A. Statistics
 

    Details of the overall portfolio in 2005 are as follows:
 

Portfolio Return-actual	6.0%
Portfolio Return- annual	6.9%
Portfolio January 1, 2005	$80.56 million
Portfolio November 15, 2005	$89.30 million
Investment earnings 2005	$5.10 million
Investment Earnings 1981-2005	$53.81 million

 
    Details of the individual years are as follows:

 

Year	Rate of Return	Inflation	Real Rate of Return
1981	15.0%	8.0%	7.0%
1982	15.4	3.0	12.4
1983	16.0	4.0	12.0
1984	9.8	4.0	5.8
1985	18.3	4.0	14.3
1986	13.8	1.5	12.3
1987	9.7	4.0	5.7
1988	18.0	4.0	14.0
1989	10.7	4.5	6.2
1990	0.7	6.0	-5.3
1991	14.9	3.1	11.8
1992	10.0	3.0	7.0
1993	13.7	2.6	11.1
1994	0.3	2.7	-2.4
1995	13.2	2.7	10.5
1996	15.5	3.0	12.5
1997	6.9	1.8	5.1
1998	-4.5	1.5	-6.0
1999	-2.3	2.5	-4.8
2000	15.3	3.3	12.0
2001	19.2	1.5	17.7
2002	-0.6	1.5	-2.1
2003	25.2	2.2	23.0
2004	9.9	3.4%	6.5%
Average 24 years	11%	3.3%	7.7%

 
  

 Over the life of the portfolio it has performed in the following fashion:

         Volatility is a measure of how much a portfolio gains or loses in a given period and, generally, the bigger the gyrations the greater the stresses felt by the investor. My goal is to make the ride as stress free as possible and also to capture most of the returns offered by the riskier and more volatile asset classes. We succeeded in doing this over the first 24 years of the life of the portfolio and it would be very pleasing if we could repeat it in the next 24 years. At that point I think retirement might look like a very viable option. ?

C. Blogs (Weblogs)

         Our two blogs are now up and running and I would encourage you to view them when you have a free moment. The web addresses are:

Nancy (financial planning): http://oakwoodgroupplanning.typepad.com/oakwoodgroup_financial_pl/

Mike (portfolio): http://oakwoodgroupplanning.typepad.com/oakwoodgroupinvesting/

        My blog will focus on all aspects of money management and on the management of the portfolio and Nancy’s blog will focus on all aspects of financial planning. The interactive feature is the feature where you can add comments (always welcome) and questions. You can add them anonymously, use a first name or, indeed, identify yourself. The blogs are not exclusively for our clients, but we are keeping a very low profile and the intent is to create another tool that you can use and another way for you to interact with this office.
 
        In my case it will provide a lot of background (the whys and wherefores of the portfolio) and it will be a place where information is available between my regular reports.

        The planning blog will, over time, be a source of information on all kinds of planning issues and the categories should be self explanatory. As Nancy adds articles she will contact our clients who are directly affected by the article and she will follow up with you after you have had a chance to refer to the article. Equally as events occur she will send you old, but pertinent, articles that refer directly to your specific situation.
 
         Both blogs also have the articles grouped into categories on the right hand side of the blog so, for example, if you click on the category “real estate” in my blog, it will produce all the articles listed under that heading.

         We have a number of clients who, perhaps wisely, have not joined the    computer age and we will continue to contact you by telephone and by mail and we will send hard copies of any pertinent blog articles.

D. Taxes

        This is the time of year when we will be doing a number of tax related transactions. As is usual we will be trying to reduce your tax bill by selling any securities that have significant unrealized losses. These are strictly tax maneuvers and, in most cases, we will not reduce our overall position in the holdings in question. We will also be looking, as is usual, for securities that are being affected by heavy tax loss selling as this is often an area that provides opportunities for a seasoned value investor. I should mention that 95% of the stocks beaten down by tax loss selling are not, upon examination, worthy of our hard earned $.

         Nancy will also, after the tax loss selling is completed, be providing you with the estimated tax payments for the 4th quarter and telling you whether to pay them in 2005 or to defer them until January 15th 2006. It is vital that these payments are made on time as the I.R.S. has NO sense of humor.

E. Summary
 
        We are conservative value based investors with the following attributes:

• The portfolio returns are unpredictable over shorter periods of time. We recognize that we cannot control price movements and we cannot control what will outperform in the next month or even the next year
• It is extremely unlikely that we will have significant losses and, even if we do, those losses would NOT be permanent. We expect a minority of our investments to be unsuccessful for a variety of fundamental reasons.
• We will have losing years. That is part of the process.
• It is highly likely that we will attain our longer term goals for the portfolio.
• Our investment management is carefully, and individually, integrated with our financial planning on your behalf. We maintain a diversified portfolio.

         Please call if you have any questions or concerns. We are always available and are happy to talk, answer questions and, hopefully, to provide useful advice and answers.