Special Reports

from Mitch Fisher, CFP, President

DECEMBER 31, 2009

As we turn the last page and close the books on 2009, many of us can hardly wait for tomorrow’s new decade to begin. If there is one recurring theme that seems to punctuate this period in history, it might be that nothing is safe or secure anymore. Clients we know have walked into banks and been unable to promptly cash in their insured CD. Our identities and computers are vulnerable. Trust deeds that used to pay like clockwork have stopped ticking. The world’s greatest golfer has become a pariah. The world’s greatest entertainer is dead at age 50. The world’s biggest thief is in jail after stealing billions from some very smart people. The world’s greatest investor reported a loss of 62% net income in the previous year![1]

“I would give all my fame for a pot of ale and safety.” William Shakespeare in Henry V

While falls from grace have disappointed, 2009 has really been an excellent year for most investors. The recovery began in March and many indices have recently reached their highs of the year. From New Year’s Day through Christmas eve this year, the DOW is up 19.8%, the S&P 500 ahead by 24.7%, the Russell 2000 +26.9%, and the NASDAQ +44.9%. The best sectors this year have been Technology +68%, Precious Metals +69%, Real Estate +40%, Natural Resources +61%, Financials +32%, Health +26%, and Utilities +24%. The biggest gainers in 2009, for the same period, are Diversified Emerging Markets +78%, Pacific/Asia ex-Japan +74% and Latin America +125%.[2]

Stock prices and savings rates are positive, and lower prices have brought us something to celebrate. Purchasing electronics or an automobile, staying at a hotel, buying a new house, eating good food, and heating your home with natural gas should cost less today than a year ago. Despite negative gyrations in early 2009, our economy no longer appears to be looking into the abyss. However, Victor Hugo’s words should still remind us: “Caution is the eldest child of Wisdom.”

Thank you to those of you who brought food or toys to our office this holiday season. When I delivered these to the local fire department, you could have lit up an entire neighborhood with the bright smile on the face of the fireman. Thank you to those of you who have completed your beneficiary forms. You should feel good about putting your affairs in order. We are still collecting these for IRAs, life insurance, annuities, and retirement plans. If you have funds in banks or other financial institutions, please allow us to coordinate and update your holdings. Thank you to those of you who have written me notes, cards, or emails with compliments and appreciation for our service and our relationship this year.

ROTH-IRA changes in 2010. Regardless of your earned income next year, you will be eligible for a contribution or a conversion to a ROTH-IRA. In simple terms, these are tax-qualified plans that provide tax-free accumulation and tax-free distributions. Unlike a traditional IRA, the contributions to a ROTH are not tax deductible. You may see a big campaign in the coming year to convert your IRA to a ROTH. In most cases, a conversion requires writing a voluntary check to the “taxman”. This can be a very complicated decision that requires proper calculation and projection. We can certainly help you with the math and refer you to an accountant for the appropriate tax planning questions.

“Never surrender opportunity for security.” Branch Rickey

If there is a lesson to be learned from this past turbulent period, as boring as it might seem to the day traders and chartists, it could be simply that “old school” works. Persistence and patience pay dividends. You don’t have to swing at the pitch. Buy low sell high. The 3 rules of real estate are location, location, and location. These time-honored adages when applied to investing should be fresh in your minds before putting up your money. For every 1 good stock tip, newsletter-hyped investment, or trading “formula” that I’ve seen over the years, there were probably 49 that didn’t turn out well at all. Our ears and eyes should always be alert to an opportunity, an idea, something that could change our lives. We should look to undervalued companies, green energy, tech, real estate, and health sectors for growth potential in 2010. On this last day of a big year, I would urge restraint and fiscal caution, especially in the next few months.

“Better a thousand times careful then once dead.” Proverb

At Pac Sun this year we accomplished so many of our objectives. Forbes Magazine called me as part of an article about top US financial managers. We found that during one of the worst economic periods in history, our client retention rate at Pac Sun was 93%. This is a major accomplishment, a key to our success, and a tribute to your loyalty, your trust, and your confidence. According to the Wall Street Journal[3], the most important qualities of a financial advisor are: #1 “works in my best interest”, #2 “understands financial situations and goals”, and #3 “is available and responsive”. We received a repeat award this year as a Five Star Wealth Manager in client satisfaction from Orange Coast Magazine.

Our paperless office system, technology, and staff education improved this past year. We even refreshed our offices a bit with new carpet and paint. Our assets under management increased, our real estate and other private placements grew, our insurance and annuities decreased. In 2010, we intend to use advanced technology for better communications including client reviews by web-cam, quicker data access, and perhaps videotaping some client meetings. We will be focusing our new business efforts on the $4 trillion held in IRA accounts. More than 46 million Americans have an IRA and deserve trustworthy advice. Along with improving our services, of course, I want to see all of you create or maintain a steady income, increase your net worth, and enjoy a quality life.

Wishing you great happiness, health, and prosperity in 2010,

Mitch Fisher

National Asset Management, Inc. (NAM) is a Registered Investment Advisor with the SEC. NAM provides fundamental investment management services. The views expressed contain certain forward-looking statements. NAM believes these forward-looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies. This material represents an assessment of the market at a particular time and is not a guarantee of future results. This information should not be relied upon as research or investment advice regarding any security. One cannot directly invest in an index. Index performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the US economy. The NASDAQ Composite is a stock market index of all the common stocks and similar securities listed on the NASDAQ stock market. The Russell 2000 is a market capitalization-weighted benchmark index made up of the 2000 smallest US companies in the Russell 2000. Securities offered through National Securities Corporation, Member FINRA/SIPC. Investment Advisory Services offered through National Asset Management, Inc SEC Registered Advisor and affiliate of National Securities Corporation. NAM or Pacific Sun Financial does not offer any legal or tax advice. One should consider consulting with a legal or tax professional before implementing investment strategies.

[1] CBS News “Warren Buffet’s Berkshire Hathaway Suffers Worst Loss Ever”[2] LA Times 12-26-09[3] Wall Street Journal 10-5-08

NOVEMBER 13, 2009

“Predicting rain doesn’t matter. Building an Ark does.” The Noah Principle

There is so much to tell you that it may not be possible to squeeze everything into the normal, 2-page report. For openers, the market reached a 52-week high this week, health care legislation was passed in the House of Representatives, the Yankees won their 27th title (okay, only New Yorkers probably care about this one), Warren Buffet is buying railroads, the 3.5% increase in the GDP officially marked the end of the recession, and year-end tax planning is right in front of us. In addition, you should be updating your IRA and retirement beneficiaries, watching out for some unnecessary Minimum Required Distributions (MRD) and fees, considering a few alternative investment ideas, and calculating your virtual age.

Yesterday, the DOW (10,291) and the S&P 500 (1,099) reached their highest levels this year. The spot price of Gold hit a record high of $1,118 per ounce. On Monday, the DOW surged 203 points, its second 200-point gain in three trading days.[1] As regular readers of this report know, I’ve been waiting for the rains to come down on the stock market since September. For those of you who have stayed invested, you should be patting yourselves on the back and soaking up sunny profits. The current financial weather report apparently doesn’t see storm clouds over our economy. The Russell 2000 index of small cap stocks shot up 75% from March 9^th to September 30^th.[2] The S&P 500 is ahead by 14.72% this year through the end of October. During the same period the S&P Emerging Intl Index is +62.7%, Diversified Financial Services +13.4%, Metals +34.51%, the Russell 400 Mid-cap is +22.4%, Tech +44.2%, and Healthcare +5.38%.[3]

Speaking of Healthcare…it sure looks like this lagging sector has been watching Congress from the sidelines this year. The controversial health reform bill passed the House of Representatives last Saturday by a vote of 220-215. If the Senate concurs with this legislation, most Americans would be required to have insurance. Federal subsidies would be provided for those who could not afford coverage and large companies would have to cover their employees or be fined. Denying coverage for pre-existing conditions would be banned and insurers could not charge higher premiums based upon gender or medical history.

Beneficiary forms: Kudos to so many of you who have completed and returned your IRA, Retirement Plan, Annuity, and Life Insurance forms to us. We have already discovered some trusts designated inappropriately and a few heirs who shouldn’t be named at all. I certainly hope that this mildly annoying, yet extraordinary service request has given you the chance to consider your loved ones and put your financial affairs in good order.

Have you been eating well, exercising, and enjoying your relationships? Find out how these factors and others can affect your life expectancy. When you have a few minutes, click the arrows in this virtual age test to see how old…or how young…you really are today: www.sonnyradio.com/realage.htm. (Warning: Do not take this test if you are sensitive to aging. No promotion of this website or content intended.)

“Due to the challenging business and economic climate, the cost of doing business has dramatically increased. As a result, we are making rate and fee changes to your agreement.” If you have received a notice like this from your bank or credit company, you are not alone. Rest assured, you will not be receiving a notice like this from us.

There is an annual IRA – Retirement Plan fee of $35 per account with National Financial Services. You may have it deducted from your account or send a check and take a tax deduction. In non-retirement accounts without any transactions or dividends this year, you can avoid the $35 “inactivity fee” by: 1) completing a trade before year-end, 2) disbursing all assets, 3) beginning periodic investments, dividend reinvestments or withdrawals, or 4) having $10,000 in a money market account. NFS has a fee for accounts less than $2,500 that will be waived if they are UTMA, UGMA, or “house-hold/family” accounts.

