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Ronald Muhlenkamp: It’s an opportune time to be investing

July 22, 2006

I have frequently been asked to compare the current economy and markets to prior periods. In this vein, I believe the following:

• The economic and investment climate is most similar to the early 1960s; good GDP growth and contained inflation.

• The current stage of the business cycle looks most like 1994-1995 —

a soft landing or slowdown after a nice recovery from recession.

• The current psychology and market action are volatile. There is so much money, managed both professionally and privately, which is seeking to latch onto the latest fad or trend and then to be the first

one off (which is the hard part) that the markets will remain quite volatile. We think this will continue.

Many think that volatility is a bad thing. We think it is a good thing, allowing us to buy cheap or sell dear.

Because we like the climate and the seasons and, most importantly, we think we’re finding good companies at cheap prices (some of

which we own — and have gotten cheaper), we think it’s an opportune time to be investing money in our companies’ stocks.

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