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David Wright, Managing Director Sierra Investment Management, Inc.

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David Wright, Managing Director Sierra Investment Management, Inc.

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    1. David Wright, Managing Director Sierra Investment Management, Inc. “UNCHARTED WATERS” – UPDATE ARE WE NOW IN THE “THIRD INNING”? Trends and Outlook in the Global Economy and Investment Markets January 2009

    8. “UNCHARTED WATERS” – Fair warning 12 months ago?

    10. Jan. 2008: “The crunch in the US housing and mortgage markets are really just the visible tip of a very large ‘iceberg’ – a massive, global debt bubble plus HUGE leverage – which will take several years to unwind.”

    25. HOW LIKELY IS IT THAT THE U.S. HAS ENTERED (OR SOON WILL ENTER) A RECESSION? [My view was that a recession HAD started in Oct. 2007]

    27.

    28. 1/08: “The cyclical recovery in the US economy has ended, and has apparently now entered recession – which may become the worst since the 1930s . . .”

    29.

    32. TWO FACTORS MAINLY DRIVE STOCK PRICES Corporate earnings Investor psychology: enthusiasm/greed, fear, complacency, etc. Indicated by P/E ratio – the multiple times earnings the most optimistic investor is willing to pay Price = P/E times E WHAT IF – both earnings and attitudes (the P/E multiplier) decline this year?

    33. So: Was it REALLY impossible for the authorities to foresee the dangers that lay ahead in 2008? For the past year and more, the data gave fair warning!

    34. “UNCHARTED WATERS” update: Are we now in the “third inning?” What lies ahead?

    49. LONG-TERM “SECULAR” CYCLES

    55. LONG-TERM “SECULAR” CYCLES

    65. UPDATE ON THE SIERRA CORE RETIREMENT FUND Has the same goals and substantially the same investment strategy as Sierra’s “Balanced Program”, which has an excellent 15-year track record Goals: Low volatility and exceed 8% annual Total Return on average You own the special no-load Class R shares – no load, and no 12b-1 fee

    67. SIERRA CORE RETIREMENT FUND Class R shares, symbol SIRRX, are priced about 3:30 every day via Yahoo and various graphics websites. SierraCoreFund.com shows some details. The Core Fund’s daily and weekly ups and downs are a pretty accurate proxy (as to direction) for your overall Sierra account. Sierra Core Fund shares are available via TD Ameritrade, Schwab, Fidelity, etc.

    68. SUMMARY The economy and the stock market have completed their rebound cycles and turned down. The outlook for both is now very negative. The U.S. economy has entered a severe and long recession – U.S. consumers are retrenching very deeply, and the negative cycle is unlikely to end this year.

    69. SUMMARY – 2 The secular Bear Market in stocks has begun another multi-year down cycle. In this phase of the economy, avoid HYCBs and reduce your allocations to stocks and other “risky” Asset Classes. Consider various durations of high-grade bonds; high yield municipal bond funds; inverse dollar funds.

    70. SUMMARY – 3 – GOOD NEWS Energy prices are plummeting – like a huge tax cut to consumers and businesses! Mortgage rates are at an all-time low; other interest rates are now also less burdensome The Fed, the Treasury and Congress are fully attentive now Barack! But he has no magic wand

    71. And now - - - Dr. Sleeper!

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