Billionaire Warren Buffet called it his “all-in wager” on America’s economic health as he shelled out $34 billion for Burlington Northern, one of the nation’s largest rail transporters. Why? He likes model trains. He considered the stock undervalued as railroad companies have been hit hard by the recession. Burlington Northern transports a variety of goods including food, clothing, appliances, coal, and electronics. Fuel costs that hurt the trucking industry could help railroads in the future. Globalization of a multitude of products arriving in ports like Long Beach will need to be freighted across the country. The stock jumped from $75 to $97 the day this news was announced.

Tax Tips for Year-end Planning: The first and best tip is to find a good CPA. If you own a home, or just purchased one, you may receive deductions for mortgage interest, points on the loan, property taxes, and even a credit for profit on sale. If you have been caught in the current mortgage crises, there could be debt forgiveness, short sale, and restructuring tax breaks. Purchases for solar energy, plug-in vehicles, and energy efficiency property offer valuable tax credits. Investment real estate can provide tax breaks for depreciation, maintenance and upkeep, 1031 tax-free exchanges, and interest payments. Municipal bonds give federal and state tax exemptions. Business owners, even part-time, may be entitled to home office deductions that include maintenance costs, hiring spouse and kids, plus tax benefits for equipment and property purchases. If you are an employee, not the owner, you might maximize your contributions to your 401K, or 403B, or other retirement plan. You could be eligible for a flexible spending account to help pay child-care costs and out-of-pocket medical expenses. Charitable giving may offer substantial year-end tax benefits by using charitable trusts, charitable IRA rollovers, giving appreciated securities, real estate, or life insurance policies. Remember that you are not required to take an IRA distribution in 2009! These are just a few general methods you might consider in the next 45 days to lower your taxes.

“Don’t you have something better than a 1% CD in the bank?” Of course…with some degree of risk attached. Here are a few short-term alternatives that we have been using lately: 1) High yield money market accounts with bonuses, 2) individual short-term corporate bonds, 3) treasury exchange-traded bond funds, 4) callable yield notes tied to an index, 5) direct placement hospital receivables, and 6) “fallen angel” stocks with dividends. Long-term investors should consider these sectors for growth potential: 1) medical delivery, 2) utilities, 3) alternative energy, 4) storage and apartment real estate, 5) technology, 6) healthcare, and 7) financials. For rates, dividends, details, and prospectuses, please give us a call.

One of our clients received an inheritance with specific instructions to purchase an annuity rather than receive a lump sum. The purpose was to provide a guaranteed income for life to the beneficiary without the chance of squandering or losing any of the principal. On the surface, the design was simple: obtain a single premium deferred annuity at the best rate. After several quotes were obtained from various companies, a more creative design emerged that increased the income significantly. Using the “split annuity” technique, acquiring a single premium and an indexed annuity (with a bonus and a guaranteed income rider), the client was able to receive a higher, guaranteed income.

Will this be the decade of bonds and fixed income? Many people see too much volatility in stocks and a very long recovery time for real estate. Uncomfortable with the meteoric rise of equities since March, I have urged prudence and patience lately, especially to our conservative clients. October produced a drizzle that slightly dampened the markets. Many of you have cash that is idle and would like to see it working for you. It’s not easy to be patient when stocks have turned and seem to be running away from you. I suggest that we reverse the theory of “myopic loss aversion”[4], the desire of investors with long horizons to allow the avoidance of short-term losses to cloud their judgment. In simpler terms, “buy low, sell high”, preserve your portfolios with quality and care. If the torrential rains come again, have your Ark ready to launch with a diversified group of worthy investments.

“When you reach the fork in the road, …take it.” Yogi Berra

On Veteran’s Day 2009, and every day, we should give honor and credit to our military people who have served our country and kept us safe. Thank you for protecting our freedom.

Mitch Fisher

National Asset Management, Inc. (NAM) is a Registered Investment Advisor with the SEC. NAM provides fundamental investment management services. The views expressed contain certain forward-looking statements. NAM believes these forward-looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. This material represents an assessment of the market at a particular time and is not a guarantee of future results. Investors will directly bear the expenses of the ETF’s underlying investments. The underlying investments may involve heightened risks related to liquidity, increased volatility and unfavorable fluctuations in currency values. This information should not be relied upon by the reader as research or investment advice regarding any particular security. One cannot directly invest in an index. Index performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the US economy. By investing in high yield bonds you may be subjected to greater price volatility based on fluctuations in issuer and credit quality. When investing in bonds, you are subject, but not limited to, the interest rate, inflation and credit risks associated with the underlying bonds. Bonds may be worth less than original cost upon redemption or maturity. National Asset Management, Inc. or Pacific Sun Financial does not offer any legal or tax advice. One should consider consulting with a legal or tax professional before implementing investment strategies. Securities offered through National Securities Corporation, Member FINRA/SIPC. Investment Advisory Services offered through National Asset Management, Inc SEC Registered Advisor and affiliate of National Securities Corporation. NAM or Pacific Sun Financial does not offer any legal or tax advice. One should consider consulting with a legal or tax professional before implementing investment strategies.

[1] Market Watch 11-11-09[2] LA Times 11-9-09[3] Bloomberg 11-2-09[4] Jerry Kerns from MorningstarAdvisor.com

OCTOBER 5, 2009

Waves from an underwater earthquake swept across the Pacific Ocean this week, killing people and destroying property. Tsunami warnings blared for Samoa, Indonesia, Hawaii and California. As we enter the treacherous month of October, tempests and earthquakes could reach the financial markets, too.

For seven months in a row the markets have advanced, bringing the S&P 500 Index now 20% above its 200-day moving average. In the last two quarters ending September 30th, the DOW has jumped 26%, the NASDAQ is ahead by 36%, and the S&P 500 has shot up more than 30%. This last quarter, the leading sectors were Financials +25%, Materials +21%, Technology +16%, Energy +9%, Healthcare 9%, and Utilities 5%. These rapid inclines have rewarded many optimistic and long-term investors. In the 30’s, 70’s and 80’s, these historic gains have led to pullbacks of an average of 12% three months later.[1] Storm surf advisories should be in effect.

I spent a few of days in Las Vegas last month and never left the hotel. Stuck at the black jack tables trying to win money back? Not me. Checking out the Beatle’s “Love” or the Jersey Boys? No time. The feature presentation for me was an 18-hour, two-day session with Ed Slott, considered the nation’s premier IRA and Estate Tax expert. Most of you have an IRA, a SEP, a pension, or a 401K plan. Ed was a wealth of information on recent tax rulings and court cases. He was also a great lookout man to help us avoid making tragic mistakes with some of our biggest assets. The highlight of this course was the proper naming of beneficiaries for your IRA. There are so many ways to disinherit your loved ones and cause them unnecessary taxes. Tragic stories were told of husbands and wives, parents and children who inadvertently left their money to undeserved heirs, ex-spouses, and the state. Court case after court case supported the beneficiary form as the ruling document, no matter how obvious the circumstances. You will be urged to review and update your beneficiary designations immediately. We will be sending you a new beneficiary form on every retirement plan, annuity and life insurance policy of yours that we can find. If you have other assets that we might not know about, please tell us so that we can help you make the changes.

A central theme of the conference was how often the big brokerage houses, banks and financial institutions failed to complete the beneficiary form properly or follow through on a rollover or transfer. “These guys were so busy with their stock options and mergers that they didn’t pay attention or didn’t know the nuances. They cost their customers dearly,” said Ed. We do not want this to happen to any of our clients, so please take a few minutes to discuss the possible pitfalls with me and sign your updated forms.

Here are just a few additional tax and estate ideas from Ed:

“Two words, ‘Touch nothing’. You could expose your biggest asset to taxes. So, before you accept an inheritance, or rollover an IRA… get the facts from someone who knows and who cares.”

“If you are eligible for ‘in-service’ distributions, move your funds out of your company retirement plan now. There are too many rules against you and limited access. Diversify. Avoid the Enron syndrome.”

“A person who has lost their job, or their company has closed down, should have tax-free retirement plan transfers available to them…so find out.”

“ROTH-IRAs are great for kids and grandchildren. Tax-free growth. Tax-free income. They could also be very good conversion candidates this year. Rates are low. Markets are low. No RMD required. ”

“Have company stock in a plan? You could have a huge tax break using NUA…net unrealized gain.”

There is undeniable growth potential in the green sector. Wind and solar segments are the most prolific. About 80% of venture capital investments last year were in “clean-tech”. The American Recovery & Reinvestment Act is a $787 Billion driving force. California is the leader in clean energy jobs with 125,000, followed by Texas with 55,000.[2] I continue to look for good investments for you in clean-tech.

A new banking relationship was established this month with EverBank, FDIC insured with a strong reputation throughout the financial industry. National Securities Corporation has approved the arrangement. For our clients, this means higher rates on money market funds and certificates of deposit. EverBank is committed to offer cash equivalents nationally in the top 10%. We welcome the chance to offer a service to you that keeps your cash working at competitive levels. You shouldn’t have to search around for CD rates anymore. Currently, the 3-month bonus money market rate is 2.54% APY.

