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GO FIGURE – MATH CAN LIE (A BIT)

GO FIGURE – MATH CAN LIE (A BIT). 3 X 1/3 = 1 (RIGHT?). SO IF: 1/3 = 0.333 WHAT DOES 3*0.333 = ? 0.999 RIGHT?. ACTUALLY NO: IN MATH 0.999(REPEATING DECIMAL) = 1. HERE’S PROOF: X= 0.999 10(X) = 9.999 10X – X = 9.999 – 0.999 9X = 9 X = 1. GOT TO LOVE THIS STUFF????.

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GO FIGURE – MATH CAN LIE (A BIT)

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  1. GO FIGURE – MATH CAN LIE (A BIT) 3 X 1/3 = 1 (RIGHT?) SO IF: 1/3 = 0.333 WHAT DOES 3*0.333 = ? 0.999 RIGHT? ACTUALLY NO: IN MATH 0.999(REPEATING DECIMAL) = 1 HERE’S PROOF: X= 0.999 10(X) = 9.999 10X – X = 9.999 – 0.999 9X = 9 X = 1 GOT TO LOVE THIS STUFF????

  2. BIGFOOT INVESTMENTS OPEN FORUM Mar 28th, 2013 WELCOME!

  3. AGENDA • WELCOME! • ADMIN NOTES • QUOTE OF THE DAY • OPTIMISM GAUGE • CHARTS OF INTEREST • SO WHAT’S UP WITH: CONVERTIBLE BONDS • A CLOSER LOOK AT • DAVID’S CORNER • SWAPS AND SPREADS • LEE’S COMMENTS • QUESTIONS/COMMENTS

  4. “NOTES” • IF YOU USE ANY OF OUR SLIDES, PLEASE REMEMBER TO • HAVE THEM APPROVED BY YOUR COMPLIANCE DEPARTMENT. • WE’LL UN-MUTE YOU ON OUR END SO YOU CAN ASK QUESTIONS. • PLEASE MUTE AUDIO FROM THE MENU ON YOUR SCREEN SO • WE DO NOT GET FEEDBACK. • THANK YOU!

  5. BigFoot Investments is now on Twitter, LinkedIn!

  6. BigFoot On LinkedIn! Don’t Forget To Join Our “Group”

  7. Notifying You! SMS Alert System

  8. Screening/Scoring for April *Note: We will attempt to have all postings completed AMC on 3/28/2013

  9. QUOTE OF THE DAY: Take time to deliberate; but when the time for action arrives…… …STOP THINKING AND GO ON! Andrew Jackson

  10. Optimism Gauge As of: 3/28/2013

  11. Measuring Our Economy Last Update: 3/28/2013

  12. Measuring Our Economy READING AS OF: 3/28/2013 Economic Optimism Index NOTES/COMMENTS CURRENT READING: 67.7% PRIOR READING: 76.3% BIAS: MILDLY BULLISH 9 OF 13 INDICATORS POSITIVE TREND - NEGATIVE 45 65 35 75 25 85 67.7% 15 95 Current Reading Prior Reading POSITIVE AS OF: 8/17/2012

  13. Charts of Interest!

  14. WE CAN HOPE Source: EIA

  15. WATCH CAREFULLY

  16. EVER HEARD OF THE MSDP? It’s the Monthly Statement of Public Debt • Published by Treasury Direct??? • Summary of Debt Holdings • Last published in Feb, 2013 • Also includes Statutory Limits

  17. MOST OF ‘EM STILL LOVE US

  18. THEY’RE STIILL BORROWING DESPITE THE RUMORS

  19. THINK THERE IS CONCERN IN THE MIDDLE EAST?

  20. SO WHAT’S UP WITH: Convertible Bonds

  21. DEFINITION A bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder. It is much like a Call Option that is attached to a bond. As such, there is a premium “attached” - a lower interest rate The conversion feature is a RIGHT NOT AN OBLIGATION! Sometimes called "CVs” or “Converts” Source: Investopedia

