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October 1, 2016

Dear Client:   Returns for the major stock indices through the third quarter of 2016 and the current bond market yields are as follows:   Index YTD 2016 Dow Jones Industrial Average +5.07% S&P 500 +6.08% NASDAQ Composite +6.08%   Fixed Income Yields 1 year 5 year 10 year 30 year Municipals 0.74% 1.05% 1.52% 2.28% US Treasuries 0.59% 1.15% 1.60% 2.32%   As we head into the fourth quarter, we recognize that 2016 is on pace to be a positive year in the equity and bond markets.  The economy continues to improve modestly as we are reaching full employment, seeing annual household incomes rise for the first time in nine years, and benefiting from increased consumer spending, low gas prices, and low inflation.  We also know that GDP growth has been slow and global tensions abound, but we believe the economy needs to see improvement in GDP growth, as corporate earnings are highly correlated to growth.  The United States has not had GDP growth over 2.7% since 2005 and only twice above 3% since the roaring markets and internet boom of the late 1990s. As addressed in our second quarter letter, we at LYNCH & Associates continue to monitor economic numbers and global events, but we subscribe more to the micro view of individual securities.  In the words of legendary investor Warren Buffett, “We have never bought a business nor not bought a business because of any macro feeling of any kind.”  When asked his thoughts of the interest rate cycle, he responded “If Alan Greenspan (ex-Fed Chairman) was on one side of me and Bob Rubin (ex-Treasury...