October 2008 joined the list of the top monthly market meltdowns. The S&P 500 dropped as much as 27%. The most infamous day of October was way back on the 29^th in 1929. Stocks crashed 12.8% that day and eventually lost 90% of their value on their journey through the Great Depression. The scariest financial nightmare of them all occurred on October 19^th, 1987. Known as Black Monday, the DOW fell 22.6% in a single day. Should investors be peeking nervously through their fingers? Yes. Will the ghosts and ghouls of October appear again? Probably. So keep your cash safe for another month. Take some gains. If you’ve been thinking about a Principal Guarantee plan, do it now.

“After seven straight months of gains that have lifted key indexes 50% or more from their March lows, you’d think there would be a lot more itchy trigger fingers out there.” Tom Petruno, LA Times.

“I think we are starting a 10-year bull market and the DOW will double for sure.” Neil Hennessey, CEO, Hennessey Funds

As many of you know from our recent conversations and meetings, this month is not the time to be feeling too confident. What may appear to be investment inactivity lately is merely paying attention to what I believe are dangerous, high surf advisories for our economy, real estate and stock markets. Don’t be too hard on yourself if you got out late and then missed the last market rally. Give October its props and be patient until November before you jump back into the waves. It’s Trick or Treat time again and right now…there is more Trick than Treat.

Mitch Fisher

About EverBank Financial Corp:

EverBank Financial Corp, and its EverBank subsidiaries, is a privately-held thrift holding company headquartered in Jacksonville , Florida offering innovative banking, lending, and world markets products and services of exceptional value. The company’s balanced mortgage banking and deposit banking platforms provide diverse revenue streams with proven success in a variety of market conditions. As of June 30, 2009, the company has $7.5 billion in assets and $5.8 billion in deposits. For more information on the EverBank Family of Companies, log on to EverBankAdvisor.com. EverBank, the EverBank Infinity Sphere and the EverBank logo are proprietary service marks of EverBank. All rights reserved. 09EAP0346.4

[1] Jason Wotman 10/1/09 [2] New York Times 6/10/09

AUGUST 7, 2009

“The optimist sees the rose and not its thorns; the pessimist stares at the thorns, oblivious to the rose.” Kahlil Gibran

The optimists have enjoyed smelling the roses all spring and the fragrances have continued through the first half of this summer. I suppose the scorching heat of the market rallies from early March have driven the bears into their caves…but they are hot and grumpy and anxious to come back out.

"The prospect of a fourth-quarter relapse is not trivial…these bullish signals are the stuff bear markets are made of.” David Rosenberg, Gluskin Sheff Associates

While the short-sellers wait for the next downturn, the investors who remained confident or began buying this Spring, can dance to these sizzling numbers from March 9^th through August 4^th: The Dow has bounced the trampoline from 6547 to 9320 (+42%), the S&P 500 rose from 676 to 1005 (+48%), the NASDAQ soared from 1268 to 2011 (+58%), and the Russell 2000 boiled from 343 to 570 (+66%).[1]

New home sales were up 11% for July from the previous month according to the US Department of Commerce. The Labor Department said Thursday, August 6^th, that new claims for unemployment benefits fell to a seasonally adjusted 550,000 last week. Oil companies profits fell in the second quarter: Exxon Mobil was down 66% from a year ago and British Petroleum was off 53%.[2] Microsoft and Yahoo signed a 10-year deal to join forces to promote and develop Bing, in order to compete with Google’s dominant search engine. The US Federal Reserve Board’s Beige Book, a roundup of economic conditions across the Fed’s 12 districts through July 20^th, indicated signs of stabilization and improvement in key areas of our economy such as manufacturing, residential property, and employment. According to this Beige Book report, commercial real estate and consumer spending remained weak.[3]

Market Notes is a new feature on our website www.pacsunfinancial.com. Written by Donald Selkin, Chief Market Strategist for National Securities, it is an excellent analysis, opinion, and commentary about the happenings in the markets and the economy. The author is a nationally recognized commentator and analyst. It should be great reading for information seekers and daily market followers.

“A pessimist is one who makes difficulties of his opportunities and an optimist is one who makes opportunities of his difficulties.” Harry Truman

No news and good news. Last month, you may have noticed, the Pac Sun Report was absent because there wasn’t much in the way of news, and I simply couldn’t find any compelling stories or information worthy enough for you. Thank you to those of you who really missed the report and asked me about it. As you can see, there is much in the way of good news to report this month.

The chart below shows that decades of poor returns in the market (red bars) have been followed by decades of excellent total returns in the range of 8%-13% (green bars). Is this optimism or reality?

This graph represents the S&P 500 Index from 1964-2008. Source: Thompson Financial, Bloomberg, Davis Funds. Past performance does not guarantee future results.

“I can’t be right all the time, but I’m never in doubt.” You may have heard these words from me in the past. Today, I am convinced there are several areas of investment that have exceptional risk-reward ratios. Inflation is likely on its way, so Treasury Inflation-Protected securities (TIPS) should be favorable and are generally considered conservative. Although far from a healthy industry, real estate is beginning to heal. When the lending institutions really loosen the loan strings, the housing market should recover nicely. If suitable, consider self-storage, apartments, healthcare, senior housing and assisted living properties. Another opportunity sector to consider is the ravaged financial companies. Banks and insurance companies with good management and healthy cash flow may soon become a prime example for the investment creed: “buy low, sell high”. Tech and small cap companies should also do well…as they have historically…following past recessions.

The most potentially lucrative sectors, at least in my view, are energy and utilities. Stocks and funds in these segments have been knocked down this past year and are beginning to get up. People need to turn on their lights, their AC, and their heat. Alternative and green energy funds and stocks may have enormous growth potential. Utility and energy companies usually pay relatively good dividends.

All politics aside, if you’ve looked at your electric or gas bill lately, you want something to put an end to these escalating costs. The movement to “green energy” and “eco-friendly” are main topics, not only in the classrooms of our Universities, but also in the boardrooms of corporate America. I have been researching companies that could be the next big providers of alternative energy. Will our future energy come from the sun or the waves, the atom or the wind? Once we find the best source, how will we then transport it, store it, and make it safe? Investments in companies that succeed in developing and providing these resources may make their stockholders very happy. The energy opportunity reminds me of the investment story related to the discovery of air conditioning. Many investors became wealthy by investing in these cooling units, plumbing and related supplies. The big money, however, was made from investors and developers who were smart enough to see the ripple effect. They bought land in Arizona, Florida, and Nevada and the invention of the air conditioner brought the housing boom to them.

You should be pleased with your latest statements. Please continue to refer us to your friends and family.

“You always pass failure on the way to success.” Mickey Rooney

Mitch Fisher

[1] Reuters-Thomson 2] Reuters-Thomson [3] Marketwatch 8-3-09

JUNE 18, 2009

What kind of coffee do you like? French Roast. Columbian. Something from Sumatra or Costa Rica? How about a cappuccino from Starbucks? Have you tried the Barefoot Contessa’s blend with a hint of cinnamon? My favorite is just about anything 100% from Kona. Not a java drinker? Don’t despair. You don’t have to be a coffee connoisseur to see the correlation of brews and financial blends in this report.

GM declared bankruptcy last week. American and Delta Airlines slashed jobs. According to the Commerce Department, the US trade deficit expanded in April to $29.2 Billion from $28.5 Billion in March. The price of a barrel of oil has doubled in 5 months to $72. You would think that all of this bad economic news would slow the markets down, right? Wrong. The S&P 500 reached a 7-month high last Thursday. The caffeine of positive news has been kicking in. 10 major banks are repaying $68 Billion in TARP funds this month. Manufacturing and materials sectors perked up, personal spending fell .1%, and personal income jumped by .5%. US Consumer confidence increased in May for the fourth straight month.[1] The LA Lakers 15^th championship title run must have been a factor, too. When the purple and gold have won the NBA crown, the S&P 500 has ended that year 80% of the time in positive territory.

Does this mean that the worst is over because bad news doesn’t matter that much in these beaten down markets? Could be. Consider these eye-opening statistics: The S&P 500 has climbed 40% since March 9^th and it is ahead 6.1% in 2009. The median price of a California home is up for the first time in two years. It looks even better abroad this year for Asia (ex-Japan) +36.6%, the UK +17.9%, and Europe +9.1%. The Tech sector (+26.2%) has led the way in ’09, followed by Materials (+23.4%), Consumer Goods (+11.8%) and Energy (+7.0%). Telecom (-3.8%), Health Care (-2.0%) and Utilities (-1.8%) could use a stimulant.[2]

Checks have been arriving for many of you from Alliance Capital Management. These distribution payments are the result of a class action suit that was settled and a “fair fund” established for certain shareholders of Alliance Funds. If you received a check, you can feel free to cash it. However, if it is from your IRA or qualified retirement plan, you may want to avoid paying taxes now. You can endorse it, write “for deposit only”, list your account number, and return it to our office for redeposit without penalty or tax consequence within 60 days.

If you have an account with less than $25,000, you may have received correspondence about a transfer of assets and a prefix change from MGT or MGU to LR3. NFS sent a standardized letter that has caused some confusion. There should be no cause for concern. All assets were simply moved “in-kind” from one account to another. The primary purpose of this change was to reduce client expenses. Nothing was bought or sold and all assets remain under your control. Please feel free to call our office for further explanation.

