December, 2009 Words from the Street In This Issue A MESSAGE FROM OUR PRESIDENT MAIN FEATURE BOOK PICK OUR PEOPLE A MESSAGE FROM OUR PRESIDENT As the year draws to a close, we want to thank you for your continued support which has helped make this year such a success.   We are much stronger leaving 2009 than entering it.  Our advice to clients has been particularly effective, both before and after the capital markets turned around.  We increased the breadth and depth of our expertise by adding Charlie Walsh and Randy Hustvedt to the team.  We were fortunate to bring on a significant number of new clients.   We are excited about 2010.  We have a great group of clients and friends.  Our ability to provide advice and service has never been stronger, and as a result, our prospects for growth are great.  As we survey the competitive landscape, our investment and planning expertise and our culture of putting clients first cause us to stand out.   We hope that the past year has been good for you, as well, and we wish you all the best for the New Year.  We look forward to working with you.   John LaPann, President   "LISTENING TO YOU... WE GET THE MUSIC" or "What Pete Townshend Teaches About Serving Clients" By Randy Hustvedt We'd like to share a deep, dark secret with you.  As much as we focus endlessly on investments, and as much as we have whole groups of people at Federal Street Advisors who do little else than asset allocation, manager due diligence and portfolio management, the core group of us are as interested in our clients' family history as we are their investable assets.  You might think that we'd shy away from this "touchy-feely stuff" and focus exclusively on hard-core investment strategy or estate planning, but over the years, we have found the value we can add from taking the time to understand our clients, and in doing so, gain insight into their family histories, is immeasurable.   Most of you are old enough to recognize the line above from "Tommy" by The Who.  But, how many of you remember the refrain:   Following you I climb the mountain. I get excitement at your feet! Right behind you I see the millions. On you I see the glory. From you I get opinions. From you I get the story. In the opening days of a client/advisor relationship, it is not easy to dive right into the highly personal, but we do, and we look to get below the surface quickly.  (Click to continue reading)   BOOK PICK: Raising Perfect Children... Sort Of. Our book pick this month comes from John LaPann and is just a little bit out of the ordinary.  Elizabeth Beckwith's "Raising the Perfect Child Through Guilt and Manipulation" is not what you would call a traditional parenting guide. No, not this time. The 256 page paperback centers on the author's basic parenting philosophy, which is: A family should be a team. A tribe. A group of people living together who, though all individuals, share a common set of values and principles. It boils down to this golden rule: "We do things a certain way, and everyone else is an a**hole." The author argues that while you should not put this rule on a bumper sticker and slap on your minivan ("that would be trashy"), in the privacy of your own home, you can employ her essential components of Guilt and Manipulation to mold kids that you won't be embarrassed to admit are yours.   According to Macy Halford of The New Yorker, "Beckwith's book is meant to be humorous, and it is, but I don't think it's a joke. The most successful families I know are the ones who think of themselves as a capital-F Family, who espouse the motto "Family first," who when they speak of themselves say "The Family" or "The Fam."   The author is a stand-up comedian, writer and actress who lives in Los Angeles with her husband and two kids.  John enjoyed the book and thinks some of the parents out there will as well. (Click the book to go to Amazon.com or here for our Reading List.) FEDERAL STREET'S DESCHAINE FOSTERS INDUSTRY DIALOG Federal Street senior analyst Ben Deschaine, a member of the Chartered Alternative Investment Analyst Association (CAIA), serves on its education committee.  In that role, he recently helped the CAIA host an event at the Harvard Club in Boston that explored the potential for future inflation or deflation.   The featured speakers for the event were Larry Heller, portfolio manager at hedge fund Helios Advisors in New York and Gerard Gardner, portfolio manager with the hedge fund North Asset Management in London.   Mr. Heller discussed his concern about the potential for future inflation driven by what he believes is the U.S. Government's unwillingness to allow deflation to run its natural course.  Mr. Gardner echoed that opinion and went on to say that if the U.S. Government pushes too hard it could trigger a "hyperinflation" type scenario that would have wide-ranging implications.   The night's discussion wasn't all about the impact of government policy on future inflation or deflation.  Mr. Gardner also discussed the likelihood of future deflation being driven by the aging of the baby boomers and the resulting "aggregate demand void," which he sees resulting in an overall decline in spending as this huge segment of the population reaches retirement age, the point at which consumer spending traditionally tails off.