2010 investment outlook
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2010 INVESTMENT OUTLOOKGreenspring Wealth Management
Presented by Patrick Collins, CFP, EA
Wealth Manager and Principal
IMPORTANT DISCLOSURESIM
PORTAN
T DISCLO
SURES
Please remember that different types of investments involve varying degrees of risk, including the loss of money invested, and that past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by Greenspring Wealth Management, Inc, will be profitable. Please remember to contact Greenspring Wealth Management Inc. if there are any changes in your personal of financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. This presentation is not a substitute for personalized advice from Greenspring Wealth Management, Inc.
The index returns on slides 3, 5 and 6 show the total return for various investment indices and include the impact of the reinvestment of dividends. Actual client accounts will hold different securities that the ones included in each index. The index returns are gross of applicable account transaction, custodial and investment management fees. The actual investment results would be reduced by such fees and any other expenses incurred as an investor.
Information included in this presentation has been gathered from various sources that are believed to be reliable; Greenspring Wealth Management Inc. cannot guarantee the accuracy of this information.
A TALE OF TWO YEARSA TALE O
F TWO
YEARS
-53.33%
78.51%
-43.38%
31.78%
-39.20%
28.46%
-37.00%
26.46%
-35.65%
18.91%
-2.76%
15.93%13.11%
-10.13%
25.80%
-14.90%
-100.00%
-80.00%
-60.00%
-40.00%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
Emerging MktEquity
DevelopedInt'l Equity
US REIT US Equity Commodities CorporateBonds
5- Year USTreasury
Notes
Long-termGovernment
Bonds
2008 2009
Sources: MSCI Emerging Market Index, MSCI EAFE Index, DJ Selected REIT Index, S&P 500, DJ UBS Commodities, Barclays Credit Bond, Five Year Treasury Bonds, Barclays Long-term Government Bonds
THEMES FOR 2010IM
PORTAN
T DISCLO
SURES
•Valuations are back to normal in most asset classes
•Long-term demographic trends
•Increasing taxes- funding the debt
•Inflation vs. Deflation- which one will emerge?
•Active vs. Passive- the endless debate
STOCK VALUATIONSSTO
CK VALUATIO
NS
Normalized P/E Ratio of S&P 500
0
10
20
30
40
50
1930
1933
1936
1940
1943
1947
1950
1953
1957
1960
1964
1967
1971
1974
1977
1981
1984
1988
1991
1994
1998
2001
2005
2008
Year
Nor
mal
ized
P/E
Rati
o
Normalized P/E Average P/E 1930-2009 Average P/E 1988-2009
Avg: 25.62
Avg: 17.95`
20.08
Normalized P/E Ratio uses 5-year average annual reported earnings. Decemberr 2009 P/E level incorporates Standard & Poor’s earnings estimates and data taken from Robert Shiller’s Irrational Exhuberance.
BOND VALUATIONSBO
ND
VALUATIO
NS
Data is taken from Yahoo Finance and Bank of America High Yield Master Index: 1996-2009
Yield Spread: High Yield Corporate Bonds vs. 10 Year Treasury
02468
101214161820
Dec-
96
Dec-
97
Dec-
98
Dec-
99
Dec-
00
Dec-
01
Dec-
02
Dec-
03
Dec-
04
Dec-
05
Dec-
06
Dec-
07
Dec-
08
Dec-
09
Date
Yiel
d Sp
read
(%)
Yield Spread Average
GLOBAL DEMOGRAPHIC TRENDSGlobal Population- 2005
