edward m. kerschner, cfa chief investment...

SmithBarney

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Edward Kerschner

1

March 2005

NYU B40.3124

Investment Policy&

Thematic Investing

NYU B40.3124

Investment Policy&

Thematic InvestingEdward M. Kerschner, CFA

Chief Investment OfficerEdward M. Kerschner, CFAEdward M. Kerschner, CFA

Chief Investment OfficerChief Investment Officer

See slides 120 to 121 for Analyst Certification and Important Di sclosures

Smith Barney is a division of Citigroup Global Markets Inc. (the “Firm”), which does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this r eport.Investors should consider this report as only a single factor in making their investment decision.

March 2005

Current Outlook Current Outlook

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Edward Kerschner

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March 2005

Economic Outlook

Real GDP: Actual & ForecastsReal GDP: Actual & ForecastsVery solid growth, but sharp acceleration passedVery solid growth, but sharp acceleration passed

Sources: Citigroup Economic and Market Analysis

0%

2%

4%

6%

8%

10%

2003 2004E 2005E 2006E

March 2005

Economic Outlook

Yr Yr –– Yr Change in Inflation vs. Output GapYr Change in Inflation vs. Output Gap

Output Gap = Modest InflationOutput Gap = Modest Inflation


-5

-3

-1

1

3

-1.0

-0.6

-0.2

0.2

0.6

85 8 7 89 9 1 93 9 5 97 9 9 01 0 3 05 0 7Output Gap (Left, Lagged 6 Quarters) Inflation Rate (Right)

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Edward Kerschner

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March 2005

0

3

6

9

12

15

18

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Federal Funds Rate 10-Year Tsy

Economic Outlook

Fed. Funds Rate & Treasury BondsFed. Funds Rate & Treasury BondsModestly higher interest ratesModestly higher interest rates


E

2004.1 2004.2 2004.3 2004.4 2005.1 2005.2 2005.3 2005.4Federal Funds (End of Period) 1.00 1.25 1.75 2.25 2.75 3.00 3.25 3.7510-year Tsy (Period Average) 4.02 4.60 4.30 4.17 4.20 4.40 4.60 4.75

E

March 2005

S & P 500 EarningsProfit growth slowing Profit growth slowing

Sources: Standard & Poor’s, Citigroup Economic and Market Analysis

S&P 500 Operating EPS GrowthS&P 500 Operating EPS Growth

-20%

-10%

0%

10%

20%

30%

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005E

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March 2005

S & P 500 EarningsMargins may decline as labor rates riseMargins may decline as labor rates rise

Sources: Standard & Poor’s, Citigroup Economic and Market Analysis

S&P Operating Margin and YearS&P Operating Margin and Year--toto--Year Percent Year Percent Change in Labor CompensationChange in Labor Compensation

-2%

0%

2%

4%

6%

1985 1990 1995 2000 2005

4%

5%

6%

7%

8%

Unit Labor Costs (Left) S&P Operating Margin (Right) Ex - Financials (Right)

March 2005

Investment PolicyThe New Normal: 6% secular EPS growthThe New Normal: 6% secular EPS growth

Source: Smith Barney; Historical Statistics of the United States; and Statistical Abstract of the United States

US Productivity/Per Capita GDP GrowthUS Productivity/Per Capita GDP Growth

0.3%

3.0%

1.9%

0%

1%

2%

3%

4%

Agricultural Industrial Information

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March 2005



3.0%

0.8%

1.4%

0%

1%

2%

3%

4%


US Population GrowthUS Population Growth

March 2005



3.0%

1.4%0.8%

0.3%

1.9% 3.0%

0%

1%

2%

3%

4%


Population Growth Productivity Growth


3.3% 3.6%

3.8%

Implied US Real GDP GrowthImplied US Real GDP Growth

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March 2005

Investment PolicyDJIA 19,000 2015DJIA 19,000 2015


Projected Secular S&P 500 Nominal 6% Earnings GrowthProjected Secular S&P 500 Nominal 6% Earnings Growth

3.5%

2.0%

0.5%

0%

1%

2%

3%

4%

5%

6%

7%

0.5% growth via “composition change”

3.5% real revenue growth

2.0% inflation (i.e., corporate pricing power)

