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Capital Investment Management

Securities and advisory services offered through First Allied Securities, Inc., member FINRA, SIPC. Capital Investment Management and First Allied Securities, Inc. are separate companies.



. Inc. All information is believed to be from reliable sources.FORMALITIES Securities offered by First Allied Securities. however. We believe the information contained in this commentary has been obtained from sources that are reliable. Opinions. forecasts. does not provide tax or legal advice. Neither the named representative nor the named Broker Dealer gives tax or legal advice. The indices mentioned in this seminar are unmanaged and not available for direct investment. we make no representation as to its completeness or accuracy. and not necessarily those of the named representative or First Allied Securities. and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. Past performance is no guarantee of future results. First Allied Securities. estimates. LLC. Inc. Inc. Please consult your financial advisor for further information. This presentation is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. member FINRA/ SIPC. These are the views of Platinum Advisor Marketing Strategies. are separate companies. consult your tax or legal advisor regarding your particular situation.. Inc. Capital Investment Management and First Allied Securities.. and should not be construed as investment advice.

AGENDA • A Review of 2011 • Factors Affecting the Stock Market and the Economy • Economist Projections • Investment Strategies .

A LOOK BACK The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Data Source: Yahoo Finance. All index returns exclude reinvested dividends. .

2007 00 00 00 December 31.A LOOK FARTHER BACK March 24.6x 1. and do not include the reinvestment of dividends. Data are as of 12/31/11. 2002 P/E(fwd) = 14. Past performance is not indicative of future results. as provided by Compustat. Dividend yield is calculated as the annualized dividend rate divided by price.258 00 00 00 00 October 9. Morgan Asset Management. First Call.1x 777 00 December 31.527 14 Years of S&P 500 PerformanceP/E(fwd) = 15. Forward Price to Earnings Ratio is a bottom-up calculation based on the most recent S&P 500 Index price.565 October 9. and is provided by FactSet Market Aggregates.2 1. FactSet. 2000 P/E(fwd) = 25. J. 2011 P/E(fwd) = 11. . Returns are cumulative and based on S&P 500 Index price movement only. 2009 P/E(fwd) = 10.0x 741 00 00 March 9. Compustat.P. 1996 P/E(fwd) = 16.8x 1. divided by consensus estimates for earnings in the next twelve months (NTM).3x 677 00 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Sources: Standard & Poor‟s.

Dies (Oct. 2) Unemployment Rate Hits Lowest Point in Two Years (Dec. 17) Rebel Forces Advance in Libya (Aug.S.S. All index returns exclude reinvested dividends. Indices are unmanaged and cannot be invested into directly. 11) Possible Shutdown of Federal Government Goes Down-to-the-Wire (April 1) Osama bin Laden Killed in Pakistan (May 1) Hurricane Irene Hits the East Coast (Aug. 27) S&P Closes flat for the year at 1257. 8) Qaddafi Is Captured and Killed (Oct. 26) End of Fannie Mae and Freddie Mac (Feb. 26) Budget Talks Heat Up as Debt Ceiling Deadline Nears (July 19) Series of Tornadoes Devastate Southern States (April 27) Unemployment Rate Dips Slightly ( . 21) Steve Jobs. CoFounder of Apple. 25) 9. 5) Supercommittee Fails to Agree on Deficit Reduction Plan (Nov. 26) European Leaders Agree on Solutions for Euro Crisis (Oct. (Dec. Credit Rating (Aug. Data Source: Yahoo Finance.0 Magnitude Earthquake and Tsunami Devastate Japan (March 11) Jobs Stall in August Report (Sept. 4) Standard & Poor's Lowers U. News points source: infoplease. 21) The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.6. 2) Unemployment Rises as Job Growth Slows (June 3) Stocks Nosedive After U. 20) Senate Makes Deal to Avoid Government Shutdown (Sept. Past performance is no guarantee of future results. Credit Rating Is Lowered (Aug. 5) Occupy Wall Street Movement Continues to Grow (Oct.A LOOK BACK Obama Announces Budget Cuts. Freezes (Jan. 2) Senate Approves Stopgap Budget (March 17) Security Council Approves Sanctions on Libya (Feb.

