“The current financial crisis continues to affect the markets and economy daily. We remain in a defensive mode; one year ago we increased our cash (money market funds) allocation while reducing our equity allocation. Furthermore, within the equity asset class, we reduced exposure to international funds (riskier investments that had a five year run up) and moved to domestic mid/small company funds, which tend to lead the way out of difficult economic times. However, this does not make us completely immune to the ongoing reorganization of the financial markets. The times ahead will continue to be volatile, as the credit crisis and the deflation in the housing market work their way through the system. It is in times like these that we need to remind ourselves that we are long term investors, and that staying the course has always proven itself to be the best strategy.

We want to reassure our clients that both Schwab and Fidelity are very strong financially and manage their money market funds in a very conservative manner. In communicating with our custodians, they have assured us that their first priority in managing these funds has been and will continue to be maintaining the $1 Net Asset Value. In addition, we have confirmed that neither firms’ money market funds own any Lehman securities.

In time, the markets should recover as they always do. If you need to speak with us or come by our office to discuss your individual situation further, please let us know. We appreciate your business and, as always, we are here for you."

- John Hayman, Founder/President

LET US HELP YOUR FRIENDS AND FAMILY

Did you know Capital Advantage, Inc. can work with your friends and family (children, parents, siblings, and family trusts)? We are happy to waive our minimum asset requirement for your loved ones. Many existing clients already have us manage their childrens and parents accounts. Call John, Donna or Gary if you have a need at (925) 299-1500.