March 2005

Equity Strategy

P/E vs. Interest RatesP/E vs. Interest RatesP/Es appropriateP/Es appropriate

Sources: FactSet, Economy.com, Smith Barney Equity Strategy, Citigroup Economic and Market Analysis

R2 = 0.50R2 = 0.59 (ex Bubble)

5

10

15

20

25

30

2 4 6 8 10 12 14 1610-Year Treasury Yield

P/E

March 2005March 2005

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March 2005

Equity StrategyEPS estimates: High in Spring ‘04, now normalizing EPS estimates: High in Spring ‘04, now normalizing

Sources: Quest and Smith Barney U.S. Equity Strategy

S&P 500 Annualized EPS Estimate Revision ChangesS&P 500 Annualized EPS Estimate Revision Changes

-50%

-20%

10%

40%

70%

1975 1980 1985 1990 1995 2000 2005Annualized change Average +1/-1 Std. Dev. +2/-2 Std. Dev.

March 2005

Equity Strategy

The Other “PE” (Panic/Euphoria) ModelThe Other “PE” (Panic/Euphoria) ModelSummer ’04 panic Summer ’04 panic èè ’05 Market Gains’05 Market Gains

Sources: Smith Barney Equity Strategy

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

1985 1990 1995 2000 2005

Euphoria

Panic

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March 2005

Equity Strategy

S&P 500 ExS&P 500 Ex--Financials Net Debt to CapitalFinancials Net Debt to Capital


Improving balance sheetImproving balance sheet

25%

30%

35%

40%

45%

50%

1985 1989 1993 1997 2001 2005

March 2005

Equity Strategy

S&P 500 Cash as a % of Total Market Value S&P 500 Cash as a % of Total Market Value (based on current constituents)(based on current constituents)


High cash levelsHigh cash levels

8%

12%

16%

20%

24%

1985 1989 1993 1997 2001 2005

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March 2005

Equity Strategy

Debt Adjusted Valuation of the S&P 500Debt Adjusted Valuation of the S&P 500


Cheap when adjusted for cost of equity Cheap when adjusted for cost of equity andand debt debt

10

15

20

25

30

35

1985 1989 1993 1997 2001 2005Valuation + 1 St Dev - 1 St Dev

Expensive

Attractive

March 2005

Quantitative OutlookKey equities drivers Key equities drivers

Sources: Smith Barney Quantitative Research

Quantitative OutlookYieldYield--Curve SlopeCurve Slope


-4

-2

0

2

4

6

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Credit SpreadCredit Spread InterestInterest--Rate MomentumRate Momentum

Equity Risk PremiumEquity Risk Premium Relative ValueRelative Value

0

1

2

3

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005-1

0

1

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

-20

-10

0

10

20

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

0

1

2

3

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

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March 2005

Investment Policy

Equity Earnings Yield GapEquity Earnings Yield Gap

A relative case for stocks vs. bondsA relative case for stocks vs. bonds

Sources: U.S. Census Bureau, Historical Statistics of the United States

-6-4

-202

468

10

121416

1925 1935 1945 1955 1965 1975 1985 1995 2005

March 2005

Investment PolicyLower volatility = Less riskLower volatility = Less risk


Equity Earnings Yield Gap & GDP VolatilityEquity Earnings Yield Gap & GDP Volatility

-6-4-202468

10121416

1925 1935 1945 1955 1965 1975 1985 1995 20050

2

4

6

8

10

12

10 Yr Std Dev GDP (RHS) Earn Yld - 10Y Gov (LHS)

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March 2005

Investment PolicySweet spot: 2 Sweet spot: 2 –– 4% inflation4% inflation


P/E vs. CPI P/E vs. CPI (1926(1926--2004)2004)

13.7 14.0

17.8

13.5

10.0 10.08.412.3

0

4

8

12

16

20

-2 to 0 0 to 2 2 to 4 4 to 6 6 to 8 8 to 10 10 >

CPI

P/E

(White Bar includes below –2% CPI)

March 2005

0

10

20

30

40

50

-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10%

% Inflation

#

Investment Policy

PPI (10 Yr Moving Average): Frequency Distribution PPI (10 Yr Moving Average): Frequency Distribution (1720(1720--2004)2004)

Very low inflation is the normVery low inflation is the norm

Sources: Bureau of Labor Statistics, Handbook of Labor Statistics, Historical Statistics of the United States; and StockVal

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March 2005

Inflationary Icons: War . . .Inflationary Icons: War . . .