4 0.0 31 83. 07) Since Low (Mar.7 -3. 09) 13. Data as of 12/31/2011.1 77. Since Market Peak represents period 10/09/07 to 12/31/11.6 68.4 -17.8 97.7 10.S&P PERFORMANCE BY SECTOR S&P Weight 2011 YTD Since Peak (Oct.7 -0. illustrating market returns since the S&P 500 Index low on 3/9/09.9 100 2. Returns are cumulative.7 6.8 11.3 -9.0 12.1 11.7 3.3 11.1 82.2 Source: Standard & Poor’s.9 20.5 135.0 2.8 111.6 -14. . Past performance is not indicative of future returns.1 -11. not annualized.3 4.5 10.1 118.0 4.0 156.9 12.2 3. including dividends for the stated period. Since Market Low represents period 3/9/09 to 12/31/11. illustrating market returns since the S&P 500 Index high on 10/9/07.1 -60.8 -13.2 3.0 19.5 -9.2 6.5 14. not annualized. All calculations are cumulative total return.8 72.7 4.6 105.

Japan. New Zealand. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. Italy. Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets. the Netherlands.6% . Australasia. 2011. Google Finance. Returns are for illustrative purposes only and do not reflect the performance of any actual investments. The MSCI EAFE Index consists of the following 22 developed market country indices: Australia. Singapore. Germany.S. Israel. The MSCI EAFE Index (Europe.MSCI indexes are calculated with net dividends in U. You cannot invest directly in an index. excluding the US & Canada. Portugal. Finland. Norway. Austria. Hong Kong. Greece. Switzerland. France. Belgium. Sweden. the Wall Street Journal. and the United Kingdom*. dollars. Sources include seekingalpha. and MSCI Barra.SOME WINNERS AND LOSERS 10-Year Treasury* Oil Gold DJIA MSCI EAFE Natural Gas Futures Cotton Bank of America 17% 13% 9.5% 12% 32% 37% 58% Note: Figures through December 30th. Ireland. Denmark. Past performance does not guarantee future results. Spain.

629 2.5 5. All GDP Growth data are from J. J.176 6.885 1. which is from the India Ministry of Statistics & Programme Implementation and represents % change versus a year ago. Data are as of 12/31/11. Morgan Asset Management.481 2.3 5.5 7.S. and Italy unemployment is as of 6/30/11.185 -0.6 3.K.518 2. China GDP USD (B$s) $15.6 2 1. All GDP Growth data are for 3Q11. Japan Russia India Canada Mexico 5. Morgan Economics and expressed as % change versus prior quarter annualized with the exception of India. Morgan Securities. J.759 1.5 Source: FactSet.P.988 GDP Growth 1.855 3.6 -0.P.80% 7. GDP values are from the IMF and are based on purchasing power parity.246 1.808 2.5 3.843 1.9 Italy Germany France Brazil U.P.2 2. . CIA.ECONOMIES OF THE WORLD Nation U. India unemployment is from CIA estimates and is as of 2010.

AGENDA • A Review of 2011 • Factors Affecting the Stock Market and the Economy .

December 2011 .HeadWind – Sovereign Debt Is the Euro Zone Currently In a Recession? Yes. 8% 27% No. 65% Source: Wall Street Journal Economic Forecasting Survey. and it will avoid one. but it's imminent. Not now.

. J.P. Data reflect most recently available as of 12/31/2011. FactSet. Morgan Asset Management.EMPLOYMENT Civilian Unemployment Rate Seasonally adjusted Employment – Total Private Payroll Total job gain/loss (thousands) Source: BLS.

P.HeadWind – Home Prices Will Home Prices Outpace Inflation over the next three years? Median Existing Home Prices $ thousands. seasonally adjusted Yes. No. 11% 89% Sources: Wall Street Journal Economic Forecasting Survey. Sources: National Association of Realtors. December 2011. FactSet. Data reflect is most recently available as of 12/31/2011. . J. Morgan Asset Management.

Data reflect most recently available as of 12/31/2011.Headwind – Gas Prices WTI Crude Oil & Retail Gasoline Prices Oil Gas 12/31/2000 $26.S. J. 2011 and 2012 world oil consumption based on estimates from U.S.41 12/31/2011 $98. Price of gas based on U. FactSet. .83 $3.S.26 Source: U. Morgan Asset Management. Department of Energy. retail national average of all formulations and WTI for crude.72 $1.P. Department of Energy.

