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State of the Markets David S. Richmond, MSFS, CLU®, ChFC® President Matthew J. Curfman, CFP® Senior Vice President.

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Presentation on theme: "State of the Markets David S. Richmond, MSFS, CLU®, ChFC® President Matthew J. Curfman, CFP® Senior Vice President."— Presentation transcript:

1 State of the Markets David S. Richmond, MSFS, CLU®, ChFC® President Matthew J. Curfman, CFP® Senior Vice President

2 HOUSEKEEPING ITEMS

3 QUESTIONS

4 Richmond Brothers, Inc. is a Registered Investment Adviser. Richmond Brothers, Inc. does not provide tax or legal advice; consult your tax or legal advisor regarding your particular situation. The indices mentioned in this seminar are unmanaged and not available for direct investment. Past performance is no guarantee of future results. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information contained 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 sale of any security. These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, and should not be construed as investment advice. The named does not give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. FORMALITIES

5 A Brief Review of 2012 Where We Are Now Factors Affecting the Stock Market and Economy Recent Tax Law Changes Projections for 2013 AGENDA

6 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 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 BACKEurope U.S. Presidential Election Fiscal Cliff

8 Consumer Discretionary Financials TechnologyHealth Care Industrials Energy Consumer Staples Telecom Utilities Materials S&P 500 Total S&P Weight (%) 2012 Since Peak (Oct. 07) Since Low (Mar. 09) Source: Standard & Poor’s. All calculations are cumulative total return, not annualized, including dividends for the stated period. Since Market Peak represents period 10/09/07 to 12/31/12, illustrating market returns since the S&P 500 Index high on 10/9/07. Since Market Low represents period 3/9/09 to 12/31/12, illustrating market 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 12/31/2012. S&P PERFORMANCE BY SECTOR

9 Source: FactSet, Eurostat, CIA, J.P. Morgan Securities, J.P. Morgan Asset Management. GDP levels represent 2011 data and are from the October 2012 World Economic Outlook published by the IMF, except for the U.S. levels, which come directly from the BEA. All GDP Growth data are from J.P. Morgan Economics and expressed as % change versus prior quarter annualized. All GDP growth data are for 4Q12. India unemployment is from CIA estimates and is as of Unemployment rate for developed countries comes from FactSet Economics, Eurostat and Statistics Canada and represent the most recently available data. Data are as of 12/31/12. ECONOMIES OF THE WORLD NationGDP USD (B$s)GDP GrowthUnemployment Rate U.S.$15,0761.5%7.7% China7, Japan5, Germany3, France2, Brazil2, U.K.2, Italy2, Russia1, India1, Canada1, Mexico1,

10 A Brief Review of 2012 Where We Are Now Factors Affecting the Stock Market and Economy AGENDA

11 Source: BLS, FactSet, J.P. Morgan Asset Management. Data are as of 12/31/12.

12 EMPLOYMENT Source: BLS, FactSet, J.P. Morgan Asset Management. Data as of 12/31/12.

13 HOUSING Sources: (Left) National Association of Realtors, Standard & Poor’s, FHFA, FactSet, J.P. Morgan Asset Management. (Top right) Census Bureau, J.P. Morgan Asset Management. Monthly mortgage payment assumes a 20% down payment at prevailing 30-year fixed-rate mortgage rates; analysis based on median asking rent and median mortgage payment based on asking price. (Right) Census Bureau, National Association of Realtors, J.P. Morgan Asset Management. *4Q12 rent and mortgage payment values are J.P. Morgan Asset Management estimates. Data are as of 12/31/12.

14 INFLATION Source: BLS, FactSet, J.P. Morgan Asset Management. CPI used is CPI-U and values shown are % change vs. 1 year ago and reflect November 2012 CPI data. CPI component weights are as of December 2011 and 12-month change reflects non- seasonally adjusted data through November Core CPI is defined as CPI excluding food and energy prices. Data are as of 12/31/12.

15 Source: myinflationrate.com, bea.gov. Data as of INFLATION

16 CORPORATE CASH Source: Standard & Poor’s, FRB, Bloomberg, FactSet, J.P. Morgan Securities, J.P. Morgan Asset Management. Standard & Poor’s, FactSet, J.P. Morgan Asset Management.

