As we begin a new year, the question of the year already seems to be: "Is the stock market in a stall or have we really begun a bear market?" On July 28, 2000, I wrote a newsletter titled, "Predicting a Stall". You can take a look back at this newsletter by visiting our website at www.turamali.com. I would like to continue with that subject herein as I believe we have entered a year in which making a profit in the stock market will be difficult. Additionally, I believe it will be a year in which professional management will be a must.

Since our last newsletter, the Federal Reserve has finally acknowledged that our robust economy is beginning to slow. They have cut the discount rate for the first time since September '99. While Turamali, Inc. continues to recommend a well diversified portfolio as mandated in Ecclesiastes 11:2, we do feel that the economy will continue to stall for at least the first half of 2001. We will probably see more discount rate cuts from the Federal Reserve.

INTEREST RATES
Interest rates finally took a drop at the end of 2000. The robust economy that has been building since the last recession of 1991 finally took a sharp spike downward. The growth rate in the fourth quarter was half the average of the previous three years. With this sharp drop, the FED elected to lower rates since they felt a recession was a possibility. Even with a .50 percent drop, many economists feel it will take at least another .50 percentage drop to stimulate borrowing to prop the current stock market up.

The good news for bond investors is that there has been an incredible double-digit return over the past three months (i.e., good news for those who moved to the bond market). Turamali, Inc. continues to believe that the allotment for fixed income products should remain the highest percentage in one's portfolio; however, we urge investors to be careful. If interest rates drop too quickly, there may be inflation fears as we saw early in 2000. Watch for a trend of dropping interest rates during the first half of 2001. Remember if moving money to fixed income products, please evaluate your portfolio every six months and be on the lookout for changing trends as markets will be manipulated to halt any sharp sell-offs during the coming year.

TRADE DEFICITS AND THE DOLLAR
Before we address the direction of the dollar, I would like to review the U.S. trade deficits that we listed in our July 28th newsletter. At that time, trade deficits had hit a record $270 billion for 1999. Regrettably, we now report the trade deficit for 2000 is over $325 billion (and the final total has not yet been released). In other words, due to the strength of the dollar, we continue to buy cheaper goods and send our money out of this country. We all know that at some point this trend will change. However, since the dollar hit an eighteen-month high last week against the yen, it is hard to say when that change will take place. Also the rally in the EURO has slowed and the dollar has gained strength over the past three weeks after a drop at the end of 2000. Another surprise has been the weakness of the Swiss franc that had long been the strongest currency worldwide until the last three years. Merrill-Lynch is currently recommending shorting the Swiss franc.

With all this pressure on the Swiss franc, the Euro and the yen, the dollar should peak out in the first quarter, but not later than the second quarter of 2001. Turamali, Inc. continues to recommend that investors place part of their portfolio into physical foreign currency or in a foreign bond fund.

INFLATION, DEFLATION AND RECESSION
For the first time in a decade, we are seeing economists predicting a recession for 2001. Remember it takes two consecutive quarters of negative growth to bring a recession to a reality. Of those predicting a recession, many feel the NASDAQ is signaling a recession due to its 48% drop from its high on March 10th. Even with inflation rates dropping significantly from the much higher rates of the first half of 2000, it may not be enough to stop the economy from going into a minor recession. Either way, I do not think it will affect the economy that dramatically. Turamali, Inc. believes the best two possibilities are either a mild recession or we will see a return to stagflation. Right now we do not consider deflation a possibility since oil and gas prices are remaining constant (i.e., we are not seeing falling prices here as we did during 1997-99).

We will continue to watch this indicator, but we are not expecting any significant impact here especially if the economy continues to grow at a nominal rate or if it shrinks slightly.

STOCKS
The overwhelming majority of the e-mails and phone calls coming into our office specifically address the domestic stock market. In response, here are some statistics. Currently, the NASDAQ is down 48% below its record close of 5048.62 on March 10, 2000. The DJ Industrial Average is down 10.2% from its high of January 14, 2000 and the S&P index is also down 13.7% from its March 24th all time high. While one could make a case that the NASDAQ is in a bear market, it is too early to say the Dow Jones and S&P are also in a bear market. Probably the most alarming figure that has come out of the tremendous drop in equities has been the $3 trillion in market value that has been erased from the net worth of investors. While price earning ratios have fallen to much more respectable levels, the S&P still traded at twenty-four times earnings for the past twelve months. That number still seems somewhat high if compared to an average of sixteen since 1970 as reported by Ned Davis Research of Venice, Florida. Maybe the most alarming figure that has appeared in print thus far this year in the Wall Street Journal is that analysts are currently projecting that earnings could fall ten percent this year as opposed to the five to ten percent (average) rise of the past several years. As mentioned previously, the Federal Reserve will have a lot to do with the stock market's performance for 2001. Turamali, Inc. recommends that investors continue to use professional management keeping your stock portfolio at no more than one-third of the value of your investable money.