Sources: Bureau of Labor Statistics, Handbook of Labor Statistics, Historical Statistics of the United States; and StockVal

PPI & CPI (10 Yr Moving Average: 1720PPI & CPI (10 Yr Moving Average: 1720--2004)2004)

Investment PolicyInvestment Policy

-10

-5

0

5

10

15

20

1720 1740 1760 1780 1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000

PPI CPI PPI Avg. 1.76

WW IIRevolutionary War War of 1812 Civil War WW I Cold War

March 2005

Investment PolicyInflationary Icons: War and OilInflationary Icons: War and Oil

Source: Bloomberg

NADAQ, Nikkei and Oil:NADAQ, Nikkei and Oil:Three Years Before the Peak and Three Years AfterThree Years Before the Peak and Three Years After

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Oil WTI {Mar 2005} (x850)

Nikkei {Dec 1989}

NASDAQ {Mar 2000} (x10)

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March 2005

FXCurrent account deficitsCurrent account deficits

Sources: International Monetary Fund

79%

2%

1%1%

4%5%

1% 7%

United States United Kingdom Australia

Turkey Hungary Mexico

Czech Republic Others

Distribution of Global Non-Oil Current Account

Deficits, 2004 (% of Total)

Distribution of Global Non-Oil Current Account

Surpluses, 2004 (% of Total)

14%

8%

24%

31%

23%

Japan Non China EM Asia

Euro area China

Others

March 2005

75

125

175

225

275

3251975 1980 1985 1990 1995 2000 2005 2010

Foreign ExchangeWeaker U.S. DollarWeaker U.S. Dollar


0.6

0.9

1.2

1.5

1975 1980 1985 1990 1995 2000 2005 2010

Yen Exchange Rate vs. U.S. Dollar (Inverted Scale) USD vs. Euro

Yuan Exchange Rate vs. U.S. Dollar

0

2

4

6

8

10

1975 1980 1985 1990 1995 2000 2005 2010

US Dollar Trade – Weighted Index (FRB)

60

80

100

120

140

160

180

1975 1980 1985 1990 1995 2000 2005 2010

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March 2005

Thematic Investing Thematic Investing

March 2005

ManiasManiasThematicsThematicsThematics

MinutiaMinutiaMinutia

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March 2005

ManiasManias

March 2005

ManiasMania (n) Mania (n) excessive or unreasonable enthusiasmexcessive or unreasonable enthusiasm

Bernard Baruch, 1932Bernard Baruch, 1932

““Without due recognition of crowdWithout due recognition of crowd--thinkingthinking(which often seems crowd madness) our theories(which often seems crowd madness) our theoriesof economies leave much to be desired.of economies leave much to be desired.””

MerriamMerriam--Webster DictionaryWebster Dictionary

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March 2005

Jeffrey P. BezosPerson of the Year

Time Magazine, December, 1999

Jeffrey P. BezosPerson of the Year

Time Magazine, Time Magazine, December, 1999December, 1999

Dot Com – 1998-2000

In the minds of many investors, because they were prized fortheir potential earnings power five or ten years hence, these stocks could not be valued by traditional metrics such as price-to-earnings multiples.

Instead, many turned to new metrics: price-to-sales, revenues per customer, gross profit per customer, etc.

