How Average Are You?

1. How Average Are You?

2. How Average Are You? Live in same state (60%) Have 2 children Eat 3 lb’s of PB per year Do NOT floss regularly (90%) Exercise once a week Recycle (50%) Shop At Walmart at least Annually (80%) Believe God exists (80%) Are happy or very happy (93%) Larry, Mo, Curly (& Schemp) (89%) Legislative, Judicial, & Executive (20%) Does NOT have a college degree (65%) Take a bath or shower (10.4 minute shower, daily) Own stocks?( 50/50)

3. Selected “Average” Statistics Drinks 55 gallons of soda a year Does not wash his hands properly after using public restrooms Throws away more than 100 lbs of food per year 25% of Americans over 18 abstain from alcohol for life 69% of Americans go to the movie theater at least annually

4. The Average AmericanFederal Reserve Survey of Consumer Finance 2001 2004 2007 Median Family Income $46.7k $47.5k $47.3k College Degree 34.0% 36.6% 35.3% Holds Credit Card Bal. 44.4% 46.2% 46.1% Amount of Bal. $2.0k $2.4k $3.0k Of those 45-54 Own Retirement Acct. 63.4% 57.7% 64.7% Amount in it $51.1k $61.0k $67.0k

5. Business Development, An ‘S’ Curve Analysis

6. Innovation Growth Maturity 100 90% 99% 99.9% 90 80 70 60 50 50% 40 30 20 10 1% .1% 10% 0 The S-Curve Percent Adoption

7. The Industry Life Cycle

8. The S-Curve in Cars Percent of Urban Households 1900 1907 1942 1921 1935 1914 1928 Assembly Line Installment Financing 90% Urban Adoption Cars only for the Rich Model T Design

9. Mobile Phone S-Curve Innovation Growth Maturity 100 90 80 70 60 50 40 30 20 10 0 90% 86% 2007 82% 2006 73% 77% 2005 63% 2004 58% 50% 2003 Percent of Households 2002 47% 2000 13% 10% 1995 2% 1% 1990 2001 1994 2008 Time Source: Forrester, Census Bureau

10. Internet S-Curve Innovation Growth Maturity 100 90 80 70 60 50 40 30 20 10 0 83% 74% 79% 2009 73% 2007 71% 2006 2005 67% 2004 66% 2003 61% 2002 50% 2001 Percent of Households 31% 1999 22% 1998 17% 10% 1997 2000 2007 1993 Time Source: Pew Internet

11. Broadband S-Curve Innovation Growth Maturity 100 90 80 70 60 50 40 30 20 10 0 90% 91% 2009 80% 2007 63% 2006 50% Percent of Households 37% 2004 22% 2002 10% 2000.5 2008.5 2004.5 Time Source: Pew Internet

12. Digital Camera S-Curve Innovation Growth Maturity 100 90 80 70 60 50 40 30 20 10 0 90% 77% 2009 62% 2007 60% 2005 Percent of Households 43% 2003 10% 1997 2004 2011 Time Source: Infotrends, Consumer Electronics Association

13. High-Definition TV S-Curve Innovation Growth Maturity 100 90 80 70 60 50 40 30 20 10 0 90% 53% 2009 50% Percent of Households 35% 2008 23% 2007 10% 3% 2009 2005 2013 2001 Time Source: CTAM

14. Car GPS Systems S-Curve Innovation Growth Maturity 100 90 80 70 60 50 40 30 20 10 0 90% 99% 50% Percent of Households 17% 3% 2009 10% 0.9% 1% 2003 2018 2008 2013 2002 2005 Time Source: Masterlink

15. S-Curves Source: NY Times

16. S-Curves Innovations follow a curved pattern of acceptance, or “lifecycle” Industry supplies on a different cycle Many innovations are moving through the second half of their growth phase, and will peak near the end of the decade Innovations tend to be developed by the young

17. Inflation/Disinflation/Deflation

18. Quantity of Money Formula for Inflation MV=PY M=Money Supply P=General Price Level V=Velocity Y=Real Income

19. Inflation Indicator

20. Inflation Forecast 20 Year-Olds on a 3-Year Lag Minus 63 Year-Olds Inflation Source: U.S. Census Bureau and U.S. Bureau of Labor and Statistics

21. Inflation Inflation, in a stable financial system, is based on people and workforce growth Changes in labor force can be used to forecast inflationary pressures Tremendous changes are coming

22. Deflation Deflation is typically associated with very difficult economic times, where cash is hoarded by consumers. Slower spending by consumers leads to falling economic activity, which causes businesses to slow expansion or even contract their capacity. This is circular because that would lead businesses to shrink their workforce, causing spending to fall even more, perpetuating the cycle. The Paradox of Thrift

23. Inflation Fears Are MisguidedIt’s DEFLATION That Will Hurt! With the US government doubling the asset base at the Federal Reserve and pumping trillions of dollars into the economy, everyone is worried about inflation – too many dollars chasing too few goods. It’s understandable, but wrong. If the economy remained constant, this would make sense. But we are changing, and the changes will mean deflation, not inflation. Unfortunately, deflation hurts a lot more!