China, 20.35%
India, 17.07%
Latin America,
8.68%
Eastern Europe, 4.60%
Mid Income, 5.64%
Low Income, 13.44%
Sub Saharan, 11.62%
Indonesia, 3.45%
U.S, 4.61%
Japan, 1.98%
Canada, 0.50%
Aus/NZ, 0.37%
Hi Inc. nonOECD,
1.57%
Western Europe, 6.14%
BON
D VALU
ATION
S
Source: The Future for Investors, Jeremy Siegel
Global Population- 2050
Canada, 0.47%
Aus/NZ, 0.36%
Inida, 17.55%
Latin America,
8.63%
Eastern Europe, 2.46%
Mid Income, 5.43%
Low Income, 16.48%
Japan, 1.24%
Hi Inc. nonOECD,
1.51%
China, 15.34%
Western Europe, 4.41%
U.S., 4.35%Indonesia,
3.14%
Sub-Saharan Africa,
18.64%
Population by Economy 2005 2050
Developed Economies 15.2% 12.3%
Emerging Economies 84.8% 87.7%
GLOBAL DEMOGRAPHIC TRENDSWorld GDP- 2005
China, 14%
India, 6%
Latin America, 8%
Eastern Europe, 5%
Mid Income, 5%
Low Income, 5%
Sub Saharan, 2%
Indonesia, 2%
U.S, 21%
Japan, 7%
Canada, 2%Aus/NZ, 1%
Hi Inc. nonOECD,
3%
Western Europe, 19%
BON
D VALU
ATION
S
Source: The Future for Investors, Jeremy Siegel
World GDP- 2050
Inida, 18.00%
Latin America, 10.00%
Eastern Europe, 4.00%
Mid Income, 7.00%
Low Income, 9.00% Canada,
1.00%
Aus/NZ, 1.00%
Japan, 2.00%
Hi Inc. nonOECD,
2.00%
China, 19.00%
Western Europe, 7.00%
U.S., 10.00%
Indonesia, 3.00%
Sub-Saharan Africa, 7.00%
GDP by Economy 2005 2050
Developed Economies 53.3% 22.9%
Emerging Economies 46.7% 77.1%
FUTURE TAX PLANNINGFU
TURE TAX PLAN
NIN
G
Source: Urban Brookings Tax Policy Center
Debt to GDP and Effective Tax Rates (1940-2008)
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
140.00%
1940 1948 1956 1964 1972 1980 1988 1996 2004
Debt as a % ofGDP
Effective tax rate($250k income)
FUTURE TAX PLANNINGFU
TURE TAX PLAN
NIN
G
Source: Urban Brookings Tax Policy Center
Highest Marginal Tax Rate1913-2010
0%
20%
40%
60%
80%
100%
1913
1919
1925
1931
1937
1943
1949
1955
1961
1967
1973
1979
1985
1991
1997
2003
2009
Highest Marginal Tax Rate
INFLATION VS. DEFLATIONIN
FLATION
VS. DEFLATIO
N
Source: US Federal Reserve Board, NSA Monetary Base
US Monetary Base 1959-2009
0
500
1000
1500
2000
2500
1959
-01
1962
-02
1965
-03
1968
-04
1971
-05
1974
-06
1977
-07
1980
-08
1983
-09
1986
-10
1989
-11
1992
-12
1996
-01
1999
-02
2002
-03
2005
-04
2008
-05
Billions
Mon
etar
y Ba
se
INFLATION VS. DEFLATIONIN
FLATION
VS. DEFLATIO
N
Source: US Federal Reserve Board, Adjusted Excess Reserves of Depository Institutions, NSA
Excess Bank Reserves 1959-2009
-
200
400
600
800
1,000
1,200
1959
-01
1961
-05
1963
-09
1966
-01
1968
-05
1970
-09
1973
-01
1975
-05
1977
-09
1980
-01
1982
-05
1984
-09
1987
-01
1989
-05
1991
-09
1994
-01
1996
-05
1998
-09
2001
-01
2003
-05
2005
-09
2008
-01
ACTIVE VS. PASSIVEACTIVE VS. PASSIVE
Source: Standard and Poors Indices Versus Active Funds Scorecard- June 30, 2009
0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%
100.00%
US Stocks InternationalStocks
EmergingMarketStocks
InvestmentGrade Bonds
High YieldBonds
MunicipalBonds
Percentage of Funds Outperformed by BenchmarksAs of June 30, 2009
1 yr 3 yr 5 yr
QUESTIONS & ANSWERSQ
UESTIO
NS &
ANSW
ERS
Thank you for attending!
Contact Information:
www.greenspringwealth.com
443-564-4600
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