*Estimates for 2012 – 2021 are based on adjustments to the August alternative scenario from the CBO‟s “Budget and Economic Outlook: An Update ” which was released on August 24. Additionally. .P. 1960-2021* Source: U. Morgan Asset Management. Note: Years shown are fiscal years (Oct. 2011 numbers are actuals.HEADWIND – National Debt Federal Debt (Accumulated Deficits) % of GDP. this adjusted alternative scenario assumes a reduction in troop presence in Iraq and Afghanistan starting in 2012.S. J. 2011. 30). Treasury. which is in line with current policy. 1 through Sep. CBO. Data reflect most recently available as of 12/31/11. This adjusted alternative scenario assumes an extension of all Bush tax cuts. BEA. OMB. annual adjustments to AMT and Medicare payment schedules and a 1-year extension for calendar year 2012 only of the payroll tax cut and extended unemployment benefits.

025. 2Accumulated debt taken from TreasuryDirect.328.72 $3.522 $80.162.657. American Community Survey.215.856.000.78 $29.001 $1.77 Source: MFS Investment Management.86 $1.731.000.000.75 $159.453.221.328.997.000.00 Hypothetical Household Income $500.20 $399. page 3.291. 2010.218.000.S.78 $ for December 31st. 2009.000. .000. government Figures adjusted to various income levels.003 Hypothetical Household Income $100.72 $298.000. 3United States Median Household Income level taken from U.218.568.666.657.86 $149.621.731. Median Household Income $50. Census Bureau.001 $14.Headwind – Government Budget If your budget resembled the U.54 $648.001 $3. Actual numbers are calculated as a percentage of the GDP for 2010.288.00 Government Tax Revenue/Inc ome Current Spending Annual Deficit Accumulated Debt $2.S.54 $ Hypothetical Household Income $250.708.805.595.190. Disclosure: 1United States Government numbers taken from the congressional Budget Office summery „Budget and Economic Outlook: An Update‟ Table 1.38 $798.

Tailwind – Optimism Source: American Association of Individual Investors .

J.P. *4Q11 Household Debt Service Ratio is J.P. Savings rate data as of November 2011. Employer and employee contributions to retirement funds are included in after-tax income but not in personal outlays. FRB. Data reflect most recently available as of 12/31/11. and thus are implicitly included in personal savings. Morgan Asset Management. Morgan Asset Management estimate. seasonally adjusted. BEA. All other data are as of 3Q11. Personal savings rate is calculated as personal savings (after-tax income – personal outlays) divided by after-tax income.Tailwind – Household Finances Personal Savings Rate Annual. % of disposable income Household Debt Debt payments as % of disposable personal income. .

Morgan Asset Management. FactSet. Subsequent 12-month S&P 500 returns are price returns only. Data reflect most recently available as of 12/31/11. Peak is defined as the highest index value before a series of lower lows.Tailwind – Consumer Sentiment Consumer Sentiment Index – University of Michigan Source: University of Michigan. J. while a trough is defined as the lowest index value before a series of higher highs. .P. which excludes dividends.

J. quarterly Adjusted After-Tax Corporate Profits (% of GDP) Includes inventory and capital consumption adjustments Source: BEA. FactSet.Tailwind – Healthy Companies Corporate Cash as a % of Current Assets S&P 500 companies – cash and cash equivalents. Morgan Asset Management. Standard & Poor‟s. .P. Data as of:12-31-2011.

*Current bull run from 3-9-09 to 12-31-11.9 1.1% 101.8% -35% 18 21 20 3 31 17 14 Months 74.2% 125.0% 31 74 60 148 60 34 68 Months 1. All returns are S&P 500 Index returns and do not include dividends .2% Length of Decline (Months) 12 3 6 8 Bull Run 257.8 5. .0% -22.8% 582. Past performance is not indicative of future returns.4% -27. The bull run data reflect the market expansion from the bear market low to the subsequent market peak.6% 228.5% 85.Tailwind – History Market Peak 5-29-46 7-15-57 12-12-61 2-9-66 Market Low 5-19-47 10-22-57 6-26-62 10-7-66 Bear Market Return -28.8% 176.1% -48.0% Length of Run (Months) 122 50 44 26 Years to Reach Old Peak 3.2 0.6% 87.8% 48.5% -49.1 0.6 ? 2.1% -33.7% -28.2 Years Source: Standard & Poor’s.6 11-29-68 1-5-73 11-28-80 8-25-87 3-24-00 10-9-07 Average 5-26-70 10-3-74 8-12-82 12-4-87 10-9-02 3-9-09 -36. A bear market is defined as a peak-to-trough decline in the S&P 500 Index (price only) of 20% or more.6 4.8 0.6% -20. Data as of 12-31-2011.2 1.1% -56.4% 79.