“It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time.” Winston Churchill

Have you written a life plan or made a personal wish list? No matter what your age or financial position, it is never too late to discover your true passions, to dream big, and to find ways of making a contribution. As I think about the struggles and disappointments of so many people during this economic adversity, I know that this easy and powerful source of hope has worked for so many for so long. Nathaniel Hill wrote about it. Norman Vincent Peale did too. Rabbis, priests, and management gurus have communicated it one way or another. In its most basic form, it can be found in your personal wish list.

In 1977, I read an article about some entrepreneurs who had sold their businesses and had become very wealthy. They had been asked by a magazine to make a list of some things they wanted to do with their lives since money was no longer an issue. (A recent example of this scenario was embellished in the movie “The Bucket List” with Jack Nicholson and Morgan Freeman.) Some wanted travel and adventure. Climb Mt. Everest. Dive the Great Barrier Reef. Most wanted to teach something, to see their children earn college degrees, and many wanted to help find a cure for a terrible disease. It was fascinating to read these wish lists, to sense the excitement, and to envision how good the future was going to be when many of these wishes came true. I proceeded to make my own wish list and continue to revise and amend it each year.

At the end of these Pac Sun Reports, you’ll usually find some investment recommendations, a financial sector to watch, or perhaps a little economic future gazing. This time, I’d like to change things up a bit and ask you to consider creating your personal wish list. Surely, you can find a couple of financial items to put on it. There must be a few interesting places you’d like to visit or some people you could help. So, find yourself a comfy seat under an umbrella or a tree, near the sea, by a lake, or wherever you can have some peace and quiet. A cup of coffee, some jasmine tea, mineral water or a glass of wine might be nice to get the creative juices going. Write in a stream of consciousness…whatever comes into your head. Start by answering these two questions: What activities make you feel the happiest? What ways can you make a difference in people’s lives? Now, try writing down 50 things you want. Just you. Whatever comes into your mind, as silly, or extravagant, or as impossible as it might seem, jot it down. There is tremendous power, internal and external, that will likely emanate from this list, engulf you, and could make a huge difference in your life. I’ve seen it work wonders with clients and friends who have used this technique. In his commencement speech to Stanford graduates in 2005, the founder of Apple Computer, Steve Jobs said:

“You can only connect the dots looking backwards. You have to trust in something…your gut, destiny, life, karma, whatever.”

Summer is now upon us. You shouldn’t expect the markets to continue this tremendous upswing, but it’s very possible that the worst, at least, is behind us. Be cautious with your investment decisions and dab on the sunscreen while you sip that cup of java in the morning sun.

Mitch Fisher

President

[1] Institute of Supply Management June 1, 2009[2] J.P. Morgan – Figures for period 1-1-09 to 6-15-09

MAY 21, 2009

“The Jesusita fire is now 90% contained. The last 10% is the most difficult part to put out and we’ve been working on it the longest.” Santa Barbara Fire Captain David Sadecki[1]

Contained. Enclosed. Controlled. Don’t you wish you had a fire chief in the financial markets to alert you when the fires are under control? Based upon the 60 days from March 9^th to May 8^th, the S&P 500 burned up the charts from 683 to 929. This might lead one to believe that stocks have bottomed out and the recession is over.[2] It must have been comforting for most of you to see your investments gain in value during this period. Even if the last ember has truly been extinguished, cleanup and re-building must take place…for those who lost property in Santa Barbara and for those who lost asset values, too.

Nine months prior to the official start of the recession, Lakshman Achuthan, managing director of the Economic Cycle Research Institute, predicted it. On April 29, 2009 he announced that the recession is now ending. “Over the last 75 years, when our indicators have turned up, the recession ends in four months, no exceptions,” says Achuthan.[3]

The hottest sectors year-to-date have been Technology (+13.6%), Materials (+13.1%), High-yield bonds (+24.8%), and Asia Ex-Japan (+21.8%). The Mid Cap growth style has produced the best results (+9.1%) this year, and Utilities (-9.8%) and Small Cap Value (-8.9%) the worst. The 10-year Treasury Notes were at 3.84% a year ago…today they yield 3.13%[4]

The S&P 500 closed on May 4^th at 907, the first time in 2009 that it ended in positive terrain. The bond markets have continued to decline over the last few weeks with even more Treasuries going on sale to finance our country’s budget deficits. It is expected that corporate earnings will be negative in the second and third quarters of this year before jumping up in the fourth quarter.[5] Oil was over $60 a barrel yesterday. GM is facing bankruptcy. According to the Labor Department, there are now 6.7 million people claiming unemployment insurance. These developments should send a cautionary message to investors: Take heart from the recent market rallies but position your assets to stay within your tolerance for risk.

In general, the investments we have been making for clients recently have been in low-priced, household name stocks, self-storage and industrial real estate, managed futures, and exchange-traded funds for potential growth. For clients who can handle a slightly higher risk than CD’s and money market accounts, we have been purchasing short-term bonds with large companies that we think will be here in 6-18 months.

You may be hearing a new voice from our office contacting you about our service. Please give her just a few minutes to discuss how we can do better for you.

“Professional life is like a fire hydrant. You spend your time putting out fires and standing your ground against the big dogs.” Anonymous

A private company recently contacted me about appearing in Forbes Magazine. (My first question was: “How much is this going to cost me?”) Although I declined the offer, one of their criteria areas for the Forbes report was about customer retention and satisfaction during the last 12 months. It turns out that our accounts are nearly 96% of what they were a year ago. In this difficult economic climate, client confidence and loyalty is an indicator of knowing what truly matters to you. Thank you.

Mitch Fisher

[1] LA Times May 14, 2009[2] Reuters - Thompson[3] Anderson Cooper – CNN April 29, 2009[4] JP Morgan – Statistical period 1-1-09 to 5-14-09[5] Wall Street Journal May 5, 2009

APRIL 6, 2009

“Pour down your warmth great sun!” Walt Whitman

The S&P 500 gained 20% in the last 25 days and the DOW jumped 1470 points.[1] April Fools? No, just some balmy reality during the first few days of spring. Most investors have been craving a little sunshine from the markets and hopefully…we have the proper sunscreen applied to avoid getting burned. I don’t think that we’re out of the woods yet, but your latest investment statements should warm you up a bit and offer you some hope for the future.

Here are the stats for the month of March and for first quarter of 2009: The S&P 500 was up 8.7% in March, down 11% for the first quarter. The DOW gained 7.7% in March, down 13.3% for the year. The S&P Mid-Cap 400 gained 9% in March, lower by 8.5% year-to-date. The S&P Small-Cap 600 gained 8.2% in March, off by 16.8% in the first quarter. Other S&P index results for March/Q1 include: Asia 50 +12%/-.5%, Europe 350 rose 2.2%, lost 11.3% in the first quarter, Latin America 40 is +9.1%/+.53%, and California Municipals -1.5%/+2.2%.[2] The NASDAQ Composite, up 4.4% in the first quarter, has the distinction of being the only major stock index with a gain thus far this year. Crude oil futures in New York closed at $49.66, up $5.06 for the quarter. Gold rallied to $922.60 an ounce, a gain of 4.4% for the quarter. The 10-year Treasury note yield stands at 2.68%, higher than the 2.25% it was on Dec. 31, 2008.[3] The composite Real Estate Investment Trust index is -31% this year, but managed a 4.4% gain in March.[4]

The G-20 Summit in London that ended last week delivered financial sunbeams to domestic and international equity markets. In order to promote trade and bolster some precarious economies, $1.1 Trillion was pledged for loan guarantees. These world leaders also agreed to monitor and regulate credit-rating companies, hedge funds and executive compensation. A second decision that nudged the markets higher was an accounting rule change by the Financial Accounting Standards Board. Simply put, the Board agreed last week to allow companies to use their own judgment to a greater extent in determining the "fair value" of their assets. This particular change is expected by economists and investors to boost the earnings of banks.

I went to my dentist, the much-loved and well-respected Dr. Jim Kahal. I asked him what was happening lately and he said: “Just fixing teeth as usual…but I’ll bet there’s more decay in your line of work these days than mine!”

The March unemployment report displayed plenty of erosion. 663,000 jobs were lost. We have the highest rate of unemployment since 1983.[1] The only good part of these numbers is that ADP had estimated nearly 100,000 more job losses. Corporate earnings announcements begin next week. Prognosticators are angling for another serious negative quarterly number. Most of our fingers are crossed that earnings will not fall nearly as much as the 60% they did in the last quarter of 2008.

Your IRA contribution deadline is April 15^th if you want it to count for 2008. In order to leave plenty of room for a timely deposit, your checks should be made payable to National Financial Services and received in our office by April 12^th. The most significant tax savings this year might be for you to skip your Minimum Required Distribution from your IRA or retirement plan. If you don’t need it, don’t take it.

“Cos I’m the Taxman, Yeah, I’m the Taxman. Don’t ask me what I want it for, if you don’t want to pay some more. Cos I’m the Taxman, Yeah, I’m the Taxman.” The Beatles

Some of our clients who exited the stock and real estate markets last year are beginning to wade back into these equity waters. Is there risk? Is there opportunity? Yes to both. Although disturbed by the drop in their asset values, many people realize that prices are relatively low and perhaps…the market bottom was scraped on March 9^th. Retirement dollars are generally paid out over lengthy periods. For instance, a 70 year-old, American female has a life expectancy of 15.3 years taking her to age 85. (A male makes it statistically to age 83.)[2] That could be a long time to recover what might be lost on paper and to gain additional asset appreciation.

