A Man Looks Into The Abyss, Theres Nothing Staring Back At Him. At That Moment, Man Finds His Character. Lou Mannheim, Wall Street

The U.S. Economic Recovery Is Real

US Job Creation Hits Record Not Seen Since The 1990s

US Unemployment Rates Falls And Economic Recovery Strengthens.

An Improving Economy Gives Obama His Game Back

In Case You Missed ItThe Economy Is Back.

-3.0

2.0

Personal Income

Personal Income

1.4

1.9

Employment

All Employees: Total nonfarm

0.01.02.03.04.05.06.0

Industrial Production

Industrial Production Index

2.03.04.05.0

Consumer Spending (PCE)

Personal Consumption Expenditures

1.0

3.0

5.0

7.0

9.0

Personal Savings Rate

Personal Saving Rate

3.0

3.5

4.0

4.5

5.0

GDP

Gross Domestic Product

15.00%

16.00%

17.00%

18.00%

19.00%

20.00%

21.00%

2007 2008 2009 2010 2011 2012 2013 2014

Social Benefits As % Of Real Disposable Income

$50,000

$51,000

$52,000

$53,000

$54,000

$55,000

$56,000

$57,000

$58,000

$59,000

Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14

Seasonally Adjusted Median Household Income (March 2013 $)

Gallup Poll - Family Of Four Living Needs

65

4

60

7

59

8

17

4

-95

8

13

6

56

-42

1

80

1

1,2

54

12

2

93

8

12

0

52

2

36

7

19

0

71

0 83

8

1,6

09

1,3

65

1,3

48

1,9

51

1,2

98

80

6

62

5

1,3

56

75

8

2,1

58

2,2

82

2,0

60 2

,30

9

1,9

80 2

,29

4

1981 1985 1989 1993 1997 2001 2005 2009 2013

Workers Not In Labor Force Soars

Annual Chg. To NILF

More Than 93 Million Americans No Longer Counted Roughly 80% Of The Population Lives Paycheck-To-Paycheck 1-in-4 Americans On Some Form Of Government Assistance Highest Level On Record Of 70+ Aged Individuals Still Working Equity Ownership In Private Business At Lowest Levels Since 2000 Household Net Worth Lower Today Than In 2007 Household Investments In Financial Assets Lower Today Than In

2007

-8000.0

-6000.0

-4000.0

-2000.0

0.0

2000.0

4000.0

6000.0

8000.0

2009 2010 2011 2012 2013 2014

Employment Gains Since 2009 - Including/Excluding B/D Adj.

Cumulative Employment Since 2009 Cumulative Employment W/O B/D Adjustment

Cumulative Employment Adj For Gallup

Employment Overstated By3,678,000 Jobs

42.00%

44.00%

46.00%

48.00%

50.00%

52.00%

54.00%

56.00%

58.00%

1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012

Employment To Working-Age Population (16-54)

Does This ReallyLook Like A 5.6%Unemployment Rate

500.0

700.0

900.0

1100.0

1300.0

1500.0

1700.0

1900.0

2100.0

2007 2008 2009 2010 2011 2012 2013 2014 2015

S&P 500 Index

QE1 QE2OperTwist

QE3

REVENUE

RET

UR

N

SALES

REWARDDIVIDENDS

BU

YBA

CK

S

EPS IN

VES

TIN

G

EARNINGS

VALUE

PR

ICE/

EAR

NIN

GS

RISKC

HEA

P

ESTIMATES

RATIOCAPECAGR

GROWTH

RET

UR

ND

OLL

AR

INVESTING WITH A LACK OF VALUE

32

64

128

256

512

1024

2048

4096

8192

16384

32768

65536

1965 1973 1981 1989 1997 2005 2013 2021 2029 2037 2045 2053 2061

S&P

50

0 I

nd

ex

Act

ual

& P

roje

cte

d (

Log

Scal

e)

What Analysts Promise & What Happens Likely Very Different

Actual S&P 500 Projected S&P 500 Expon. (Projected S&P 500)

7% Annualized Return

Capital Not Available,

25.00%

Capital Needed For Other Things,

Psychological Mistakes,

50.00%

A recent DALBAR study shows that much of the shortfall in

investor returns are due to psychological factors such as Loss

Aversion, Narrow Framing, Herding or Optimism.

There are actually three primary causes for the chronic

shortfall for both equity and fixed income investors:

-6000

-4000

-2000

0

2000

4000

6000

8000

10000

32

64

128

256

512

1024

2048

4096

8192

16384

32768

65536

1965 1973 1981 1989 1997 2005 2013 2021 2029 2037 2045 2053 2061

Act

ual

Vs.

