What happened to the economy? What has been the response? Where are we now, and what does the future hold?

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2. P e r s p e c t iv e s o n t h e
F in a n c ia l S t o r m

3. It b e g a n w it h C h e a p C r e d it
Home
Loans Home
Loans
Mortgage Backed Home
Loans
Security
Securitized loans
reduce investor risk

4. A Popular Product
A Great Profit Engine
Subprim
e
1
Loans
Consum Auto
er Loans
Loans
Home
2
Loans
Extended
loan packaging
3
Sliced into Time Tranches
Risk Grows 1 perceived as very safe
Bundled together

5. Market Excesses
Emerge:
Risk Underestimated
Lax Oversight

6. Economy slows , Credit bubble bursts
Companies, Banks Need for credit,
face Capital Calls liquidity, fast
A Vicious
Selling Cycle
Fire sale of liquid
Assets – stocks,
Lower prices = Lower bonds
asset values pressure on
levered institutions, Banks
Investor panic
Markets crash

7. T id a l w a v e o f w o r r ie d m o n e y r u n s t o
t h e s id e lin e s
Data source: Federal Reserve; Wedgewood Partners Inc.

8. M a r k e t P a n ic o f 2 0 0 8
S & P 5 0 0 C o m p o s it e 1 0 y r . a n n u a liz e d Re a l Re tu rn s
source : www. Dshort.com

9. Federal Government Steps in to Halt the slide
Lack of Confidence
No Credit
Insolvency
MARKET FORCES
Economic Activity
Spending Forces
Market orces
12.8 Trillion Dollars
Guarantees F
Market
GOVERNMENT
Credit
Federal action seeks to restore balance and faith

10. F in a n c ia l C o lla p s e
Av e rte d
QuickTimeª and a
Animation decompressor
are needed to see this picture.

11. The Uphill Battle to Recovery
• Banks need to de-leverage, raise more capital
• Credit markets remain frozen
• High debt defaults rates persist
• Commercial and residential real estate price
declines continue
• Government debt burden 80% of GDP
• World economy weak

12. M y F in a n c ia l
Fu tu re

13. Overwhelmed
Burdened
The Anxiety Pyramid
Paralysis
Fear
Catastrophe

14. Are we at the bottom? How long will it take for my portfolio to
recover
(wrong question - speculation)
How do I position my portfolio and generate the income I
need for short and long term?
(right question)

15. 1 . R e g a in F in a n c ia l S e c u r it y
A d d r e s s F e a r s F ir s t

16. Historical Truths on Markets
Asset allocation accounts for over 90% of returns
Short term market swings are unknowable
Markets revert to the mean over the long term
Systematic disciplined investing builds wealth

17. H is t o r ic a l R e t u r n s ( In f la t io n
A d ju s t e d )
Source : 1802- 1998 Jeremy J. Siegel, “The shrinking equity premium”: Historical facts and future forecasts
1999-2008 : Wilshire, Standard and Poors Zephyr, Federal Reserve past performance is no guarantee of future results.
L o n g T e r m F o c u s : S t a b le S t r a t e g ic B le n d

18. 1 . R e g a in F in a n c ia l S e c u r it y
2 . A S t r a t e g ic P o r t f o lio

19. The Multi- faceted
Asset Allocation Process
Strategic
Core
Passive Bi-
& Annual
Active Tactical
Dynamic
Rebalanc
e

20. Rigorous Back Tested Models
GV Orientation
Strategic
Core -Value
-International
Customized Diversified allocation
across 14 asset classes

21. 12 Point Tactical Analysis
Macro Economic Factors
Bi-Annual
Tactical
Market Conditions
Relative Valuation

22. Active Periodic Rebalance
Dynamic
Rebalance
Stocks
Bonds

23. Tax Loss Capture

24. Money Manager Selection
Style Purity
Passive &
Active
Long Term Performance
Disciplined Process for Securities
Selection
Manager Investment in the Fund
Passive Management through ETF’s

25. Active and Continuous Due Diligence
Weekly News Search
Monthly Quantitative Reports
Quarterly Conference Calls
Annual Review - 50 point
Questionnaire
Personal Visits

26. 1 . R e g a in F in a n c ia l S e c u r it y
2 . A S t r a t e g ic D iv e r s if ie d P o r t f o lio
3 . R is k s a n d O p p o r t u n it ie s

27. Risks
Inflation
Credit
Freeze
&
Imbalances
High Debt
Imbalances Global
Recession
Imbalances
Consumer Deflation

28. Im b a la n c e s D r iv e O p p o r t u n it ie s
For illustration purposes only; it has not been determined whether any or all of these recommendations would be appropriate for client
portfolios in light of clients needs and risk tolerance

29. Artificially Real Estate
Low Prices,
Liquidity
LowBargains
Interest
Premium
Rates
E x p lo r e B r o a d e r O p t io n s

30. QUESTIONS
GVFA 2009 0047
DOFU 4/2009