country will never be the same, but we will endure.

Thank you for your loyalty.

Wishing you well,


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Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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