The latest run-up has produced a little more confidence as stocks rise and real estate sales pick up. Investors are beginning to purchase securities at perceived to be deep discounts and to use a dollar cost averaging approach with a percentage of their cash. Well-known companies in sectors such as technology, financial, real estate and energy have produced welcome gains for some buyers in the recent upswing. No matter what the state of our economy, the asset allocation of the world’s high net worth individuals is Equities 33%, Fixed Income 27%, Cash/Deposits 17%, Real Estate 14%, and Alternative Investments 9%.[3]

Do you really think that our economic machine is busted and beyond repair? If the answer is yes, you should be in cash and treasuries, guaranteed annuities and fixed income. If your answer is no, that our financial system is not broken, I suggest once again that you consider these investment avenues for growth potential: healthcare and self-storage real estate, stock in companies that show healthy amounts of cash and pay a reasonable dividend, commodities or managed futures, alternative energy resources, and a variety of exchange traded funds.

I look forward with you to more growth this spring.

Mitch Fisher

President

[1] Wall Street Journal April 3, 2009[2] Social Security Administration Periodic Life Table[3]Merrill Lynch World Wealth Report 2008

[1] 3-9-09: DOW closed at 6547; S&P 500 at 676. 4-3-09: DOW closed at 8017; S&P 500 at 842.[2] S&P Reports[3] Los Angeles Times[4] National Association of Real Estate Investment Trusts

National Asset Management, Inc. (NAM) is a Registered Investment Advisor with the SEC. NAM provides fundamental investment management services. The views expressed contain certain forward-looking statements. NAM believes these forward-looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies from those currently expected to be employed. This material represents an assessment of the market at a particular time and is not a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any particular security. One cannot directly invest in an index. Index performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the US economy. The S&P Mid Cap 400 Index included 400 mid sized companies and covers approximately 7% of the US equities market. The S&P Small Cap 600 is an Index of 600 small capitalization domestic stocks. The S&P Asia 50 is an index drawn from four major Asian markets – Hong Kong, Korea, Singapore, and Taiwan and are leading, large blue-chip companies from these markets. The NASDAQ Composite is a stock market index of all the common stocks and similar securities listed on the NASDAQ stock market. The S&P Latin America 40 represents major economic sectors of Mexican and South American equity markets. Diversification does not protect against loss. Securities offered through National Securities Corporation, Member FINRA/SIPC. Investment Advisory Services offered through National Asset Management, Inc SEC Registered Advisor and affiliate of National Securities Corporation.

MARCH 8, 2009

“Just when I thought I was out, they pulled me back in.” Al Pacino, Godfather 3

Most markets continued their pullback in February. The S&P 500 lost 10.6%, the S&P Mid-Cap 400 fell 9.6%, and S&P Small Cap 600 plummeted 11.9%. Global markets declined: S&P Asia 50 (-5.3%), S&P Europe 350 (-10.3%) and S&P Latin America 40 (-6.9%). California Municipal bonds gained .40% and are higher this year by 5.9%. The U.S. unemployment rate rose to a 25-year high of 8.1% in February. Four million jobs have been lost since the recession began in December 2007, and almost half of those losses have occurred in the past three months. [1]

You just can’t escape from these painful financial times. It’s like the dance game of limbo: “Hey economy…how low can you go?” Except this is no game. It is serious business with worldwide ripples that affect us each day. People are altering their buying habits, cancelling their travel plans, putting off their retirement, and struggling to pay the bills. We have all lost something in this global recession….a job, a house, a customer, values in our real estate or equities. The media feeds off this bad news; their ratings go up when they show car wrecks and report disasters. We are really tired of the bad news. So, what can we do? Ignore it, deny it...or deal with it and keep running to daylight to succeed. I believe that we must get smarter and do what is necessary to prosper again…and not let the government do it for us.

“What daylight?” you ask. It is there…you just need to know where to look. The first way to see it is to zoom out and take a wide-angle view. This will give you the proper perspective. As hard as it might be to look at your investments these days, we know for certain that we have always recovered from economic crises. Over time, the total return on equities has exceeded that of any other class of asset as shown below. Here is a “satellite” look at the last 200 years from 1801 to 2001[2]:

You don’t have 200 more years left for your assets to grow back? Okay. You probably won’t need two centuries. More recent figures show an annualized return of the S&P 500 Index since 1978 is 9.26%. The 5-year annualized return is -2.92%, the 10-year annualized return is -1.75%, the 15-year annualized return is 6.19%, the 20-year annualized return is 8.22%, and the 25-year annualized return is 9.61%[3].

The second place to look for perspective is in the history of downturns in our economy. Although we are in a new world of global consequences, the U.S. economy has been in recession 5.3% of the time over the last 25 years. This compares to the much higher frequencies of recessions in previous periods of comparable length shown in the chart below. [4] Given that the average length of the ten recessions since World War II has been 10.4 months, with a range of 6 months in the 1980 recession to 16 months in 1981-82, the natural time frame for the end of this recession would appear to be the middle of 2009[5].

What was going through your mind after 9/11? Anxiety, feelings of fear and loss were part of our daily lives 7 ½ years ago. Our country was attacked, lives were lost, and the world was changed forever….and we recovered. In fact, the DOW doubled from the low points after 9/11 to its high of 14,164 on October 9, 2007. It can be easy to forget the feeling of sunshine when the DOW closes today at 6626 and the S&P at 683. Imagine the upside potential if this kind of recent history repeats itself? Using the simple rule of 72, to illustrate this means a 12% yearly return for the next 6 years to bring things back to the levels of 2007. In my opinion, there are tremendous investment opportunities now to recover lost ground and the potential to make excellent gains over the next few years by making good choices and giving them enough time. If you are going to see your assets grow nicely again, it is critical to try and keep emotions in check and look for quality real estate and equities.

A third place to gather perspective is from experienced and highly successful people. Warren Buffet shook up the markets last week. His company, Berkshire-Hathaway lost 32% in 2008. If this man, considered by many to be the greatest investor of all time, lost nearly 1/3 of the value in his diversified company, you might see how so many could be swept up in this market deterioration, too. Here are a few of Warren’s viewpoints from his February 27, 2009 letter to shareholders:

· “During 2008 I did some dumb things in investments…”
· “We’re certain that the economy will be in shambles throughout 2009...but that conclusion does not tell us if the stock market will rise or fall.”
· “Berkshire is always a buyer…and the disarray in markets gives us a tailwind in our purchases.”
· “When investing, pessimism is your friend, euphoria the enemy.”
· “The market value of stocks and bonds that we continue to hold suffered a significant decline. This does not bother me. Indeed, we enjoy declines…to increase our positions.”

Finally, to deal with our current reality and to see the light coming, you only have to think of America and our underlying system of capitalism. There is no doubt that the greatest achievements of modern civilization have come from the people living, working, and pursuing their dreams right here in our country. Bell, Edison, Einstein, Ford, Gates. History shows us that the absolute best way to improve our world is to apply our creative and dynamic activities that are encouraged and rewarded in a free enterprise system.

Conventional wisdom these days says that our financial markets are going lower. I firmly believe that there are going to be some very happy people who can put their cash to work today, or rearrange their investments to take advantage of these low prices. For the investors with longer horizons, the best way to make back what may have been lost is to locate and put money into investments that offer growth. As mentioned in previous reports, I believe today’s best opportunities are in self-storage and healthcare real estate, alternative energy companies, managed futures and commodities, corporate bonds, insured municipals and dividend paying stocks with low debt.

Let’s get together on the phone or in person now to review your investments again. You should be positioned and ready for the recovery. I am confident that it will happen sooner than later.

“If you can keep your head when all about you are losing theirs…yours is the Earth and everything that's in it.” Rudyard Kipling

Mitch Fisher

President

acause adjustments in portfolio management strategies from those currently expected to be employed. This material represents an assessment of the market at a particular time and is not a g gguarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any particular security. One cannot directly invest in an index. IIndex performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. S&P 500 Index is an unmanaged index of 500 common stocks chosen to rreflect the industries in the US economy. The S&P Mid Cap 400 Index included 400 mid sized companies and covers approximately 7% of the US equities market. The S&P Small Cap 600 is an iiIndex of 600 small capitalization domestic stocks. The S&P Asia 50 is an index drawn from four major Asian markets – Hong Kong, Korea, Singapore, and Taiwan and are leading, large blue-chip ccompanies from these markets. The S&KP Europe 350 is an equity index drawn from 17 major European markets covering approximately 70% of the region’s market capitalization. The S&P LLatin America 40 represents major economic sectors of Mexican and South American equity markets. Diversification does not protect against loss.

SSecurities offered through National Securities Corporation, Member FINRA/SIPC. Investment Advisory Services offered through National Asset Management, Inc SEC Registered Investment aAdvisor and affiliate of National Securities Corporation.

[1] Wall Street Journal, S&P Reports

[2] Stern-NYU Economics Data Source

[3] I Stock Analyst

[4] Mark Perry, Professor of Economics, University of Michigan

[5] Anthony Karydakis, Fortune Magazine 12-3-08

FEBRUARY 9, 2009

A woman went to her banker and said, "I'd like to start a small business. How do I go about it?" "Simple," replied her banker, "Buy a big one and wait."

