Here is what our charts are showing us now:

v      The major index charts show the offensive team on the field, so we are playing offense.

v      Equities remain strongly favored over cash.

v      Domestic Equities and International Equities are favored.

v      The trend charts of major indices are both positive and very orderly.

v      There are many holdings that still have good risk-reward characteristics.

Most importantly, we have a sell discipline for when the odds are no longer in your favor and defensive action should be taken.  We look at the chart patterns to see if supply or demand is in control, determine the calculated potential reward for the risk taken in holding or buying an investment, and then establish or update our exit points and enter stop loss orders for assets we choose to continue to hold.  We use the relative strength relationships between cash, foreign currencies, fixed income, commodities, domestic equities, and international equities to tell us where the strengths lie.  Please let us know if you have any questions or concerns.

Seminar Announcement:  We will present our seminar entitled “Disciplined Investing:  Who Has the Ball and What’s the Game Plan?” on Thursday, October 29, 2009, from 6:00 to 8:00 p.m. at the French Broad River Garden Club on Hendersonville Road.  There is detailed information about the seminar on our website, and anyone is welcome to attend.  There is no charge.  Please let us know if you plan to come so that we can reserve your seats and have ample refreshments. 

Roth IRA Conversions:  From January 1, 2010, through December 31, 2010, IRA owners who were previously unable to convert their Traditional IRA's into Roth IRAs due to having a modified adjusted gross income over $100,000, will now be allowed to do so thanks to the Pension Protection Act of 2006.  Income tax liability for such conversions can be spread over a two-year period.  We will be working with our clients to ensure that all IRA account holders for whom a Roth conversion is the proper course of action take advantage of this opportunity.

Year-End Investment Reports:  Fidelity has announced that it will not mail out Year End Investment Reports (YEIR) in an effort to be “green” and to not clutter client mail boxes.  These reports summarize activity in your accounts throughout the year, such as dividends, interest, and capital gains/losses; additions and withdrawals; and “transaction costs, loads, and fees” which will be primarily advisor fees since White Oak absorbs all transaction costs possible for our clients.  The YEIR will be available to you online or through White Oak beginning in mid-January 2010.

The NYSE Bullish Percent chart has reversed up to X’s, showing us that demand is appearing once again. Our game plan is always to push some chips back onto the table when this occurs. This may sound like gambling terminology, but over the years, what we have tried to do for our clients is stack the odds in favor of your success in meeting your goals. We also look at the relative strength relationships between cash, equities, and bonds to see where the demand strength is, both short-term and long-term. We think that the U.S. markets are in a long-term secular bear market for many reasons, but that does not mean there will not be some excellent investment opportunities along the way. If the equity markets continue to gain in demand, then we will push more chips back onto the table. Our plan is laid out in front of us, and we are ready to act.

We have been building a shopping list of ideas, and we know where we want to employ cash when our criteria is met. If we didn’t have the conviction of our game plan, we would have to rely on what we hear from the many investment experts, none of whom agree with each other. There may be many right answers, but the common theme for us is both a tactical approach to managing risk and a strategic approach to growing your wealth or maintaining your income. There is always the steadfast adherence to our game plan, and we believe that being able to articulate that to our clients gives both you and us a tremendous amount of comfort in our abilities. In every situation there is a solution, so long as we remain focused on the task at hand.

Following this game plan, we continue to position our portfolios very defensively.  Wealth preservation in portfolios can come in many forms.  It can be establishing stop-loss points on positions so that we know exactly what we are going to risk; it can be liquidating all or part of a position; and it can also include raising cash, or looking at alternative investments.  A relative comparison of performance between money markets and the equity markets has been favoring cash since late July 2008, and that is still the case today.  We believe that this recent bounce in the market, which began near the end of March 2009, was a bull bounce within a long-term secular bear market.  We decided in March that it was likely to be of short duration, and this appears to be the case.  While our charts have shown some short-term strength in equities, both domestic and foreign, our longer-term charts continue to show us that cash is and was stronger over the long-term.

Now our supply and demand charts are clearly indicating that short-term supply is moving to take over the market direction, and we should either remain with -- or move again to -- a defensive game plan.  If you chose to take advantage of that bounce and moved some of your assets that you own outside of White Oak Financial Management, Inc. (such as your company retirement plans or variable annuities) back into the equity markets over the last couple of months, we would like to suggest that you move into or remain in the stable value, fixed income, or money market accounts within your plan or annuity at this time.  Please call us if you would like specific guidance on an outside account.

While we don’t know exactly when we will change our posture from wealth preservation to wealth accumulation, we do know we can’t escape hearing the “crisis” at every turn.  Take your pick -- Financial Crisis, Banking Crisis, Global Crisis, Housing Crisis, etc.  Anyone who has invested for at least ten years knows that a crisis presents the chance to take advantage of new, emerging trends.  It reminds us of the following quote:

"When written in Chinese, the word 'crisis' is composed of two characters -- one represents danger, and the other represents opportunity."

Please call us anytime you have a question or wish to come in to meet with us.  Our clients and friends are our greatest asset.