Pro

mis

ed

Re

turn

sTh

ou

san

ds

S&P

50

0 I

nd

ex

Act

ual

& P

roje

cte

d (

Log

Scal

e)

Impact Of Bear Markets Are Have Substantial Effects On Outcomes

Promised Growth Of $10000 At 7% Actual Growth Of $10000 Return Gap

Actual S&P 500 Projected S&P 500 Expon. (Projected S&P 500)

010

20

30

40

50

64.00

128.00

256.00

512.00

1,024.00

2,048.00

Jan-1871

Jan-1886

Jan-1901

Jan-1916

Jan-1931

Jan-1946

Jan-1961

Jan-1976

Jan-1991

Jan-2006

Real S&P 500 Index With Recessions(Robert Shiller Real Price Data)

Recessions S&P 500 (Real Price) Expon. (S&P 500 (Real Price))

35

2126

19 1723 20

32

1811

43

9

2126

20

49

79

3644

38

23

105

35

57

11

91

119

72 70

Mar

-18

79

May

-18

85

Ap

r-1

88

8

May

-18

91

Jun

-18

94

Jun

-18

97

Dec

-19

00

Au

g-1

90

4

Jun

-19

08

Jan

-19

12

Dec

-19

14

Mar

-19

19

Jul-

19

21

Jul-

19

24

No

v-1

927

Mar

-19

33

Jun

-19

38

Oct

-19

45

Oct

-19

49

May

-19

54

Ap

r-1

95

8

Oct

-19

60

No

v-1

970

Mar

-19

75

Jul-

19

80

No

v-1

98

2

Mar

-19

91

Sep

-20

01

Jun

-20

09

Historical Economic Recoveries Average 40 Months

Recovery Length - No Of Months

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

1936 1943 1950 1957 1964 1971 1978 1985 1992 1999 2006 2013 2020

Earnings Reversion - The Never Foreseen DangerPost S&P Revisions (2015)

S&P 500 Earnings as of 06/01/14 EPS Growth Rate Lower Bound (5% Trough to Trough)EPS Growth Rate (6% Peak To Peak) Earnings Growth Trend LineS&P 500 Earnings as of 3/1/15 (Post-Rev)

2014 Estimates

Analysts NEVER sawthe earnings reversions

STREETTALKLIVE.COM

2015 Estimates

2020 Estimates

The current slope of estimated earnings growthhas never occurred in history.

2015 Actual

05

10

15

20

25

30

35

40

45

50

-5%

0%

5%

10%

15%

20%

25%

30%

CA

PE

Ro

llin

g 2

0-Y

ear

Ret

urn

s

S&P 500 Real Rolling 20-Year Annualized Returns CAPE Valuations

-100.00%

-80.00%

-60.00%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Actual & Est. YoY % Change In Reported EPS

Tap

er B

egin

s

QE-

1

QE-

2

QE-

3

Op

. Tw

ist

Esti

mat

es

No

Q

E

24

2.5

4%

78

8.1

9%7

93

.48

%4

73

.05

%

64.00

128.00

256.00

512.00

1,024.00

2,048.00

1909 1919 1929 1939 1949 1959 1969 1979 1989 1999 2009

Real S&P 500 Index With Record Highs(Robert Shiller Real Price Data)

Real S&P 500 Index

300.0

500.0

700.0

900.0

1100.0

1300.0

1500.0

1700.0

1900.0

2100.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

S&P 500 Index Linear (S&P 500 Index)

Phase 1

Phase 1

Phase 1

Phase 2

Phase 3

Phase 2

Phase 2

Phase 3

Phase 3

20000

40000

80000

160000

320000

640000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

MISSING THE 10-Best vs 10-Worst Days

$100,000 Missing 10 Best Days $100,000 Missing 10 Worst Days $100,000 Invested In Index (Buy and Hold)

010000

20000

30000

40000

50000

60000

70000

80000

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Compound REAL Return Of $1000 Plus $100 Monthly Contributions (DCA vs Lump Sum)

Compound Value Of $1000 plus $100 Monthly Contributions (DCA)

Compound Value Of $1000 + $100 Mthly Cont. (Lump Sum)

RETIRE

OR NOT

Missed The TopAnd The Bottom

Missed The TopAnd The Bottom

(20)

(15)

(10)

(5)

-

5

10

15

20

25

30

32

64

128

256

512

1024

2048

4096

8192

1/1

/19

00

1/1

/19

10

1/1

/19

20

1/1

/19

30

1/1

/19

40

1/1

/19

50

1/1

/19

60

1/1

/19

70

1/1

/19

80

1/1

/19

90

1/1

/20

00

1/1

/20

10

CA

PE

Rat

io, I

nfl

atio

n

Infl

atio

n A

dju

ste

d R

etu

rn O

f $

10

0The Real Value Of Cash

Monthly Compound Real Return Of $100Valuation Adjusted Return Of $100 (23x = Cash, 6x = Stocks)P/E Capped At 25xAnnual Change In Inflation

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1990 1994 1998 2002 2006 2010 2014

S&P 500 Stock Price Index

SELL IT ALLSELL IT ALL

???

Not HereEither...

Absolutely Not Here...

Liquidity Bubble

Credit/Real EstateBubble

Nope...No Bubble Here.

I Don't Need An Advisor - I'm A Genius

Tech Bubble

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