2010 investment outlook

14
2010 INVESTMENT OUTLOOK Greenspring Wealth Management Presented by Patrick Collins, CFP, EA Wealth Manager and Principal

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An outlook for 2010 and a recap of the last couple years.

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Page 1: 2010 Investment Outlook

2010 INVESTMENT OUTLOOKGreenspring Wealth Management

Presented by Patrick Collins, CFP, EA

Wealth Manager and Principal

Page 2: 2010 Investment Outlook

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.

Page 3: 2010 Investment Outlook

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

Page 4: 2010 Investment Outlook

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

Page 5: 2010 Investment Outlook

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.

Page 6: 2010 Investment Outlook

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

Page 7: 2010 Investment Outlook

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%

Page 8: 2010 Investment Outlook

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%

Page 9: 2010 Investment Outlook

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)

Page 10: 2010 Investment Outlook

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

Page 11: 2010 Investment Outlook

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

Page 12: 2010 Investment Outlook

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

Page 13: 2010 Investment Outlook

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

Page 14: 2010 Investment Outlook

QUESTIONS & ANSWERSQ

UESTIO

NS &

ANSW

ERS

Thank you for attending!

Contact Information:

www.greenspringwealth.com

443-564-4600