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Markets Review – 1Q 2009

1Q 2009 Teleconference “Hedging Your Bets” Ortner, O’Brien & Ortner Advisory Group, Inc. April 3, 2009. Markets Review – 1Q 2009. Y-T-D Returns March 31, 2009 - 9.5% U.S. Stock Index - 2.0% U.S. Bond Index 14.2% Global Stock Index - 8.1% Commercial Real Estate

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Markets Review – 1Q 2009

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  1. 1Q 2009 Teleconference“Hedging Your Bets”Ortner, O’Brien & Ortner Advisory Group, Inc.April 3, 2009

  2. Markets Review – 1Q 2009 • Y-T-D Returns March 31, 2009 • - 9.5% U.S. Stock Index • - 2.0% U.S. Bond Index • 14.2% Global Stock Index • - 8.1% Commercial Real Estate • - 3.5% OO&O Balanced Portfolio

  3. Performance During 2000-2002 Bear Market: Diversify Worked Last Time Treasury Bonds +18% U.S. Stocks -43% Corp. Bonds +13% Real Estate +15% Int’l. Stocks -31% OO&O Portfolio +1% SOURCE: S&P500 Domestic Stock Index, EAFE Foreign Stock Index, Barclays Short Term Corporate Bond Index, U.S. Treasury Intermediate Term Index, TIAA-CREF Commercial Real Estate

  4. Performance During 2008 Bear Market: Diversify Didn’t Help This Time Treasury Bonds +7% U.S. Stocks -37% Corp. Bonds +1% Real Estate -14% Int’l. Stocks -43% OO&O Portfolio -22% SOURCE: S&P500 Domestic Stock Index, EAFE Foreign Stock Index, Barclays Short Term Corporate Bond Index, U.S. Treasury Intermediate Term Index, TIAA-CREF Commercial Real Estate

  5. Does Diversification Still Work? • Yes – long term • Markets need time to recover

  6. How to Protect • Insurance • Hedging

  7. New Insurance Products • Variable Annuity – Lifetime Income Rider • Guarantees an income • Allows time for investments to grow back

  8. Hedging • Manager is allowed a wider range of investment and trading activities • Seeks to offset potential losses of principal by hedging investments in a variety of ways, most notably, short selling.

  9. Traditional Problems with Hedging • Access – only for institutional investors • Transparency – cannot see the assets • Fees – very high fees

  10. New Hedging Solutions • Mutual Funds • Can see all holdings • Index / ETF Funds • Very low fees • Commodities • Diversification tool from stocks

  11. Hedging Examples +28% • Hussman Strategic Growth Fund • Manages risk by hedging if market goes down +21% +14% Hussman S&P500 -9% -23% -37% 2002 2003 2008

  12. Hedging Examples +28% • IQ Alpha Hedge Fund Index • Manages risk by hedging & diversifying markets +17% IQ Index S&P500 -9% -37% 2003 2008

  13. Strategy & Outlook • Stay the course with equities • Hedging & Insurance where necessary • Establish rebalancing targets as stocks grow • Opportunities will show up • Real Estate • Emerging Markets • Municipal Bonds

  14. Thank You!Q&A

  15. There’s a new Sheriff in town. The bull is back.

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