market state

7/28/2019 market state

1/37

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.


2/37

HOUSEKEEPING ITEMS


3/37

QUESTIONS


4/37

Securities offered by First Allied Securities, Inc., member FINRA/ SIPC.

Capital Investment Management and First Allied Securities, Inc. are separate companies.

First Allied Securities, Inc. does not provide tax or legal advice; consult your tax or legal advisor regardingyour particular situation.

The indices mentioned in this seminar are unmanaged and not available for direct investment. Pastperformance is no guarantee of future results.

Opinions, estimates, forecasts, and statements of financial market trends that are based on current marketconditions constitute our judgment and are subject to change without notice. We believe the informationcontained in this commentary has been obtained from sources that are reliable. This presentation is for

information purposes only and is not intended as an offer or solicitation with respect to the purchase or saleof any security.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the namedrepresentative or First Allied Securities, Inc., and should not be construed as investment advice. Neither thenamed representative nor the named Broker Dealer gives tax or legal advice. All information is believed tobe from reliable sources; however, we make no representation as to its completeness or accuracy. Please

consult your financial advisor for further information.

FORMALITIES


5/37

A Review of 2011

Factors Affecting the Stock Marketand the Economy

Economist Projections

Investment Strategies

AGENDA


6/37

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

All index returns exclude reinvested dividends. Past performance is no guarantee of future results.

Indices are unmanaged and cannot be invested into directly. Data Source: Yahoo Finance.

A LOOK BACK


7/37

0

0

0

0

0

0

0

0

0

0

0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

14 Years of S&P 500 Performance

Sources: Standard & Poors, First Call, Compustat, FactSet, J.P. Morgan Asset Management. Dividend yield is calculated as the annualized dividend rate divided by price, as

provided by Compustat. Forward Price to Earnings Ratio is a bottom-up calculation based on the most recent S&P 500 Index price, divided by consensus estimates for earningsin the next twelve months (NTM), and is provided by FactSet Market Aggregates. Returns are cumulative and based on S&P 500 Index price movement only, and do not includethe reinvestment of dividends. Past performance is not indicative of future results. Data are as of 12/31/11.

A LOOK FARTHER BACK

December 31, 1996P/E(fwd) = 16.0x

741

March 24, 2000P/E(fwd) = 25.6x

1,527

October 9, 2002P/E(fwd) = 14.1x

777

October 9, 2007P/E(fwd) = 15.2

1,565

March 9, 2009P/E(fwd) = 10.3x

677

December 31, 2011P/E(fwd) = 11.8x

1,258


8/37

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

All index returns exclude reinvested dividends. Past performance is no guarantee of future results.

Indices are unmanaged and cannot be invested into directly. Data Source: Yahoo Finance, News points source: infoplease.com

A LOOK BACK

Obama AnnouncesBudget Cuts, Freezes

(Jan. 25)

Security CouncilApproves Sanctions on

Libya (Feb. 26)

9.0 MagnitudeEarthquake and

Tsunami DevastateJapan (March 11)

Senate ApprovesStopgap Budget

(March 17)

Series of TornadoesDevastate Southern

States (April 27)

Unemployment Risesas Job Growth Slows

(June 3)

Standard & Poor'sLowers U.S. Credit

Rating (Aug. 5)Rebel Forces

Advance in Libya(Aug. 21)

Jobs Stall inAugust Report

(Sept. 2)

Stocks NosediveAfter U.S. Credit

Rating Is Lowered(Aug. 8)

Hurricane IreneHits the East

Coast (Aug. 27)Possible Shutdown ofFederal Government

Goes Down-to-the-Wire(April 1)

Osama bin LadenKilled in Pakistan

(May 1)

Budget Talks Heat Up asDebt Ceiling Deadline

Nears (July 19)

Steve Jobs, Co-Founder of Apple,

Dies (Oct. 5)

Occupy Wall StreetMovement Continues

to Grow (Oct. 17)

Qaddafi IsCaptured and

Killed (Oct. 20)

Senate MakesDeal to AvoidGovernment

Shutdown (Sept.26)

European LeadersAgree on Solutionsfor Euro Crisis (Oct.

26)

UnemploymentRate Dips

Slightly (Nov. 4)

End of Fannie Maeand Freddie Mac

(Feb. 11)

Supercommittee Fails toAgree on Deficit

Reduction Plan (Nov.21)

Unemployment RateHits Lowest Point inTwo Years (Dec. 2)

S&P Closes flat forthe year at 1257.6.

