ProVise Management Group, LLC, an SEC Registered Investment Advisor

SPECIAL PROVISE BULLETS ©

(November 20, 2008)

• At the risk of sounding like Macbeth and “protesting too much”, once again we want to reach out to all of you to address the extreme downside volatility in the markets.  There is no comfort in the knowledge that there has been no place to hide except in cash or cash equivalents.  We have expressed our views regarding our assessment that the stock and corporate bond markets are oversold.  Just as there was “irrational exuberance” in the days of the technology bubble, current conditions suggest “irrational despondence”. 

• While we are not a proponent of any one type of investment analysis, we can’t help but review some of the technical aspects surrounding this market.  We’d like to thank The Prudent Speculator for providing the following commentary in their Hotline written November 19th:  “Despite our continued optimism for the long-term, we realize that with fear running rampant these days and as it is unlikely that economic or corporate news will be uplifting in the near term, we have to brace ourselves for more volatility and the likelihood for additional weakness in the short run.  Having said that the technical indicators we look at are about as oversold as they have ever been, suggesting we are overdue for a significant bounce.  For example, the S&P 500 is now 35.5% below its 200 day moving average while the Russell 2000 is 39% below its 200 day moving average.  Those figures stood at 34.1% and 35.4%, respectively, when stocks began a six day rally on October 27th which took the S&P 500 up more than 18% from 849 to 1006.  During the same time span, the Russell 2000 rebounded from 448 to 546, or more than 21%.  In addition, the Volatility Index (VIX) hit 74 today, not far from the record close of 80 seen on October 27th.”      

• While obviously there are never any guarantees, and recognizing that while we are suffering through this it is hard to see over the tops of the trees, let’s remember that investors survived 1973-74, 1980-81, 1987, 1990, 1998, and 2002.  From each of these time periods when current events seemed the most bleak, optimism was non-existent, and pessimism was at its highest, the patient investor was ultimately rewarded.

• At a fundamental level, the 90 day T-Bill is providing a zero percent return, while the 10 year Treasury Note provides a yield of about 3.1%, the lowest in 50 years.  At the current level, the S&P 500 has a dividend yield estimated at 3.5%.  Even with reduced earnings projections for the S&P 500 for 2009, the current S&P 500 value translates into about 10 times earnings while the 10 year Treasury Note is trading at the equivalent of about 32 times earnings.  Thus, the relative value of equities is compelling.  At times like this wide disparities exist, but over time equilibrium returns.

• Based on research prepared by the Stanford Group Company, the S&P 500 is now trading more than 35% below the 200 day moving average, meaning that we are extended more to the downside than three other classic bottoms of 1974, 1987, and 2002.  Each of those periods of under-performance was followed by a period of significant out-performance.  Again, we can’t offer any guarantees and we are unable to predict the future, but both fundamental and technical analysis suggests that there are better times ahead.

• We remain available to visit with anyone at any time.  Communication is the most important thing to have during these very challenging times.  We hope you and your family have a safe and happy Thanksgiving!

RAY, KIM, ERIC, BRUCE, and LOU

©11/20/08 ProVise Management Group, LLC

This material represents an assessment of the market and economic environment at a specific point in time.  Due to various factors, including changing market conditions, the contents may no longer be reflective of current opinions or positions.  It is not intended to be a forecast of future events, or a guarantee of future results.  Forward looking statements are subject to certain risks and uncertainties.  Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in these Bullets, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio.  Moreover, you should not assume that any discussion or information contained in these Bullets serves as the receipt of, or as a substitute for, personalized investment advice from ProVise.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Information is based on data gathered from what we believe are reliable sources.  The information contained herein is not guaranteed by Provise Management Group, LLC as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.  The indices mentioned are unmanaged and cannot be directly invested into. .  If you do not want to receive the ProVise Bullets, please contact us at:  info@provise.com or call:  (727) 441-9022.  Please visit our Web Site at:  www.provise.com.

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