John P. Bott, IITri-Star Financial

Economic Predictions 2014

John P. Bott, II

Chairman of Tri-Star Financial

GP of Parallax Investments, GP& CIO of Parallax Capital

Partners, LP Hedge fund and Portfolio Manager of Parallax Asset Management

“What’s Working Now” radio show 1110 AM 4pm-5pm, M-F

Full service Houston-based brokerage firm founded in 1986

Fixed income specialistsSuccess is built upon long-standing client

relationships based on trust, honesty, and quality service

Economic Predictions for 2008

Several major U. S. financial institutions will no longer exist Several major U. S. financial institutions will no longer exist

Short term interest rates fall below 3.25%Short term interest rates fall below 3.25%

Long term rates between 3.50% and 5.00%Long term rates between 3.50% and 5.00%

Housing continues to decline, over 25.00% drop in value Housing continues to decline, over 25.00% drop in value

Leverage buyouts deadLeverage buyouts dead

Gold breaks $1,000 per ounceGold breaks $1,000 per ounce

Oil prices will be flat again this yearOil prices will be flat again this year

The Yen will rally sharply against the US DollarThe Yen will rally sharply against the US Dollar

Stocks will be 25% lower by the end of the 2008 Stocks will be 25% lower by the end of the 2008

Unemployment rate over 6.00% by the end of 2008Unemployment rate over 6.00% by the end of 2008

Economic Predictions for 2009

Several major U.S. Financial Hedge Funds and Insurance Companies will go out of business

Short Term Interest Rates will hit zero Long Term Rates between 1.5% and 3% 30 Year Mortgage rates will hit 4% Housing will bottom in Q3 Gold breaks $1,200 per ounce Oil prices will hit $30 per barrel Unemployment will hit 8.5% Mark to Market will no longer be the driving factor in

losses Municipalities will begin to Meltdown

Economic Predictions for 2010

300 banks will be taken over by the FDIC CPI will begin systemic deflation, down 1% for year Commodities will be lower then current 280 level at year

end Dow will test or break 7500 lows Gold breaks $1,800 per ounce Oil prices will hit $30 per barrel Unemployment will peak at 12% but bottom at 9.5%

first. Fed will attempt to raise interest rates, withdraw quant

ease Commercial Real Estate will bottom in Q3 2010 Residential Real Estate will begin to fall again.

Economic Predictions for 2011

Fed QE2 is an attempt to drive dollar lowerShort Term Interest Rates will remain at zeroLong Term Rates between will rise to a high of

5%30 Year Mortgage rates will hit 5%China turns out, not to be the “economy” we

think Gold breaks $2000 per ounceUnemployment will hit 12%Stock Market will trade in range 12000 to 8000,

buy it for the long run at 8000European Union will begin to disintegrate

Economic Predictions for 2012

Short Term Interest Rates will remain at zeroDollar much stronger (if no QE3)Gold breaks $3000 per ounce (final leg up)Unemployment will hit 8%Stock Market weaker (if no QE3)Crude Oil prices crushing world economyLong bond rates down to 1.5% to 2%European Union institutes QE1Inflation to remain very low

Economic Predictions for 2013

Short Term Interest Rates will remain at zeroDollar continues Pushing DownGold breaks $3000 per ounce (final leg up)Unemployment will hit 6%Stock Market makes new all time highs (DOW)Crude Oil pushes downLong bond rates trade to 2.0% to 2.5%U.S. Battles DeflationEconomy gets worseBattle turns to debt Ceiling

2013-Short Term Interest RatesWill Remain at Zero

Fed has kept rates at zero all yearFed has promised to keep rates at zero all this

coming year also.Great call

2013Dollar Continues to Push Lower

Dollar index did not go lower for the yearWorld Economic weakness kept dollar stronger

than it would have beenQ infinity strengthened economy slightly

compared to rest of worldLow interest should have weakened dollar, but

strong stock market off set.

2013-Gold breaks $3,000 per ounce

Gold predictions go back 10 years and have been extremely accurate.

This was a Prediction Based on QE3 coming in January or February. QE3 came in August

Gold Has yet to make new highsMissed This PredictionStill believe Gold will go up to $3000, but

higher Stocks Continues to hold back Market

2013-Unemployment will hit 6%

Unemployment Will Hit 6% Unemployment only went down to 7.2%Unemployment fell all year.Missed Call due to slow down in the Economy

2013-Stock Market Will Push to New All time HighsStocks went to New All time Highs Several Times this

YearGreat Call

Data as of 11/7/2013

Crude Oil Prices Will Push DownOil headed down hard now.Year is not overRight now prices are same as end of last

year.Incorrect call

Data as of 11/7/2013

Long Bond Rates Will Trade at 2.0% to 2.5%

10 year Bond traded between 1.66% and 2.98%Good Call

Data as of 11/7/2013

US Battles DeflationInflation went lower in 2013Consumer Price Index YoY 1.2%Producer Price Index YoY 0.3%Export/Import Index YoY -1%Core PCE YoY 1.2%Great Call

Data as of 11/7/2013

Economy Gets WorseAlthough the Economy continues to lag,

GDP does not reflect that downward move because of consumption.

Capacity Utilization still reflects a very weak economy.

Small Business and Middle Class have lost the most.

Gains this year have been related to big business restructure of the balance sheet.

Not right, but not totally wrong either.

Battle Turns To Debt CeilingThe big story of the year was the Shutdown

caused by the Debt Ceiling BattleCorrect Call

Economic Predictions for 2014

Short Term Interest Rates will remain at zeroDollar continues Pushing DownGold great buy at $1200Unemployment will hit 6%Stock Market makes new all time highs (DOW)Crude Oil pushes down10 Year Bond trades between 2.5% and 3.5%U.S. Battles DeflationCapacity Utilization begins to RiseEuropean unemployment rates continue to rise

Talking Points The current state of middle class Americans What happens if Freddie and Fannie are shut down Why deflation should not automatically be seen as bad Taxation through regulation Economic issues vs. social issues in politics K Street, Wall Street and Inside The Loop What happens when the FED finally tapers Current SEC enforcement policies Investing through betting against America Recalling Senators and Congressmen The younger generation fighting for America Bott Inflection Point QUESTIONS?

Disclaimer The preceding presentation has been prepared for

informational purposes only. It does not constitute an offer, recommendation, or solicitation to buy or sell, nor is it an official confirmation of terms. The above is based on information generally available to the public from sources reasonably believed to be reliable. Note that for any collateralized mortgage product, (CMO), the yield and average life will fluctuate depending on the actual rate at which mortgage holders prepay the mortgages underlying the CMO and changes in the current interest rates. Past performance is not indicative of future returns. Tri-Star Financial makes no representations or warranties, express or implied as to the accuracy or completeness of the above information or that any returns indicated will be achieved.