The S&P 500 Index finished its worst January ever as it fell 8.5%. The US Gross Domestic Product (GDP) dropped 3.8% in January’s report, the largest decline in 26 years. No surprise that consumer confidence sank to an all-time low in January. The Treasury bond market took its largest monthly loss since 2004. The Department of Labor announced on Friday, February 6^th that national unemployment reached 7.2%, the highest in 16 years.[1] Why would the S&P 500 rise 42 points (5.1%) on this same Friday? Perhaps it was a reaction to the agreement of Senate Democrats and Republicans on the economic stimulus package? Was it possibly due to the White House announcing plans to expand major lending programs? Maybe it was the news that the Lakers beat the Celtics on Thursday night?

If anyone can prove that they predicted these dreadful times for stocks at the beginning of the decade, I would like to meet them. Harvard graduate and author Harry Dent wrote two widely acclaimed books (The Great Boom Ahead in 1993 and The Roaring 2000s in 1998) using complex demographics and the baby-boomer age wave theory to forecast the stock market’s rise in the first decade of this century. In 2000, and again in 2004, Harry told us the DOW Industrials would reach 40,000!

“There are two types of economists: those who cannot forecast the financial future and those who do not know that they cannot forecast the financial future.” George Bernard Shaw

From my conversations with you and my financial colleagues, along with what I read in the economic reports and journals, it is obvious that most investor’s resolve is being relentlessly tested today. Patience is at a premium. There are very legitimate causes for concern and more caution with your investments…and too many to reiterate here. As much as the media may pump up your fears, in my opinion these times do not compare to the 1930s or to the crash of 1987. Trillions of dollars in cash as measured by the M2 are salivating on the sidelines today and anxious to be invested for higher returns. The constant bombardment of bad news may keep us on edge, but we also have instantaneous access to a wealth of financial information in the 21^st Century to help us navigate these financial minefields.

Many of you have already gone to cash, established a principal guarantee plan, or reduced your risk, especially if your time horizon is short or your nerves are frazzled. Hopefully, I have helped you plan for this by staying in touch with you, reviewing your assets, asking questions, remodeling your portfolios, and most importantly, recognizing your tolerance for risk. For long-term investors, especially in retirement plans, we have been nibbling here and there at perceived values in equities, dollar-cost averaging, or adding to existing positions with lengthy and strong track records. We have many more alternative investments and value opportunities today than we have had in a very long time.

Eschewing intricate charts, graphs, demographic studies, crunching unlimited numbers, or employing fortune-tellers or dart-throwing chimpanzees, please consider these general investment ideas to succeed financially in the next two to three years: 1.Take advantage of currently low commodity prices like oil and metals, 2. Purchase real estate, especially in the areas of health-care, assisted living and self-storage properties, 3. Grab some good stocks or funds at their discounts, especially the ones that pay decent dividends and, 4. Add corporate bonds and insured municipals for stability and fixed income.

Tax Tips: As you prepare your income tax returns for 2008, here are a few changes that you may wish to address in 2009: The AMT amounts have been changed, so check the new numbers. You may be entitled to a recovery rebate credit if you did not qualify for the maximum economic stimulus payment. You may suspend Minimum Required Distributions from your IRA or retirement plan this year. You might benefit from long-term capital gains tax rates in 2009 as these are expected to go up. Home sales exclusions are reduced this year for periods when a primary residence, rental property conversions, or vacation homes are not being used.[2] Consult your accountant for your specific situation.

We had a good turnout at El Niguel Country Club last month for our first public seminar in nearly three years. The topics included most of what you and I have discussed in person or published in these reports: 1. Minimizing future losses by changing investments, 2. Diversifying assets using a mix of real estate and equities, 3. Guaranteeing principal with U.S. Government-backed securities, 4. Reducing income, capital gains, and inheritance taxes and, 5. Creating a portfolio featuring income-producing investments. We are always looking for a few fine people who could use and appreciate our services.

History and personal experience are pretty good teachers. According to Haver Analytics, the S&P 500’s real annualized return was -5.1% in the 10 years ended 1-31-2009. There has not been a single time in any 10-year in history over the last 50 years that has resulted in a downtick in the S&P 500…until now. In other words, we have just experienced the worst stock market slump in ½ a century. On the optimistic side, in the last 50 years there have been only two 10-year periods in the S&P 500 with gains of less than 200 percent (1974-83 and1993-2002). There have been several 10-year stretches during this time in which the S&P 500 has tripled in value.[3]

Each week I have a selected list of companies, exchange-traded funds, individual corporate bonds, preferred stocks, and municipal bonds to share with you. Unfortunately, I can no longer publish these on our website due to privacy and regulatory reasons. Individually, I can go over this list with you and make recommendations that should be suitable to your time frame, risk level, and personal objectives.

In the real estate arena, I believe that the housing market will be improving soon. Prices have come down from their peaks, mortgages will become more affordable, and bank lending will increase. The healthcare and self-storage sectors on a national level have each returned an average of 16% annually for the 10 years ending 12-31-08.[4] I favor these investments in both publicly traded and private placement real estate for our accredited investors. If you are interested in seeing our current real estate offerings, please call or send an email and we will provide you with details and prospectuses.

With your permission, I will continue these reports to keep you up-to-date and confident along with giving you investment ideas and strategies. I want you to be positioned with a diversity of equities and real estate in order to safeguard your assets and watch them grow when the recovery begins. It is not a matter of “if” America can rebound from our current economic turmoil, only a matter of “when”.

Mitch Fisher

[1] US News & World Report. JP Morgan Asset Management[2] Stinchfield, Mellotti & Rasmusson, Certified Public Accountants[3] Mutual of America Capital Management[4] National Association of Real Estate Investment Trusts

JANUARY 20, 2009 INAUGURATION DAY

Today marked the momentous inauguration of our nation’s 44^th President. Local pastor Rick Warren gave the invocation. Yitzhak Pearlman, Yo-yo Man, and Aretha Franklin serenaded us. It was 20 degrees in Washington, DC and 80 degrees in Southern California. The DOW Jones Industrial average of stocks promptly rained down a loss of 332 points on the festivities with more worries about our nation’s banks. It’s only one day in the market. We should all hope that President Obama and our country’s leaders, old and new, will be getting down to business immediately and start leading us back to prosperity.

There is probably little point in wrapping up 2008 with a summary of the negative economic results. The S&P 500 lost 37% last year. Enough said? On second thought, we might learn something from the past by not believing so much of what we hear from the self-proclaimed “experts”. These are my top 5 worst predictions of 2008: #5 “Existing home sales to trend up in 2008” (National Association of Realtors press release 12-9-07), #4 “I don’t anticipate any serious problems among large banks” (Ben Bernanke, Federal Reserve Chairman’s report 2-28-08), #3 “No! No! No! Bear Stearns is not in trouble” (Jim Cramer 3-11-08 CNBC), #2 “I think Freddie Mac and Fannie Mae are fundamentally sound and in good shape going forward”, (Barney Frank FNM News 7-14-08), and the #1 worst prediction of 2008: “A very powerful and durable rally is in the works.” Richard Band, Profitable Investing Letter 3-27-08.)

“Forget the mistakes of the past and press on to greater achievements in the future.” John R. Wooden

Several major tax changes occurred last year that may impact your upcoming tax return. Economic stimulus payments ($300 to $600) are not taxable. Alternative Minimum Tax exemptions are $69,950 (married) and $46,200 (single). A $7500 interest-free loan is available for first time homebuyers. There are no capital gains taxes for individuals in a 15% or lower tax bracket. Please be sure to check with your accounting professional to see how these changes might affect you. (Source: FS-2009-Treasury Release.) In addition to these changes, the Minimum Required Distributions from IRAs are suspended in 2009.

Pacific Sun Financial achieved a number of goals in 2008. We completed a full cost-basis update of all of our investment accounts. We welcomed a new compliance team at National Securities, upgraded our technology, added education and new licensing for our staff. We extended our lease for 3 more years in our Orange County office. (We had no investments with, nor had ever heard the name Madoff.)

In 2009, we have our efforts and energy focused on rebuilding a good portion of what was reduced by the markets last year. Our intention is to continue using publicly traded securities and explore private placement opportunities for our accredited investors. We hope to offer several public seminars to see if we can find a few good people who want to work with an adviser they can trust. Your referrals are greatly appreciated. As always, our primary goal is to provide the absolute finest service for all of our clients.

Here are my top five reasons for optimism in 2009: #1 The S&P 500 dividend average is 3.1%, the first time in 50 years that it is higher than the 10-year Treasury Note, #2 There is $8.8 trillion in cash, bank deposits and money market accounts (investors will be hoping for better returns) #3 Mortgage rates are at their lowest levels in 37 years, #4 Oil prices have dropped from $143 to roughly $30 a barrel, and #5 Fiscal stimulus programs, renewed corporate lending, and infrastructure spending should create new jobs and provide needed economic stability.

“Am I the only guy who’s fed up with what’s happening? We’ve got a gang of clueless bozos steering our ship of state over a cliff. We’ve got corporate gangsters stealing us blind and we can’t even clean up after a hurricane much less build a hybrid car. If I’ve learned one thing, it’s this: You don’t get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it’s building a better car or a better future for our children, we all have a role to play.”

Lee Iacocca

No doubt most of you know someone who lost a loved one, lost a job, or lost a home last year to a fire or to foreclosure. These are truly devastating losses, not simply paper losses on an investment statement. It’s a new year. Let’s see what we can do now, what our role will be, to make 2009 a year to remember instead of one to forget.