(Dec. 2)


9/37

13.4 19.0 11.9 10.7 12.3 10.7 11.5 3.2 3.9 3.5 100

-17.1 2.4 12.7 -0.6 4.7 6.1 14.0 6.3 20.0 -9.8 2.1

-60.1 0.8 4.6 -14.5 -3.1 11.0 31 -9.8 4.1 -13.6 -11.8

118.0 111.3 68.7 135.0 77.5 156.8 83.7 72.2 82.2 105.9 97.2

S&P Weight

2011 YTD

Since Peak (Oct. 07)

Since Low (Mar. 09)

Source: Standard & Poors. All calculations are cumulative total return, not annualized, including dividends for the stated period. Since Market Peak represents

period 10/09/07 to 12/31/11, illustrating market returns since the S&P 500 Index high on 10/9/07. Since Market Low represents period 3/9/09 to 12/31/11, illustratingmarket returns since the S&P 500 Index low on 3/9/09. Returns are cumulative, not annualized. Past performance is not indicative of future returns. Data as of

12/31/2011.

S&P PERFORMANCE BY SECTOR


10/37

Note: Figures through December 30th, 2011. Sources include seekingalpha.com, the Wall Street Journal, Google Finance, and MSCI Barra. The Dow Jones Industrial Average isa price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The MSCI EAFE Index (Europe, Australasia, Far East) is a free

float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. The MSCI EAFE Indexconsists of the following 22 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan,

the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom*.MSCI indexes are calculated with net dividends in U.S.dollars. Returns are for illustrative purposes only and do not reflect the performance of any actual investments. Past performance does not guarantee future results. You cannotinvest directly in an index.

5.5%9.6%13%37%

17%32%

DJIAGoldOil Cotton10-YearTreasury*

Natural GasFutures

SOME WINNERS AND LOSERS

MSCI EAFE

12%

Bank ofAmerica

58%


11/37

Source: FactSet, CIA, J.P. Morgan Securities, J.P. Morgan Asset Management. All GDP Growth data are from J.P. Morgan Economics and expressed as % change versus prior

quarter annualized with the exception of India, which is from the India Ministry of Statistics & Programme Implementation and represents % change versus a year ago. All GDPGrowth data are for 3Q11. GDP values are from the IMF and are based on purchasing power parity. India unemployment is from CIA estimates and is as of 2010, and Italy

unemployment is as of 6/30/11. Data are as of 12/31/11.

ECONOMIES OF THE WORLD

Nation GDP USD (B$s) GDP Growth

U.S. $15,176 1.80%

China 6,988 7.9

Italy 5,855 -0.6

Germany 3,629 2

France 2,808 1.6

Brazil 2,518 -0.2

U.K. 2,481 2.3

Japan 2,246 5.6

Russia 1,885 3.5India 1,843 7.5

Canada 1,759 3.5

Mexico 1,185 5.5


12/37

A Review of 2011


AGENDA


13/37

HeadWind Sovereign Debt

65%

27%

8%

Is the Euro Zone Currently In a Recession?

Yes.

Not now, but it's imminent.

No, and it will avoid one.

Source: Wall Street Journal Economic Forecasting Survey, December 2011


14/37

Source: BLS, FactSet, J.P. Morgan Asset Management.Data reflect most recently available as of 12/31/2011.

Civilian Unemployment RateSeasonally adjusted

Employment Total Private PayrollTotal job gain/loss (thousands)

EMPLOYMENT


15/37

HeadWind Home Prices

11%

89%

Will Home Prices Outpace Inflation overthe next three years?

Yes. No.

Sources: Wall Street Journal Economic Forecasting Survey, December 2011, Sources: National Association of Realtors, FactSet, J.P. Morgan Asset Management.

Data reflect is most recently available as of 12/31/2011.

Median Existing Home Prices$ thousands, seasonally adjusted


16/37

Source: U.S. Department of Energy, FactSet, J.P. Morgan Asset Management. Price of gas based on U.S. retail national average of all formulations and WTI for crude. 2011 and2012 world oil consumption based on estimates from U.S. Department of Energy. Data reflect most recently available as of 12/31/2011.