ASSET ALLOCATION MODEL
In adjusting Turamali, Inc's asset allocation model for the first half of 2001, we are basically using the same model that has been in place since the beginning of 2000. There are a few changes which appear below. Remember when building an asset allocation model according to Ecclesiastes 11:2, the mandate is first to be good stewards by diversifying allowing the time to serve God and not be completely caught up in worshiping our investments. The second, of course, is to make a profit realizing that every area cannot and will not always go in the same direction. The hypothetical asset allocation model below is being offered for the first six months of 2001:

For the next six months, Turamali, Inc's hypothetical asset allocation model is as follows:
Stocks (U.S. and Israeli only) - 25% to 35%
Gold Mining Stocks - 1% to 3%
Fixed Income (bonds and annuities)- 30% to 40%
Foreign Currency (foreign bonds and physical
currency) - 15% to 20%
Tangible Assets (precious metals, gemstones, rare coins
and historical documents) - 10% to 20%
Cash - 15% to 25%
Real Estate - 10% to 15%

*While the above asset allocation model is designed to help balance risk and give investors security, Turamali, Inc. strongly recommends consulting with your own personal financial advisor before making any type of change to your personal, retirement, or profit sharing portfolios.

FURTHER CLARIFICATION
(1) Stocks - No less than 5% in Israeli stocks with the remainder placed solely in domestic stocks. At this time, Turamali, Inc. believes other foreign stocks and mutual funds should be considered based on our belief that the dollar will drop later in the year.

(2) Gold Mining Stocks - The investor should use individual gold stocks or use a well-diversified mutual fund. Recommended funds include American Century's Global Gold Fund at (800) 331-8331, INVESCO Strategic Gold Fund at (800) 525-8085, or Franklin's Gold Fund at (800) 342-5236.

(3) Fixed Income - Part of a fixed income portfolio can be positioned into fixed annuities which are paying 7% or better. Part should be placed in domestic bonds or domestic bond funds. As we have recommended in the past, zero coupon bond funds can be acquired directly from American Century by phoning (800) 345-2021. These are no load mutual funds

(4) Foreign Currency - This area could be the biggest winner for 2001; however, there is always risk when betting on the dollar to go down. As mentioned in the past, historically the dollar has generally fallen until the last five years. We do believe things are changing. Investors could buy foreign currency in the form of the British pound or diversity into a foreign bond fund (like American Century's International Bond Fund which historically has done well in those years in which the dollar drops). To order a free prospectus on this particular no load fund, phone American Century at (800) 345-2021.

(5) Tangible Assets - The bulk should be positioned into gold and platinum. Turamali, Inc. feels silver needs inflation to drive its price upward. Therefore 80% to 90% of one's metals portfolio should be positioned into gold and platinum. Gemstones should comprise about 3% of one's holdings. Remember, gemstones are a long-term investment and do not provide instant liquidity. Also watch rare coins closely as they may have bottomed.

(6) Cash - With all the uncertainty, your cash holdings should be increased until a more clear direction is seen in interest rates, stocks, and bonds. As we mentioned in July, one cannot use standard commercial paper money markets to get higher rates than are generally offered by Treasury bill money markets. Again, keep that cash basket a little higher for the next six months and be ready to take advantage of any market opportunities

(7) Real Estate - Real estate should continue to represent the same percentage of your holdings as we recommended last year. While real estate is not climbing at the rates of the past several years, there are still opportunities in REITS, select rental properties along with standard duplex investments.

CLOSING REMARKS
Turamali, Inc's next newsletter will take an in-depth look at tangible assets. This newsletter will be written during mid to late March. For your information, Turamali, Inc. is hard at work updating our website. We have plans to overhaul our screen within the next two months. In the interim, special purchase opportunities will be posted on our website under "special inventory". Also be on the lookout for new icons in the months ahead. With the stability of tangibles and the many different options that are available in rare coins, historical documents, gemstones, diamonds and precious metals, this is an area of importance to your investment portfolio. This is also an investment that affords a unique sense of pride in ownership. There is still a lot of uncertainty surrounding our new President and Congress - so we are advocating a "wait and see" approach.

A new program that you will surely want to listen to is The Entrusted Steward. In this bi-monthly show Tommy will be covering and uncovering the absolute truth about many different financial and economic topics. The introductory show has already been posted. The next show will cover the "Buy and Hold" theory; looking at what the Bible has to say about this strategy. In shows to follow Tommy will be interviewing experts concerning certain financial and economic topics. I highly recommend that each of you listen to the first show to see just how edifying these programs will be for you. The shows will all be timely and in direct response to your questions. You will not want to miss The Entrusted Steward at http://www.grfinancial.com/webcast.cfm!

Finally, always remember I am available for a personal thirty-minute free telephone consultation. To arrange that call, simply phone my receptionist at (800) 247-2812. She will find a mutually convenient time for a pre-set conference call as I am always willing to discuss your personal investment goals and strategies.

.