Mitch Fisher

President

DECEMBER 2, 2008 CLIENT APPRECIATION LUNCHEON REMARKS:

Today, December 2^nd, 2008 is a very historic day. Do you know what is happening today? Brittany Spears is releasing her new album “The Circus” today.

How many of you are feeling poorer these days? Me too. How many of you have cut back on your expenditures lately? So have I. Do you know someone who has lost their job this year or had their home destroyed in a fire? I do. Do you know someone who suffered a life-threatening medical condition this year? I do. Did you lose a child, a friend, a spouse or a parent this year? I did. So, I’m with you…I’d love to put 2008 behind us already and move ahead to hopefully better times.

Today, we’re here to appreciate each other. Do you really want to hear any more statistics or pronouncements that we are officially in a Recession? There is enough bad economic news out there. The media just loves to pound and poison us with negativity. They want us riveted to the screen, to watch a home burn, a car crash, a shooting, a robbery, or an ugly day on Wall Street. Try not to let the media frighten you too much. Seeing your assets go backwards, or putting off a trip these days, doesn’t really compare to what most of you here today have probably experienced in your lives: the 1930’s Depression when unemployment was 25%, a World War, or a Holocaust.

Does worrying about the future really get you anywhere anyway? You’ve probably heard my worry story of the husband pacing the bedroom late at night while his wife tries to sleep. “Please come to bed, honey, its late. What are you so worried about?” “It’s the bank darling. Our loan is due tomorrow and we don’t have the money.” She turns on the light, grabs the phone, and dials up their banker’s home number. She identifies herself and says “I’m sorry to disturb you so late, but I wanted you to know that we don’t have the money for our loan that’s due tomorrow”. Then she hangs up. Her husband, astonished, says, “My goodness, dear, why on earth would you do that?” His wife replies, “Well darling, now it’s the banker’s problem so you can stop worrying and come to bed and I can get some sleep.”

In 1974, the year I began in financial services, the stock market had just finished a 45% loss in value. Nixon had resigned. In 1978, five years later, the United States was in a Recession. Interest rates were 21%. Yow! In 1983, five years later, we were in an even deeper Recession. Worldwide GDP growth was negative. There were big layoffs in the Midwest from the automakers. Sound familiar? On October 19, 1987, the DOW lost 22%. Yes, it lost 22% one single day. How does that compare to a 7% loss yesterday?In 1993, the Resolution Trust Corporation (RTC) was bailing out the Savings and Loan industry after deregulation. Remember Lincoln Savings and Charles Keating? In 1998 Russia defaulted on its debt to the International Monetary Fund (IMF). A hedge fund by the name of Long-term Capital Management was taken over that year and ultimately came under the direction of the NY Federal Reserve Bank. Déjà vu? In the year 2000, technology stocks blew up and the markets tumbled. We know about the terrorist attacks on 9/11 in 2001. On March 6, 2002 the DOW was at 10,586 and 7 months later, on October 7^th, it closed at 7,422. This was a 30% decline. Five years later, on October 9, 2007 the DOW reached an all-time high of 14,164. This year of 2008, my 35^th anniversary in this business, we have a worldwide credit crunch and nearly $1 trillion rescue package for the financial industry.

What does this history lesson tell us? For one thing, we’ve been down these roads before; not exactly the same bumps and potholes, and we’ve made it. In my opinion, despite all of the difficulties over the last 35 years, we have grown and prospered in our great country. It is just not a good idea to bet against America. Our lives are 7 times better, faster, with more freedom and more comforts than they were during those awful 30’s. We are generally healthier and living longer. The rest of the world is still trying to catch up to us.

My favorite philosopher-writer, Ralph Waldo Emerson wrote: “What lies behind us and what lies before us are tiny matters compared to what lies within us.”

So what lies within you today? Have you had enough of this market roller coaster ride and are you ready to settle for a probable 4%-5% per year? Fine. Then we have a plan for you. It’s a “Guarantee Principal Plan” and I’ve been offering this technique to you for quite awhile in my emails, our regular reports and our review meetings. Some of you have established this method of preserving your assets. You are the ones who are likely feeling good about things right now. This “Guarantee Principal Plan” is not all that complex. It is not an Indexed Annuity. It is a structure of US government backed zero-coupon bonds. Your principal is guaranteed when the bonds mature. The portfolio may include the "Guarantee Principal Plan" in addition to growth equities such as stocks, or mutual funds that are not guaranteed. All you have to do is select the time frame, 3 years, 5 years, 10 years, whatever, and I can lay out this plan for you.

On the other hand, you might be troubled and concerned, but you believe the markets will ultimately head into positive territory again? You may have time on your side. You might think that it’s a good time to buy, that there is money to be made in hard times. Perhaps you think a way to make back your paper losses is to buy when investors are afraid and prices are low. If this is you, then you should try to determine at least 3 things: 1. Which of your current investments look good for the future? 2. Do you have diversification and balance in style and sector? 3. What industries and companies will be the leaders in the years to come?

Take your financial temperature again. I try to do this with you in our check-ups and reviews. This should ring a bell: “Tell me, on a risk scale of 1 to 10, 1 being put it in the mattress, 10 being put it on red in Las Vegas, where do you think your comfort level for risk is today?” This thermometer reading is a big part of why we are there today. The market can rarely be outsmarted, but I believe that if I have taken your temperature and found your risk tolerance, then I can structure a plan accordingly.

How many of you watch Jim Cramer on TV? He’s animated, entertaining, smart, and seems to make good sense. Can you trust his picks? Does he know the market and does he do the research? I like him, but I’m not so sure I would follow his lead. He doesn’t know you, your objectives or tolerance for risk. Did you know that he recommended a strong buy on Wachovia Bank just 10 days before it went under? It’s on tape.

You should be the first to know that I won something of an award last week. I was chosen as one of the Best Wealth Manager’s for 2009 by Orange County Magazine. Really. It’s true. It should be in the March issue. The magazine hired a company, surveyed 45,000 consumers and readers about their advisor’s service, knowledge, communication, fees, fulfilling client objectives, quality recommendations and overall satisfaction. Somehow, I wound up in the top 7%. It’s a nice honor, thanks, but tell me, how can this be a 2009 award since we haven’t even finished 2008 yet?

So, what do you need from me? What should you expect from me? Here are 7 things:

Service. Do we answer the phone, get the paperwork done, and process things promptly? Are we attentive to what you need?
Trust. Do you believe that I work for you first, put your interests first, care about what happens to you and to your family?
Performance. Do you make more when the markets are rising and lose less when they are declining? Do you feel diversified and not overexposed or overweight? Do you have a good mix of equities and real estate?
Cost. Are your fees fairly priced compared to other advisers? I know of no other full-service, professional adviser with lower fees than me.
Knowledge. Do you have confidence in my know-how and abilities, or that I can lead you to someone who has the proper expertise?
Review and Analysis. Do we review and call you often enough? Have I made regular suggestions?
Direction. How can we do better in the future? Have I offered you ways to improve and new ideas?

As you know, I am very secure in my philosophies. I’ve followed the principles of Warren Buffet before he became a household name. In fact, Buffet’s teacher, Benjamin Graham introduced me to investment fundamentals in his 1949 book “The Intelligent Investor”. Investing is not a guessing game. You need a strategy and I can offer you one, based upon your tolerance for risk. My own client studies using the S&P 500 Index and the National Association of Real Estate Investment Trust statistics have shown me that a healthy mix of real estate and equities may potentially earn you 10% to 12% annually over time. If you have 70% stocks and 30% real estate, you may potentially earn closer to 12%. If you have 70% real estate and 30% stocks, you may potentially earn about 10% with less volatility. Of course, these figures depend on the type and location of the real estate and could vary widely with different periods of time.

So what’s the plan now? Here are 5 quick steps to help you stop worrying about things and put your financial affairs in perspective: 1. Take your financial temperature and confirm your risk level. 2. Review what you have and eliminate the laggards you believe will under perform in the future. 3. If you think it fits, establish a “Principal Guarantee Plan” 4. Try to model your assets to have a mix of real estate and equities. 5. Be patient, turn off the news, take a stroll, and spend some extra time with your family and friends.

For you information, I just signed a long-term extension on our office lease in Aliso Viejo. I’m not going anywhere. (Well, maybe to Hawaii occasionally, where I work even longer hours.) I haven’t done a public seminar in nearly 2 years and I hope to do at least 4 in 2009. Check the website for dates and times. I will be looking for a few new clients, good people who have been disappointed by their broker, who want a new approach, and an advisor they can trust. If your friends complain about their financial person, take note, and introduce me if you can.

When I see a big drop like yesterday, I become concerned just like you…. but I’m not worried. I’ve seen my own assets erode just like yours…. but I am secure in my knowledge and experience. Financial storms come and go. This has been a particularly nasty hurricane, but it doesn’t make sense to blame the weatherman. You know that I can’t predict when we will come out of this mess. It might be 6 months, maybe a year, perhaps two? Even in the toughest of times, I continue to focus on you: helping to make your assets grow, taking your “temperature” to manage your risk, and bringing quality to your life. My wife Karen, who I met and fell love with 25 years ago this week, can tell you, I have absolutely no plans for retiring from this wonderful profession.