WTI Crude Oil & Retail Gasoline Prices

12/31/2000 12/31/2011Oil $26.72 $98.83Gas $1.41 $3.26

Headwind Gas Prices


17/37

Federal Debt (Accumulated Deficits)% of GDP, 1960-2021*

Source: U.S. Treasury, BEA, CBO, OMB, J.P. Morgan Asset Management. 2011 numbers are actuals. *Estimates for 2012 2021 are based on adjustments to the Augustalternative scenario from the CBOs Budget and Economic Outlook: An Update which was released on August 24, 2011. This adjusted alternative scenario assumes an

extension of all Bush tax cuts, annual adjustments to AMT and Medicare payment schedules and a 1-year extension for calendar year 2012 only of the payroll tax cut andextended unemployment benefits. Additionally, this adjusted alternative scenario assumes a reduction in troop presence in Iraq and Afghanistan starting in 2012, which is in line

with current policy. Note: Years shown are fiscal years (Oct. 1 through Sep. 30). Data reflect most recently available as of 12/31/11.

HEADWIND National Debt


18/37

If your budget resembled the U.S. governmentFigures adjusted to various income levels.

GovernmentMedian

HouseholdIncome

HypotheticalHousehold

Income


Income


Income

TaxRevenue/Income

$2,162,288,000,000.001 $50,221.003 $100,000.00 $250,000.00 $500,000.00

CurrentSpending

$3,453,856,000,000.001 $80,218.78 $159,731.54 $399,328.86 $798,657.72

AnnualDeficit $1,291,568,000,000.001

$29,997.78 $59,731.54 $149,328.86 $298,657.72

AccumulatedDebt

$14,025,215,218,708.522 $325,805.75 $648,666.20 $1,621,595.38 $3,243,190.77

Source: MFS Investment Management. Disclosure: 1United States Government numbers taken from the congressional Budget Office summery Budget and EconomicOutlook: An Update Table 1, page 3. Actual numbers are calculated as a percentage of the GDP for 2010. 2Accumulated debt taken from TreasuryDirect.gov for December

31st, 2010. 3United States Median Household Income level taken from U.S. Census Bureau, American Community Survey, 2009.

HeadwindGovernmentBudget


19/37

Source: American Association of Individual Investors

Tailwind Optimism


20/37

Personal Savings RateAnnual, % of disposable income

BEA, FRB, J.P. Morgan Asset Management. Personal savings rate is calculated as personal savings (after-tax income personal outlays) divided by after-tax income.Employer and employee contributions to retirement funds are included in after-tax income but not in personal outlays, and thus are implicitly included in personal savings.

Savings rate data as of November 2011. *4Q11 Household Debt Service Ratio is J.P. Morgan Asset Management estimate. All other data are as of 3Q11.Data reflect most recently available as of 12/31/11.

Household DebtDebt payments as % of disposable personal income,

seasonally adjusted.

TailwindHouseholdFinances


21/37

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

available as of 12/31/11.

Consumer Sentiment Index University of Michigan

TailwindConsumerSentiment


22/37

Source: BEA, Standard & Poors, FactSet, J.P. Morgan Asset Management. Data as of:12-31-2011.

Tailwind Healthy Companies

Corporate Cash as a % of Current AssetsS&P 500 companies cash and cash equivalents, quarterly

Adjusted After-Tax Corporate Profits (% of GDP)Includes inventory and capital consumption adjustments


23/37

Market Peak Market LowBear Market

Return

Length ofDecline

(Months)Bull Run

Length ofRun (Months)

Years toReach Old

Peak

5-29-46 5-19-47 -28.6% 12 257.6% 122 3.1

7-15-57 10-22-57 -20.7% 3 87.4% 50 0.9

12-12-61 6-26-62 -28.0% 6 79.8% 44 1.2

2-9-66 10-7-66 -22.2% 8 48.0% 26 0.6

11-29-68 5-26-70 -36.1% 18 74.2% 31 1.8

1-5-73 10-3-74 -48.4% 21 125.6% 74 5.8

11-28-80 8-12-82 -27.1% 20 228.8% 60 0.2

8-25-87 12-4-87 -33.5% 3 582.1% 148 1.6

3-24-00 10-9-02 -49.1% 31 101.5% 60 4.6

10-9-07 3-9-09 -56.8% 17 85.8% 34 ?