*Based on expansion from July 2009 thru December – History Average Lengths: Recessions: 15 Months Expansions: 44 Months Source: www.nber. Past performance is not indicative of future returns. For illustrative use only. Data as of 12-31-2011. .

AGENDA • A Review of 2011 • Factors Affecting the Stock Market and the Economy • Economist Projections .

The USA had been AAA-rated for 70 years (source: ABC News). Geithner responded “that will never happen to this country.28 a gallon on 12/31/11. up 21 cents a gallon during the year (source: Newsweek. AAA). The nationwide average price of gasoline was $3. Treasury Secretary Tim Geithner was asked on 2/07/10 whether the USA could ever lose its top credit rating.” S&P downgraded the United States from AAA to AA+ on 8/05/11. President George Bush predicted on 1/03/07 that the US government would reduce its annual budget deficit to zero by fiscal year 2012 (source: White House).The “Experts” Former Shell Oil president John Hofmeister predicted in early January 2011 that gas prices would reach $5 a gallon by 2012. .

not firms forecast.340 1.350 1.250 1.400 1. *Strategists' own estimate. .352 (9% growth) Source: Barrons.325 1.330 1. Some estimates are from firms economists.Forecast – Stock Market Name/Company Adam Parker – Morgan Stanley David Kostin – Goldman Sachs Jonathan Golub – UBS Barry Knapp – Barclays Capital Andrew Garthwaite – Credit Suisse Savita Subramanian – Bank of America Gina Martin Adams – Wells Fargo Tobias Levkovich – Citigroup Brian Belski .com.Oppenheimer Sam Stovall – S&P Capital IQ Thomas Lee – JP Morgan Binky Chadha – Deutsche Bank 2012 S&P 500 Target 1.400 1.360 1. ** Mid-point of range given.167 1.375 1.430 1.350 1.500 Bob Doll – BlackRock GROUP AVERAGE 1.

FORECAST – U. 2011. ECONOMIC GROWTH Annual Gross Domestic Product 4 3.4 2. Broad surveys on more than 10 major economic indicators are conducted monthly.8 -2 Source: BLS.1 3 2. The Wall Street Journal surveys a group of 56 economists throughout the year.2 0 2007 2008 2009 2010 2011 2012 2013 2014 -1 -0. Real Gross Domestic Product at an annualized growth rate.7 1 0. Survey conducted December 11. online.8 Projections are based on opinions of analysts polled at the time of the survey.8 2.3 2 2.

AGENDA • A Review of 2011 • Factors Affecting the Stock Market and the Economy • Economist Projections • Investment Strategies .

daily returns. . Chart shown for illustrative purposes only. 1926 – Dec.Strategy – Tactical Approach Large Cap Stocks Correlations Among Stocks Dec. J. LLC. Data is as of 12/31/11. 2011: 66. Morgan Asset Management. 2011. 23. Capitalization weighted correlation of top 750 stocks by market capitalization.5% Lehman Bankruptcy 1987 Crash OPEC Oil Crisis Tech Bust & 9/11 Sovereign Debt Crisis Great Depression/ World War II Cuban Missile Crisis Average: 26.7% Source: Empirical Research Partners.P. Standard & Poor ‟s.

13. 8. 8. 8. Bonds: 26. portfolio with 25% in alternatives is as follows: U. stocks: 22.S. Alternatives: 8. Data are as of 12/31/11.S.8% Russell 2000.S.S.4% MSCI EM.3% NAREIT Equity REIT Index. bonds: 30% Barclays Capital Aggregate. Charts are shown for illustrative purposes only.3% CS/Tremont Equity Market Neutral.2% S&P 500. U.3% DJ/UBS Commodities.2% MSCI EAFE. 13% 9% Barclays Agg. Diversification does not guarantee investment returns and does not eliminate risk of loss. International stocks: 15% MSCI EAFE. U.STRATEGY – DIVERSIFY THE POWER OF DIVERSIFICATION (1994-2011) Traditional Portfolio More Diversified Portfolio 8% 26% 8% Equity Market Neut Commodities 8% REIT S&P 500 Russell 2000 30% 55% 4% 22% MSCI EAFE MSCI EM 15% Domestic Stocks International Bonds Indexes and weights of the traditional portfolio are as follows: U. Return and standard deviation calculated using Morningstar Direct.5% Barclays Capital Aggregate. International Stocks: 4. . Past returns are no guarantee of future results. stocks: 55% S&P 500.