I am very happy to be here today with you. I appreciate you so much. I’m proud of my staff, Aaron and Paige, who are reliable, efficient and who truly care about you. Thanks for coming today. Thanks for showing me your trust and your confidence. I wish you health, happiness and prosperity for the holidays and well into next year.

Mitch Fisher

REPORT FOR NOVEMBER 7, 2008:

New President. New Market? Not yet. President-elect Obama made political history this week. On Wall Street, the stock market rewarded him with the largest Election Day gain since 1984, followed by the largest post Election Day loss of all time. Restoring US economic prosperity is going to take more than a new face in the White House. I am hopeful that the new leadership will repeat or outshine the pages of our country’s financial history. Since 1900, according to MSNBC, the DOW has risen 9.8% in the 12 months after a Democratic win. According to analysts at UBS, the industries that will most likely prosper in the near future are healthcare, life sciences, natural gas, solar energy and insurance.

Many of you have told me: “I’m just not looking at my statements lately”. Although I don’t go along with this “head in the sand” approach, when your statements arrive this week, you might consider using this technique. October 2008 was the worst market month since 1987: the DOW lost 9.6%, NASDAQ fell 11.6%, and the S&P dropped 11.9%. (NY Times 11-2-08) On the flip side, October 28, 2008 showed us how big the markets could rise in one day: the DOW gained 899 points (10.8%), the NASDAQ climbed 143 points (9.5%), and the S&P 500 jumped 91 points (10.7%). As of 11-2-08, the average 30-year fixed mortgage rate was 6.5%, a 10-year Treasury bond produced 3.9%, and the US annual inflation was 4.9%. Through October 31, 2008, total mutual fund percentage returns year-to-date were scary: Latin America –58%, Precious metals –53%, Natural resources –42%, Technology –40%, Utilities –34%, Real Estate –32%, Health –22%. (LA Times 11-2-08)

Is there anyone truly making money with their investments today? (Perhaps a few short-sellers and expert traders.) The investment guru, analyst, planner, broker, commentator or writer who claims to have the answer, who says they exited the market just before the downturn, and who purports to have the right plan now, can you believe them? In other words, can someone really outsmart the market? In my view, no more often than you can outsmart your own right foot. In fact, if you doubt me, try this as a metaphor for directing financial markets: Lift your right foot off the floor and make clockwise circles. While doing this, draw the number 6 in the air with your right hand. Your foot will change direction.

So what can you do? Whose advice should you heed? How can you make back what you may have lost and start seeing some gains in your future? In my 35-year perspective, and what I believe makes Pacific Sun Financial different, is the experience of KISS investing. Keeping it simple…and sincere. Watching and learning from great investors, trying to make smart investment choices, “buying low” if we can, and generally, being patient. Good things take time. Sometimes longer than we’d like. We strive to be diversified, owning real estate and stocks, and paying attention to risk tolerance. Berkshire Hathaway (BRK) is a very good example of successful investment simplicity. BRK owns banks, insurance companies, discount retailers, and pharmaceuticals. From 1965 to 2007, BRK earned 21% per year for investors, doubling the S&P500. (Source: BRK annual report at www.berkshirehathaway.com/2007ar/2007ar.pdf)

We are planning to host a luncheon for clients on Tuesday, December 2^nd. I would like to spend some time with you, say thanks, talk finances, and personally wish you happiness and health for the holidays. Please let us know if you might be able to attend. I look forward to some positive money news next month.

Mitch Fisher

President

REPORT FOR OCTOBER 12, 2008

What's playing on the "financial radio" today? It's not jazz or opera, to be sure. It's not rock and roll or classical. It's strictly the blues. Muddy Waters and BB King could be singing in our ears for awhile.

Let's get the stats out of the way so we can cut to the chase. October 6th to October 10th was the worst week ever for the DOW and the S&P 500. Each index lost 18%. "Eight days a week" by the Beatles? Make that eight days in a row of losses. The NASDAQ was down 15% for the week. The DOW closed at 8451 and the S&P at 899. The markets haven't been this low for 5 years. (Source: MSN News) Two more banks went under, Main Street Bank in Michigan and Meridian Bank in Illinois. This brings the total to 15 bank failures this year. (Source: Market Watch) That's enough, right? You've probably heard plenty about this already.

We are in uncharted waters now. These are unprecedented global economic crises. We don't know when it will end. We could have a bear market for a long time….but I don't believe the world is coming to an end. Bear markets don't last forever. I also don't think that you can trust the "flip-floppers" like Jim Cramer, the host of CNBC's "Mad Money". For years he has come on TV daily to give us great ways to make money. Buy this stock, sell that one. Did he warn us strongly at any time during the last year that the markets would tumble this way? No. The S&P 500 lost 32% in the last 12 months. Cramer waited until most of us were about 30% poorer to announce last week that we should "take money out of stocks, if you need it in the next 5 years." Has anyone seen his audited track record? No, because he's not really accountable to us. Even the sage of Omaha, Warren Buffet, doesn't have it right so far this time. On September 23rd, he bought Goldman Sachs warrants at $115. Goldman Sachs closed Friday at $88. (Source: I Stock Analyst)

What should you believe and what should you do now? The main suggestion I have for you today is to try and minimize any stress about a decline in your accounts. You are not being chased by a Bengal tiger in the jungle. Of course things look lousy, but the stock market is not a threat to your life. Today's worldwide financial upheaval should not drive you to drink, see a shrink, or start gambling.
It should, however, cause you to pause and consider your risk, your time frame, and your purpose for each of your investments.

My fundamental belief is that stocks and real estate will outperform other asset classes in the future, just as they have during any 10 or 15 year period. (Source: Ibbotson) I have complete faith in the long-term health and strength of the American economy. I believe that the current economic and credit problems have created excellent buying opportunities for undervalued assets in real estate and securities.

Many clients and friends have asked me what I have been doing with my own accounts. I have not been selling my securities and real estate. Systematically, I have been purchasing stocks, Exchange Traded Funds and now…more real estate. Many of the same recommendations I have been making for you.

Mitch Fisher

REPORT FOR SEPTEMBER 20, 2008:

Here is a sampler of what I've heard the last few days from clients and friends:

"I don't care if we are in a Recession or a Depression. Sell everything today."
"Should I throw in the towel now, or sit it out and put ice on my #&^*s?"
"I'm not worried. Short-term economics don't matter. In the long-run, we'll all be dead."
"I went to the bank. They gave me a check for only one of my CD's. Is anything safe any more?"
"In this market, I'm holding on. I'm being patient. I know I'm going to make good money."
"Put everything liquid I have into the market. Even if it goes down, it's too good of a basis to pass up."

Can you relate to any of these comments? If you said them, thanks. (Your identity is safe with me.)

What a week of financial extremes! The DOW swings nearly 600 points on September 17th and 18th. The S&P rises and falls 4% on these days. Lehman Brothers goes down. Bank of America buys Merrill Lynch. AIG is bailed out. Congress is ready to commit $500 Billion to save our economy. (Sources: LA Times, Wall Street Journal.) These are historic times. If you put 5 advisors in a room, you'll probably get 6 opinions about what to do with your money now. Investing is art, not science. If there were absolute proven formulas to guarantee high performance, we would all be using them. I feel bad for some undeserving homeowners who are in trouble. I empathize with the employees who have done nothing wrong and will lose their jobs over these company failures.

Bankruptcies of big companies are not unusual. Remember Texaco in 1987 for $35B, PG &E in 2001 for $29B, and Conseco in 2002 for $61B? (Source Yahoo Finance.) Threats of terror have weakened our economy in the past. This is from a 1960 speech by Russian premier Nikita Kruschev: "It should be borne in mind that the United States is now not at such an inaccessible distance from the Soviet Union. If need be, Soviet artillerymen can support the Cuban people with their rocket fire, should the aggressive forces in the Pentagon dare to start intervention." (Source: Internet Modern History Sourcebook.) Nearly 50 years ago they were pointing rockets at our country and rattling their sabers. In a way, not much has changed in half a century, and we are still here.

The safety of your money has definitely changed and improved over the years. Since the stock market crash of 1929, many controls have been put into place to avoid major trading disasters. We have government sponsored insurance programs and entities that protect investors such as FDIC, PBGC, SEC, SIPC, and FINRA. National Securities has issued a "safety" letter with more details. According to NSC, Fidelity's general-purpose money market funds have no exposure to any Lehman Brothers entities.

"It is not the time to be selling stocks. Be tough. There is huge opportunity out there." - Donald Trump
"I swung by my bank today and it was a nail salon." - Jay Leno

Mitch Fisher

95 Argonaut #105, Aliso Viejo, CA.92656, Telephone: (949)-716-8646
www.pacsunfinancial.com

Securities offered through National Securities Corporation, Member FINRA/SIPC. National Asset Management, Inc NAM, an SEC Registered Investment Advisor and affiliate of National Securities Corporation, Member FINRA/SIPC. Investment Advisory Services offered through National Asset Management, Inc., a Registered Investment Advisor and wholly owned subsidiary of National Securities Corporation Member FINRA/SIPC Registered in CA, AZ, CO, DC, FL, ID, IL, MO, NC, NV, OH, OK, OR, TN, TX, WA. Pacific Sun Financial Corp/National Securities Corporation does not offer tax/legal advice. Consult your CPA or Attorney for information.