Average -35% 14 Months 176.0% 68 Months 2.2 Years

Source: Standard & Poors. A bear market is defined as a peak-to-trough decline in the S&P 500 Index (price only) of 20% or more. The bull run data reflect the

market expansion from the bear market low to the subsequent market peak. All returns are S&P 500 Index returns and do not include dividends . Past performanceis not indicative of future returns. *Current bull run from 3-9-09 to 12-31-11. Data as of 12-31-2011.

Tailwind History


24/37

Source: www.nber.org/cycles. Past performance is not indicative of future returns. For illustrative use only. Data as of 12-31-2011.*Based on expansion from July 2009 thru December 2011.

Average Lengths:

Recessions: 15 MonthsExpansions: 44 Months

Tailwind History


25/37

A Review of 2011



AGENDA


26/37

The Experts

Former Shell Oil president John Hofmeister predicted in early January 2011 that gasprices would reach $5 a gallon by 2012. The nationwide average price of gasoline was$3.28 a gallon on 12/31/11, up 21 cents a gallon during the year (source: Newsweek,

AAA).

Treasury Secretary Tim Geithner was asked on 2/07/10 whether the USA could everlose its top credit rating. Geithner responded that will never happen to this country.S&P downgraded the United States from AAA to AA+ on 8/05/11. The USA had been

AAA-rated for 70 years (source: ABC News).

President George Bush predicted on 1/03/07 that the US government would reduceits annual budget deficit to zero by fiscal year 2012 (source: White House).


27/37

Name/Company 2012 S&P 500 Target

Adam Parker Morgan Stanley 1,167

David Kostin Goldman Sachs 1,250

Jonathan Golub UBS 1,325

Barry Knapp Barclays Capital 1,330

Andrew Garthwaite Credit Suisse 1,340

Savita Subramanian Bank of America 1,350

Gina Martin Adams Wells Fargo 1,360

Tobias Levkovich Citigroup 1,375

Brian Belski - Oppenheimer 1,400

Sam Stovall S&P Capital IQ 1,400

Thomas Lee JP Morgan 1,430

Binky Chadha Deutsche Bank 1,500

Bob Doll BlackRock 1,350

GROUP AVERAGE 1,352 (9% growth)

Source: Barrons.com, *Strategists' own estimate, not firms forecast. ** Mid-point of range given. Some estimates are from firms economists.

Forecast Stock Market


28/37

Source: BLS.gov, online.wsj.com. Projections are based on opinions of analysts polled at the time of the survey. Real Gross Domestic Product at an annualizedgrowth rate. Survey conducted December 11, 2011. The Wall Street Journal surveys a group of 56 economists throughout the year.Broad surveys on more than 10 major economic indicators are conducted monthly.

2.3

-0.8

0.2

2.8

1.7

2.4

2.8

3.1

2

1

0

1

2

3

4

2007 2008 2009 2010 2011 2012 2013 2014

Annual Gross Domestic Product

FORECAST U.S. ECONOMIC GROWTH


29/37

A Review of 2011



Investment Strategies

AGENDA


30/37

Source: Empirical Research Partners, LLC, Standard & Poors, J.P. Morgan Asset Management. Capitalization weighted correlation of top 750 stocks by market

capitalization, daily returns, 1926 Dec. 23, 2011. Chart shown for illustrative purposes only. Data is as of 12/31/11.

Large Cap StocksCorrelations Among Stocks

Average: 26.7%

Great Depression/World War II CubanMissileCrisis OPEC

Oil Crisis

1987 Crash

Tech Bust & 9/11

Lehman

Bankruptcy

SovereignDebt Crisis

Dec. 2011: 66.5%

Strategy Tactical Approach


31/37

Indexes and weights of the traditional portfolio are as follows: U.S. stocks: 55% S&P 500, U.S. bonds: 30% Barclays Capital Aggregate. International stocks: 15% MSCI EAFE.portfolio with 25% in alternatives is as follows: U.S. stocks: 22.2% S&P 500, 8.8% Russell 2000; International Stocks: 4.4% MSCI EM, 13.2% MSCI EAFE; U.S. Bonds: 26.5%

Barclays Capital Aggregate; Alternatives: 8.3% CS/Tremont Equity Market Neutral, 8.3% DJ/UBS Commodities, 8.3% NAREIT Equity REIT Index. Return and standard deviationcalculated using Morningstar Direct. Charts are shown for illustrative purposes only. Past returns are no guarantee of future results. Diversification does not guaranteeinvestment returns and does not eliminate risk of loss. Data are as of 12/31/11.