March 2005

Dot Com – 1998-2000

NASDAQ fell 78% from its peakNASDAQ fell 78% from its peak

--78%78%

òò

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March 2005

LBOs – US 1989“Deals were being done not because they made economic and financial sense, but because investors, bankers and others were hungry for fees. Inappropriate companies were being taken private in leveraged transactions—one-product companies, companies subject to commodity price swings, technology companies with volatile markets and high R&D spending, among others.”Theodore J. Forstmann, The Wall Street Journal “Leveraged to the Hilt—Violating Our Rules of Prudence,” 1989

“Deals were being done not because they made economic and financial sense, but because investors, bankers and others were hungry for fees. Inappropriate companies were being taken private in leveraged transactions—one-product companies, companies subject to commodity price swings, technology companies with volatile markets and high R&D spending, among others.”Theodore J. Forstmann, The Wall Street Journal “Leveraged to the Hilt—Violating Our Rules of Prudence,” 1989

March 2005

Saturday, October 14, 1989

THE DOW PLUNGES 190 POINTS, ABOUT 7%, IN A LATE SELL OFF; TAKEOVER STOCKS HIT HARD

LBOs – US 1989

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March 2005

LBOs – US 1989

UAL fell 70% over the next yearUAL fell 70% over the next year

--70%70%

òò

March 2005

Harold Harold Geneen Geneen

Conglomerates – US 1968-70

ITT Acquired:

• Sheraton Hotels

• Avis

• Hartford Insurance

• Continental Baking

• . . .

By 1970, ITT owned over 400 separate companies in 70 countries.

ITT Acquired:

• Sheraton Hotels

• Avis

• Hartford Insurance

• Continental Baking

• . . .

By 1970, ITT owned over 400 separate companies in 70 countries.

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March 2005

The business schools are creating a The business schools are creating a generation of managers who believe that generation of managers who believe that effective management techniques transcend effective management techniques transcend industrial categories. . . . [Diversification] industrial categories. . . . [Diversification] liberates managementliberates management’’s thinking about s thinking about expansion: Uncommitted to any individual expansion: Uncommitted to any individual industry, management can swing capital industry, management can swing capital quickly into any business field that looks quickly into any business field that looks profitable enough.profitable enough.

Business Week, 1968Business Week, 1968


March 2005

““Now maybe this is one of those situations in Now maybe this is one of those situations in which the solution lies in integrating the problem which the solution lies in integrating the problem and raising it to a higher level. . . . Thereand raising it to a higher level. . . . There’’s no s no reason why you canreason why you can’’t take 200 square miles some t take 200 square miles some place that has the natural resources, which means place that has the natural resources, which means primarily waterprimarily water——and even the water problem can and even the water problem can be solved separately if it has to bebe solved separately if it has to be——and create an and create an ideal city with solutions for all these urban ideal city with solutions for all these urban problems before itproblems before it’’s even built.s even built.””

Roy Ash, CEO of Litton Industries, told Fortune in 1966 how his Roy Ash, CEO of Litton Industries, told Fortune in 1966 how his company was thinking of addressing the problemcompany was thinking of addressing the problem——with a “de novo city”with a “de novo city”


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March 2005


Those who bought these conglomerates at Those who bought these conglomerates at the 1968 peak lost 56% by 1974 even the 1968 peak lost 56% by 1974 even though the market was up 10%though the market was up 10%

--56%56%

òò

March 2005

Tulip Mania – Holland 1635

Source: How Much Is A Tulip Worth, Mark Hirschey, AIMR, July/August 1968

four tons of wheatfour tons of wheat

++ eight tons of ryeeight tons of rye

++ one bedone bed

++ four oxenfour oxen

++ eight pigseight pigs

++ 12 sheep12 sheep

++ one suit of clothesone suit of clothes

++ two casks of winetwo casks of wine

++ four tons of beerfour tons of beer

++ two tons of buttertwo tons of butter

++ 1,000 pounds of cheese1,000 pounds of cheese

++ one silver drinking cupone silver drinking cup

==

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March 2005

Tulip Mania – Holland 1635

In six weeks tulip prices fell by 90%In six weeks tulip prices fell by 90%

--90%90%

òò

March 2005

MinutiaMinutia

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March 2005

Minutia

Minutia (n) Minutia (n) trifles, details, smallness; a minute ortrifles, details, smallness; a minute orminor detail minor detail

Chicago Transit Authority, 1969Chicago Transit Authority, 1969

Does anyone really know what time it is?Does anyone really know what time it is?

MerriamMerriam--Webster DictionaryWebster Dictionary

March 2005

GDP RevisionsGDP Revisions

Source: Bureau of Economic Analysis, U.S. Department of Commerce

Does Anyone Really Know What Time It Is?Does Anyone Really Know What Time It Is?Economic data is revised and revised and . . .Economic data is revised and revised and . . .