24. Quantity of Money Formula for Inflation MV=PY M=Money Supply P=General Price Level V=Velocity Y=Real Income

25. Watch the “V”…It Is the Issue in the short termQuantity of Money Formula for Inflation MV=PY M=Money Supply P=General Price Level V=Velocity Y=Real Income

26. Adjusted Monetary Base

27. The Velocity of Money GDP to Adjusted Monetary Base Source: St. Louis Fed, US BEA

28. The Added Money Was Offset By Less Velocity

29. In the long term, it goes back to the “M”Quantity of Money Formula for Inflation MV=PY M=Money Supply P=General Price Level V=Velocity Y=Real Income

30. The Value of “M” Is the Size of the Money Supply Get your arms around how money is created Printing press – the US Govt creates out of thin air Lending – banks and other institutions create out of thin air through fractional reserve, short borrowing versus long lending

31. Printing Dollars The Federal Reserve controls the printing presses of the US The Fed does NOT have a bank account. Any purchase they make (like of securities in the marketplace) is done with newly printed dollars The worry is that they are printing over $1 trillion new dollars, which will flood the system with currency, devaluing the dollar against other currencies

32. Lending Dollars Into Existence(fractional reserve) Banks are required to hold a percentage of deposits (a fraction), they lend out the rest. If they do not lend, they do not collect interest and cannot pay their depositors. If a deposit is made for $1,000, the bank can lend $900, thereby “creating” $900 out of thin air. But the other side of the journal entry of the loan to the borrower, is the note that the borrower owes back to the bank.

33. Government $14Trn Total United States Debt Financial $17Trn Corporate $11Trn Consumer $14Trn Source: Federal Reserve Flow of Funds Report

34. US Debt to GDP Ratios Source: Steve Keen Debt Watch - www.debtdeflation.com/blog

35. Money “Creation” Works Both Ways Just as the Fed can create printed money, they can sell securities back to the marketplace, at which point they are “destroying” money. This is what many economists want them to do – sell the assets on their books, thereby shrinking the money supply.

36. Money “Creation” Works Both Ways But it is already taking place, just not at the Fed. When any debtor either pays back a loan created through fractional reserve, or has a loan canceled (foreclosure, modification, etc.) then money supply has been contracted. Go back to the $1,000 deposit with the $900 loan. Money supply went from $1,000 to $1,900 when counting both the deposit and the loan. If the borrower of the new $900 pays off the loan, then money supply shrinks back to just $1,000. This is going on at a rapid pace as we pay down debts and see massive liquidations, bankruptcies, and foreclosures.

37. M2 Money Supply Source: The Elliot Wave Financial Forecast

38. Changes in Debt in US2000 - 2009

39. The Business Cycle and Seasons of the Economy

40. Simple Four Season Economic Cycle Two Forty-Year Generation Boom/Bust Cycles Generation Spending Boom Stocks/ Economy Summer Spring Fall Winter

41. Simple Four Season Economic Cycle Eighty Years in Modern Times Consumer Prices/ Inflation Generation Spending Boom Stocks/ Economy Summer Spring Fall Winter

42. VIDEOChris Martenson, Crash CourseFuzzy Numbers

43. Investing In Each Season

44. Efficient Frontier, 1970-2007 1970-2007 Source: Advisory World, HS Dent Source: Advisory World, HS Dent

45. Efficient Frontier, 1970-2007and 1970s 1970-2007 1970s Source: Advisory World, HS Dent Source: Advisory World, HS Dent

46. Efficient Frontier, 1970-2007and 1970s, 1980s 1980s 1970-2007 1970s Source: Advisory World, HS Dent Source: Advisory World, HS Dent

47. 1990s Efficient Frontier, 1970-2007and 1970s, 1980s, 1990s 1980s 1970-2007 1970s Source: Advisory World, HS Dent Source: Advisory World, HS Dent

48. 1990s Return (%) Efficient Frontier, 1970-2007and 1970s, 1980s, 1990s, 2000s 1980s 1970-2007 1970s 2000s Article #5 MPT/Markowitz Source: Advisory World, HS Dent Source: Advisory World, HS Dent

49. Classic Asset Allocation Model • vs. S&P 500 • January 1990 through June 2008 Sector Weightings 25.0% Large Cap Stocks 25.0% Small Cap Stocks 25.0% International Stocks 25.0% Fixed Income Return Risk Portfolio 8.3% 10.3 S&P 500 9.5% 14.6 S&P 500 Growth of $1 Markowitz Asset Allocation Portfolio

50. Growth Portfolio January 1990 through June 2008 Sector Weightings 30.0% Multinational Corps. 20.0% Software/Technology 20.0% Financial Services 20.0% Health Care 10.0% Prime Rate Fixed Income Return Risk Portfolio 11.7% 14.3 S&P 5009.5% 14.6 Portfolio Growth of $1 S&P 500