STRATEGY DIVERSIFY

55%

15%

30%

Traditional Portfolio

Domestic Stocks

International

Bonds

8%

8%

8%

22%

9%

13%

4%

26%

More Diversified Portfolio

Equity Market Neu

Commodities

REIT

S&P 500

Russell 2000

MSCI EAFE

MSCI EM

Barclays Agg.

THE POWER OF DIVERSIFICATION (1994-2011)


32/37

The S&P 500 Index is a broad-based unmanaged index not available for direct investment. Results reflect the reinvestment of dividends. Average equity investor as measured byDalbar, Inc. Dalbar derives the average equity investor return using a proprietary model that measures actual historical returns and average shareholder holding periods. Past

performance is no guarantee of future results. Indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Barclays Capital U.S.Aggregate Index, Homes: median sale price of existing single-family homes, Gold: USD/troy oz, Inflation: CPI. Returns are annualized (and total return where applicable) andrepresent the 20-year period ending 12/31/2010 to match Dalbars most recent analysis.

10.5%

8%

7.7% 7.2%

6.1%

4.7%

2.8% 2.6% 2.4%

REITS Oil S&P 500 Gold Bonds EAFE Homes AverageInvestor

Inflation

20 Year Annualized Returns By Asset Class (1991-2010)

STRATEGY TUNE OUT EMOTION


33/37

$22,418$23,992

$38,016.00

$45,702 $45,741

$28,561

$21,228

$17,908

$14,240

$18,761

$38,193

$50,324

$40,141

$52,448

$33,727

$23,830

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

FranklinD.

Roosevelt

'36-'45

FranklinD.

Roosevelt

'40-'49

FranklinD.

Roosevelt

'44-'53

HarryS.

Truman'48-

'57

DwightD.

Eisenhower

'52-'61

DwightD.

Eisenhower

'56-'65

JohnF.

Kennedy'60-

'69

LyndonB.

Johnson'64-

'73

RichardM.

Nixon'68-

'77

RichardM.

Nixon'72-

'81

JimmyCarter'76-'85

RonaldReagan'80-'89

RonaldReagan'84-'93

GeorgeH.

Bush'88-'97

WilliamJ.

Clinton'92-

'01

WilliamJ.

Clinton'96-

'05

Growth of a hypothetical $10,000 investment made at the beginning of an election year.

Each 10-year period begins on January 1st of the first year shown and ends on December 31 of the final year shown. For example, the first period listed (1936-1945) covers1/1/36 through 12/31/45. All returns exclude reinvested dividends. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into

directly. SOURCE: Yahoo Finance.

STRATEGY TUNE OUT POLITICS


34/37

Portfolio isdown (%)

Total ReturnNeeded to

Break Even

Years toBreak EvenAssuming aReturn of 3%

Assuming aReturn of 5%

Assuming aReturn of 8%

Assuming aReturn of

10%

Assuming aReturn of

12%

10 11 3.6 2.2 1.4 1.1 0.9

20 25 7.5 4.6 2.9 2.3 2

30 43 12.1 7.3 4.6 3.7 3.1

40 67 17.3 10.5 6.6 5.4 4.5

50 100 23.4 14.2 9.0 7.3 6.1

60 150 31 18.8 11.9 9.6 8.1

70 233 40.7 24.7 15.6 12.6 10.6

80 400 54.4 33 20.9 16.9 14.2

90 900 77.9 47.2 29.9 24.2 20.3

Staying the course even through ups and downs

STRATEGY STAY THE COURSE


35/37

Risk vs. 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. All index returns exclude reinvesteddividends. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Source: Bloomberg

STRATEGY STAY THE COURSE


36/37

Help you diversify acrossasset classes and set

realistic expectations forperformance.

Communicate with youregularly and educate youabout factors that could

affect your financial future.

Encourage you to think long-term, tune out the noise, and

avoid knee-jerk reactions.

Monitor your portfolio andrecommend changes over

time.

HOW WE HELP


37/37

Private Wealth Management for Select Individuals.

THE END.

market state

Documents