  22. THE BASICS: • Par Value: Price when issued • Conversion Price: Set when bond issued • Conversion Ratio: Components Bond Description (Sample): Acme Company 5-year CB with $1000 Par Value and Coupon of 5%; Conversion Price = $40 Par Value of Bond Conversion Price $1000 $40 Par Value of Bond Conversion Ratio Conversion Ratio 25 $40 = or • Conversion Value Current Stock Price ($30) X Conversion Ratio (25) = $750 AS YOU CAN SEE THIS BOND IS SELLING AT A PREMIUM

  23. MORE : Parity – Bond’s conversion is equal to stock price Conversion Premium - Price of Bond exceeds market price of stock an investor would receive upon conversion Stock Split – Original Conversion Ratio/Split Ratio Dividend Declared - Conversion Ratio increases by dividend amount therefore the Conversion Price decreases.

  24. PROS AND CONS FOR PURCHASING CONVERTIBLES • PROS: • They pay interest • Typically offer better returns than conventional bonds (Kiplinger) • If stock falls – they can only call so far since they eventually pay principal • You may get to convert for a profit • Offer some degree of protection against market fluctuations • You can get dividends from companies that don’t normally pay such • CONS: • Often issued by companies with poor credit ratings • Can be dilutive to EPS of company • If stock of company performs poorly – no conversion • If issuer goes bankrupt have lower priority than common bonds • Sell at premiums • Usually “callable” – capping gains • Can have limited upside Sources: about.com BONDS BioStockspro.com

  25. INVESTING OPTIONS: • Buy the bond • ETF – CWB (SPDR Barclays Convertible Securities) • YTD - +3.51% • 1 – Year - +9.03 • CVRT Closed in Feb, 2013 (Invesco) • Mutual Funds – Next Pages • Best option – ETF or Fund

  26. Ranked Based On: • 3-yr Return • Expense Ratio • Earnings Growth Rate • High YTD Return • High 5-yr Return • High Star Rating • Low P/E

  27. INDEX COMPS

  28. INDEX COMPS

  29. WHAT’S A REVERSE CONVERTIBLE BOND? While a CONVERTIBLE BOND gives the BONDHOLDER the right to convert the asset to equity, a REVERSE CONVERTIBLE gives the ISSUER the right to convert to equity. In this case it is like a PUT OPTION that is held by the bond’s issuer on company shares. The company has the right , but not the obligation, to convert the bond into shares of company stock at the set date – and are exercised when the stock is below a “strike” price. • Why would you buy one? • Higher interest rates – sometimes 10%+ • Sideways markets

  30. DAVID’S CORNER

  31. SWAPS & “SPREADS” IGNORE AT YOUR PERIL

  32. CREDIT ANTICIPATES – EQUITY CONFIRMS Note: Status = No impact Status = Negative Impact As Of: 3/27/2013

  33. QUESTIONS & COMMENTS THANKS FOR JOINING US!

  34. IMPORTANT DISCLOSURE INFORMATION Content is intended for investment professional use/review only. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot Investments.com), or any non-investment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for any investment professional’s clients portfolio or individual situation, or prove successful. The investment professional retains all decision making authority as to whether or not to follow and/or implement any of the presentation content. BigFoot has absolutely no responsibly for any suitability determination pertaining to any of the investment professional’s clients, such obligation being exclusively the initial and ongoing responsibility of the investment professional. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot Investments.com. BigFoot Investments.com. is neither a law firm nor a certified public accounting firm and no portion of the content should be construed as legal or accounting advice. Investment Professional acknowledges that to the extent required to do so, it is his/her/its exclusively responsibility to advise his/her/its employer/broker-dealer of its BigFoot subscription. BigFoot Investments.com is a service of Lee Johnson Capital Management, an SEC registered investment adviser located in Fort Worth, Texas. A copy of the Lee Johnson Capital Management LLC’ current written disclosure statement discussing our advisory services and fees is available for review upon request. No Sharing of Content: You acknowledge that the presentation content is for investment professional use only. You warrant and represent not to share any portion of the presentation content with any non-subscriber, including but not limited to your clients or prospects

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