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18 th Annual Investment Security Group Client Event September 28, 2011

Get insights on the overview and current positioning of the investment market, including stocks, bonds, and cash. Explore income-producing alternatives and opportunities for managing risk. Discover the growth potential of BRIC countries and the catalysts driving global consumption. Also, gain valuable insights on investment strategies and corporate profits.

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18 th Annual Investment Security Group Client Event September 28, 2011

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  1. 18th Annual Investment Security Group Client Event September 28, 2011

  2. Overview and Current Positioning

  3. Today 2008 Stocks 28% 62% “Hybrid” 17% 20% Bonds/Cash 55% 18%

  4. Underweight Stocks • “Textbook” Weighting in Bonds • Shifted Bond Strategy • Raised Some Cash • Bias Towards Income

  5. INCOME + Appreciation = Total Return

  6. Looking Ahead: • Better Ways to Manage Risk • More Income-Producing Alternatives • Bottom-fishing for Cheap Assets

  7. The World is Flat

  8. BRIC’S Brazil, Russia, India, China • Large Young Populations – Make and Move Markets • Low Labor Costs with Increasing Productivity • Low Consumer Debt Levels • Motivated Emerging Consumers

  9. Demographics Powering EM Growth 74 M (size of France) China’s Population Growth Over the Last 10 yrs 643 M Chinese Urbanites 2011 925 M Chinese Urbanites 2025 282 M(size of US) Chinese Migrate to City by 2025 200 M Indian’s Migrate to City by 2025 1.2 B EM Middle Class in 2030

  10. 10 M 100 M 40 8.9% 5.5% 1.9% 10x/3 Miles of Chinese roads/rail lines needed Needed Chinese apartments % Indian’s without electricity CAGR of Chinese per capita income CAGR of Indian per capital income CAGR of US per capital income BRIC’s vs. US population / % car owners Catalysts For Growth

  11. Global Consumption

  12. Economic Power China • Worlds #2 economy • Largest consumer of copper, tin, steel, coal, aluminum & seaborne iron ore • #2 Consumer of oil • #1 Potash importer • #1 Internet market (22% penetration) • #1 Auto sales in 2010 • $2.3 Trillion/Yr consumer spending by 2025

  13. Economic Power – con’t Asia • Worlds # 1 mobile phone market • Worlds #1 LCD TV market • Worlds # 1 Health Care Market (# patients) • In 2007, 8 of top 50 urban areas • By 2025, 20 of the top 50 urban areas • Shanghai and Beijing GDP’s higher than L.A. or London BRIC’s • In 2005, 27 Fortune 500 BRIC based • In 2010, 67 Fortune 500 BRIC based

  14. Investment Strategy • US Companies with Global Presence • 47% S&P 500 Sales Offshore • Consumer Goods, Farm Equipment • 43% of World Market • Developed Markets Feeding EM Demand • Australia, New Zealand, Canada and Germany • 43% of World Market • EM Funds • 14% of World Market

  15. Corporate Profits

  16. Historical Earnings

  17. $1,000,000 Profits

  18. 16 x $1,000,000 • $16,000,000 or 16 P/E • Cash Flow 6.25%

  19. 12 x $1,000,000 • $12,000,000 or 12 P/E • Cash Flow 8.33%

  20. P/E Ratio

  21. Dr. Brad Nieder The Healthy Humorist

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