17 CONSUMER SPENDING Source: Gallup Poll

18 A Brief Review of 2012 Where We Are Now Factors Affecting the Stock Market and Economy Recent Tax Law Changes AGENDA

19 Source: U.S. Treasury, BEA, CBO, J.P. Morgan Asset Management numbers are actuals. Note: Years shown are fiscal years (Oct. 1 through Sep. 30). Chart on the left displays federal surplus/deficit (revenues–outlays). Federal net debt comprises all financial liabilities of the Federal government (gross debt) minus all intra-government holdings as assets. Deficit and debt scenarios are based on CBO budget forecasts from August 2012 and the CBO cost estimate for the American Taxpayer Relief Act, as passed by the Senate on January 1, Data are as of 12/31/12. BUDGET AND DEFICIT

20 If your budget resembled the U.S. government Government Hypothetical Household Income Tax Revenue/Income$2,162,288,000, $100, Current Spending$3,453,856,000, $159, Annual Deficit$1,291,568,000, $59, Accumulated Debt$14,025,215,218, $648, Source: MFS Investment Management. Disclosure: 1 United States Government numbers taken from the congressional Budget Office summery ‘Budget and Economic Outlook: An Update’ Table 1, page 3. Actual numbers are calculated as a percentage of the GDP for Accumulated debt taken from TreasuryDirect.gov for December 31 st, United States Median Household Income level taken from U.S. Census Bureau, American Community Survey, BUDGET AND DEFICIT

21 Source: IRS, Foundation, J.P. Morgan Asset Management. Tax rates based on maximum U.S. individual income tax. Wage income tax rates include employer and employee contributions to the Medicare tax. *Includes recently enacted healthcare tax of 3.8%. **In 2011 and 2012, the payroll tax cut reduced the employee’s share of Social Security taxes by 2% and was allowed to expire for Rates shown include both employer and employee contributions to the payroll tax. ***For 2013, the estate tax exemption amount remained at $5.12 million. (Right) IRS, J.P. Morgan Asset Management. Taxes paid are based on federal individual income taxes, which are responsible for about 25% of the nation's taxes paid. Max tax rates shown are for individual earners above $400,000, and joint households above $450,000. Data are as of 12/31/12. TAX RATES

22 Source: IRS, J.P. Morgan Asset Management. Taxes paid are based on federal individual income taxes, which are responsible for about 25% of the nation's taxes paid. Data are as of 12/31/12.

23 TAX LAW CHANGES Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6%, up from the current 35%. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000. INCOME TAX RATES GPO.Gov, Associated Press, USA TODAY Research

24 Extends jobless benefits for the long-term unemployed for one year. Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2%. UNEMPLOYMENT/PAYROLL TAX TAX LAW CHANGES

25 GPO.Gov, Associated Press, USA TODAY Research Estates will be taxed at a top rate of 40%, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35%. ESTATE TAX

26 TAX LAW CHANGES Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15% to 20%. CAPITAL GAINS, DIVIDENDS GPO.Gov, Associated Press, USA TODAY Research

27 TAX LAW CHANGES GPO.Gov, Associated Press, USA TODAY Research Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle and upper- middle income taxpayers from being hit with higher tax bills. The tax was originally designed to ensure that the wealthy did not avoid taxes by using loopholes. ALTERNATIVE MINIMUM TAX

28 Extends for five years, expansions of the child tax credit, the earned income tax credit, and an up-to- $2,500 tax credit for college tuition. Also extends for one year accelerated “bonus” depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity. OTHER CHANGES GPO.Gov, Associated Press, USA TODAY Research TAX LAW CHANGES

29 The Bipartisan Policy Center (BPC) estimates that the nation will begin defaulting on its payment obligations between Feb. 15 and March 1, unless Congress raises the $16.4 trillion debt ceiling. MORE DEBATES TO COME It’s Not Over

30  A Brief Review of 2012  Where We Are Now  Factors Affecting the Stock Market and Economy  Recent Tax Law Changes  Projections for 2013 AGENDA

31 Name/Company2013 S&P 500 Target Stephen Auth – Federated Investors1,660 Barry Knapp – Barclays Capital1,525 Jeffrey Knight – Putnam Investments1,490 Russ Koesterich – BlackRock1,545 David Kostin – Goldman Sachs1,575 Thomas Lee – JP Morgan Chase1,580 Tobias Levkovich – Citi Research1,615 Adam Parker – Morgan Stanley1,434 John Praveen – Prudential International1,600 Savita Subramanian – Bank of America1,600 GROUP AVERAGE1,562 (9.6% growth) Source: Barrons.com FORECAST – S&P 500

32 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 annualized growth rate. Survey conducted December 7-11, 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. FORECAST – U.S. ECONOMY

33 Source: online.wsj.com. Projections are based on opinions of analysts polled at the time of the survey. Real Gross Domestic Product at an annualized growth rate. Survey conducted December 7-11, 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. FORECAST – U.S. ECONOMY

34 RISK IGNOREAVOIDMANAGETRANSFER STRATEGY – ADDRESS RISK

35 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 reinvested dividends. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Source: Bloomberg STRATEGY – STAY THE COURSE

36 A Mix of Strategies Passive Management Active Management Tactical Asset Allocation Tax-efficient Investments Diversification Across Asset Classes Diversification Within Asset Classes Alternative Investments Insurance Estate Planning STRATEGY – MIX OF STRATEGIES

37 Help you develop a strategy that is suitable for your investment objectives. Communicate with you regularly and educate you about 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 and recommend changes over time. HOW WE HELP

38 QUESTIONS

39 Connect with us! UNTIL NEXT TIME…


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