This is the 14th year that we have published “A Study of Real Real Returns” and as the French say “Plus cà change, plus cà le même chose.” The more things change, the more they remain the same.

In 14 years, the tax rates have gone up and down (most recently on dividends and capital gains). Inflation rates have fluctuated, but have always been above 2% per year; and every investment has some expenses associated with it.

This year we expanded the number of assets we studied to include more asset classes. It is no surprise that over the last 20 years common stocks and municipal bonds were able to provide the best “real real returns” for taxable accounts. That has always been the case.

My main concern continues to be inflation. It is the invisible tax which no Congressman has to vote for; therefore, it is their favorite tax. The depreciation of the dollar against the major currencies of the world also imports inflation (it takes more dollars to buy a German car, a French wine or a pair of shoes from Italy). The dollar is down 33% against the Euro since the end of 2001 (as of 12/31/2006).

As investors, it is as important as ever to consider inflation, taxes, and expenses on every investment one makes.