To Our Clients, Colleagues and Friends: 

· Do you track your customers by loan volume? If you do, that’s better than nothing, but you can do better.  Much better. Since you’re not in the volume business but in the profitability business, you should start tracking your customers by profitability.  Do you know which customers (realtors, builders, mortgage brokers, and if retail, loan officers) contribute the most to your profits?  Which produce negative returns?  This is the sort of thing we help clients with, and it’s absolutely critical that you know this information.

· We find it interesting that banks are issuing more preferred stock than common stock in their goal of rebuilding capital these days.  As shareholders in financial institutions ourselves, we don’t care quite as much as some.  The key is to have adequate capital, and we’d rather get diluted than see our company under-perform because of a lack of capital.

· The Heritage Foundation and the Wall Street Journal do an annual empirical study and ranking of which countries have the most economic freedom. They look at factors such as legal protection of property rights, low taxes, minimal government intervention in the economy, and governmental barriers to entry for entrepreneurs.  We list here the top twenty:

The six worst for economic freedom were (#152- 157) Turkmenistan , Burma , Libya , Zimbabwe , Cuba , with the worst being North Korea .  A few others of note were #32 Georgia (a surprise), #38 Latvia, #44 Mexico, #46 Israel, #68 Romania, #75 Slovenia, #93 Pakistan, #113 Croatia, #115 India (!). #121 Bosnia, #126 China, #134 Russia, and #151 Iran. It’s kind of a mystery how China and India are doing so well with such poor rankings.

· This Friday is the 30^th anniversary of the movie Slap Shot.  This was in our readers’ top ten list of all time great sport movies last year. We don’t even like hockey, but it’s among our 2-3 favorites in this category.  Go rent it.

· A Senior Vice-President of bankrupt Fieldstone Mortgage killed his wife and then committed suicide last week.  Look, most everyone in the mortgage industry had a good run for a few years, but let’s keep our perspective, people.  It wasn’t going to last forever, everyone hopefully made a few dollars from it, and now it’s over.  As long as you have your health and those you love, does the state of the mortgage industry really matter all that much?

· Did you know that New Jersey has more millionaires per 1,000 household than any other state in the nation? The definition used is $1.0 million worth of liquid assets.  Maryland was #2, followed in order by Connecticut , Hawaii , and Massachusetts . In New Jersey , the percentage is that 7.12% of all households have a liquid net worth of at least $1.0 million.

· We recently got to thinking of the baseball season, and for no reason, we remembered Dick Stuart of the Pittsburgh Pirates.  He hit a fair number of home runs when we were growing up., but he was horrible at everything else.  He also may have been the worst fielder in major league history. Stuart was so bad that his own teammates called him Doctor, for Doctor Strange-glove. In one game, a hot dog wrapper blew onto the field.  Stuart ran over and caught the piece of paper in mid-air and received a standing ovation from the fans. He then acknowledged the applause by taking a deep bow and tipping his hat to the crowd.

· Here is the price-to-book ratio for some selected financial stocks.

· Either the market has way mis-priced these stocks and they’re the bargain of a lifetime, or the market just doesn’t trust book value. 

· Hey, last week’s Grammar example on you’re v. your was a joke!  We thought it was funny, but a few of our readers thought we had it all wrong and didn’t know good grammar from bad.  Let’s lighten up, people.

Joe Garrett and Corky Watts  -  Garrett, Watts & Co.   -  http://garrettwatts.com/