vaughnwoods

The Pragmatic Reality
Everything is going to be OK. The price of oil is trading below $65 per barrel. The cost of borrowing is headed lower. The nation’s largest banks and insurance companies are being recapitalized by the federal government. Additional federal strategies will be implemented to cushion the severity of the recession under a new Executive in the White House. Nationally, the back log of unsold homes is being drawn down. At the current pace of home sales, national inventories should be normalized some time in 2009. Stock prices are deeply undervalued. At current pricing levels, many great companies now sport dividend yields higher than certificates of deposit.

What to look for going forward
Unemployment rates will continue to climb throughout 2009. Historically, the stock market will begin rebounding well before unemployment peaks. Corporate earnings will be ugly through the first half of 2009 and possibly through the third quarter. However, price earnings ratios should expand to help support stock prices. Thereafter, by April or May, the worm of risk should clearly begin to turn, such that staying in cash and bonds becomes the wrong strategy.

My Advice
Here is my advice to keep from being victimized by this international banking freeze-up…hang in there!!! I sincerely believe that an 18-month time horizon will be necessary to rebuild investor confidence in real estate and the equities market, but rest assured, confidence will be rebuilt. We have done well to help you maintain a large cash and bond position going into this downturn. Therefore, you have plenty of ammunition by which to participate in the upturn, once it begins.

Regarding Friends
Many of your friends and acquaintances may 1.) have suffered under poor management, 2.) need to recognize the opportunity that this market represents, and/or 3.) need the help of an experience management team with the confidence and experience to do what they know is a once in a life time opportunity, by participating in the forth-coming bull market. Please let those friends and acquaintances know that I am a resource who can help them make it through the rest of this bear market as well as help them take advantage of the good times which we will see again.

Contact us to learn more about working with Vaughn Woods Financial Group.

Best Regards,

Vaughn L. Woods, CFP®, M.B.A.

*Investors should be aware that there are risks inherent in all investments, such as fluctuations in investment principal. Past performance is not a guarantee of future results. Asset allocation cannot assure a profit nor protect against loss. Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. Views expressed in this newsletter may not reflect the views off Delta Equity Services Corp. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. VW1/VWA0026

**Credit Suisse, Market Edge