Gold: USD/troy oz.STRATEGY – TUNE OUT EMOTION 20 Year Annualized Returns By Asset Class (1991-2010) 10.S. Oil: WTI Index. Indexes used are as follows: REITS: NAREIT Equity REIT Index.8% 2. Homes: median sale price of existing single-family homes. Bonds: Barclays Capital U. Dalbar derives the average equity investor return using a proprietary model that measures actual historical returns and average shareholder holding periods. . Aggregate Index.4% The S&P 500 Index is a broad-based unmanaged for direct investment. Returns are annualized (and total return where applicable) and represent the 20-year period ending 12/31/2010 to match Dalbar ’s most recent analysis.6% 2.7% 7. investor as measured by REITS Oil S&Pindex 500not available Gold Bonds EAFE Homes Average equity Average Inflation Dalbar. EAFE: MSCI EAFE.2% 6.7% 2.5% 8% 7. Past Investor performance is no guarantee of future results. Inflation: CPI. Inc. Results reflect the reinvestment of dividends.1% 4.

992 $21.908 $14. Clinton '92'01 Lyndon B. Nixon '72'81 John F.000 $40. All returns exclude reinvested dividends. Truman '48'57 Richard M.702 $45.00 $38. Roosevelt '36-'45 Franklin D.727 $28. Johnson '64'73 Ronald Reagan '80-'89 Each 10-year period begins on January 1st of the first year shown and ends on December 31 of the final year shown.561 $22.141 $33.000 $0 Franklin D. Clinton '96'05 Harry S. Kennedy '60'69 .418 $23.830 $20.000 Growth of a hypothetical $10. Roosevelt '40-'49 Jimmy Carter '76-'85 George H.000 $10. Nixon '68'77 Richard M. Indices are unmanaged and cannot be invested into directly.761 $52. For example. SOURCE: Yahoo Finance.228 $17. the first period listed (1936-1945) covers 1/1/36 through 12/31/45.741 $38. Eisenhower '56-'65 William J. $50. Eisenhower '52-'61 Dwight D. Past performance is no guarantee of future results.324 $45.000 investment made at the beginning of an election year.000 $30.016. Ronald Reagan '84-'93 Dwight D.193 $40.000 $50.STRATEGY – TUNE OUT POLITICS $60.240 $18. Bush '88-'97 William J.448 $23. Roosevelt '44-'53 Franklin D.

STRATEGY – STAY THE COURSE Staying the course – even through ups and downs Portfolio is down (%) 10 20 Total Return Needed to Break Even 11 25 Years to Break Even Assuming a Return of 3% 3.2 4.7 5.6 16.6 14.8 24.1 2.2 3.9 24.4 31 40.4 7.5 14.4 2.0 11.6 20.7 54.1 17.9 7.3 9.3 23.6 9.5 6.1 10.6 Assuming a Return of 8% 1.3 10.6 6.2 20.2 18.6 12.9 2 30 40 50 60 70 80 90 43 67 100 150 233 400 900 12.5 Assuming a Return of 5% 2.9 Assuming a Return of 10% 1.3 Assuming a Return of 12% 0.4 77.1 4.2 4.9 3.9 29.6 7.7 33 47.3 .9 15.1 8.

Past performance is no guarantee of future results. Source: Bloomberg .STRATEGY – STAY THE COURSE Risk vs. Indices are unmanaged and cannot be invested into directly. All index returns exclude reinvested dividends. Reward – Growth of $10.000 The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

tune out the noise. Communicate with you regularly and educate you about factors that could affect your financial future. and avoid knee-jerk reactions.HOW WE HELP Help you diversify across asset classes and set realistic expectations for performance. Monitor your portfolio and recommend changes over time. . Encourage you to think longterm.

.THE END. Private Wealth Management for Select Individuals.