Benchmark RevisionsBenchmark RevisionsFlashFlash AdvAdv PrelimPrelimFinalFinal 1st 1st 2nd2nd 3rd3rd 4th4th 5th5th

1985 Q11985 Q1 2.1%2.1% 1.3%1.3% 0.7%0.7% 0.3%0.3% 3.7%3.7% 3.1%3.1% 3.8%3.8% 4.9%4.9%

1995 Q41995 Q4 0.9%0.9% 0.5%0.5% 0.3%0.3% 2.2%2.2% 2.8%2.8%

6th6th

3.3%3.3%

3.4%3.4%

3.2%3.2%

7th7th

3.0%3.0%

3.6%3.6%

8th8th

1993 Q11993 Q1 1.8%1.8% 0.9%0.9% 0.7%0.7% 0.8%0.8% 1.2%1.2% 0.0%0.0% --0.1%0.1% 0.1%0.1% --0.7%0.7%--0.1%0.1% 0.5%0.5%

1991 Q21991 Q2 0.4%0.4% --0.1%0.1% --0.5%0.5% 1.4%1.4% 1.7%1.7% 1.5%1.5% 2.2%2.2% 1.7%1.7% 2.6%2.6% 2.3%2.3% 2.6%2.6%??

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March 2005

The Stock Market is Not the Economy

All data is the most currently available as of 10/04.

Source: Standard & Poors, Bureau of Economic Analysis, U.S. Department of Commerce

U.S. GDPU.S. GDP

Exports $1.2 tr.Exports $1.2 tr.Exports $1.2 tr.

GDP $11.7 tr.GDP $11.7 tr.GDP $11.7 tr.

Sales ofU.S. Foreign

Affiliates$3.0 tr.$3.0 tr.

USA 78%USA 78%USA 78%

Non-US 22%NonNon--US 22%US 22%

S&P 500 Sales by Region

S&P 500 Sales by Region

S&P 500 is very different composition than GDPS&P 500 is very different composition than GDP

March 2005

19%

10%15%

10%

12%

7%

5%4% 4%

Real Estate0.2%

14%

12%11%

21%

9%9%

8%

7%

6%

5%

5%

3%1%1%2%

GDP by sectorGDP by sector

S&P 500 Sales by sectorS&P 500 Sales by sectorConsumer Discretionary

Consumer Staples

Energy

Financials

Healthcare

Industrials

Information Technology

Materials

Telecom Services

Utilities

GovernmentReal estateServicesRetail tradeFinanceConsumer DurablesWholesale tradeNondurablesUtilitiesConstructionTransportationAgricultureMining

The Stock Market is Not the Economy

All data are for 2003

Source: Standard & Poors, Bureau of Economic Analysis, U.S. Department of Commerce

Tech

Real Estate

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March 2005

440 changes to S&P 500 since 1988440 changes to S&P 500 since 1988

S&P is Not a Passive Index S&P is Not a Passive Index The Stock Market is Not the Economy

Source: Standard & Poors

0

10

20

30

40

50

60

70

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

Bankruptcies (12)Retructurings (65)Representation/Transfer (78)M&A (285)

March 2005

Thematic InvestingThematic Investing

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March 2005

Thematic Investing

Determining HowDetermining How

•• Demographic Demographic

•• TechnologicalTechnological

•• Political Political

••StructuralStructural

trends will affect financial markets, trends will affect financial markets, and identifying market sectors and and identifying market sectors and individual securities that will benefit. individual securities that will benefit.

PP

March 2005

The Aging Baby Boomer

US Population GrowthUS Population Growth

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

< 5 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85 >

Age

1965-1975

Twenties1985-1995 Forties2005-2015

Sixties

Source: U.S. Bureau of the Census

The aging “Baby Boomer” is the key demographicThe aging “Baby Boomer” is the key demographic

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March 2005

Producing a thematic demographic reportProducing a thematic demographic reportThematic Investing

Historical Data

Attitudinal Research

Fundamental Analysis

Thematic

March 2005

The Aging Baby Boomer The aging “Baby Boomer” is living longerThe aging “Baby Boomer” is living longer

US Life ExpectancyUS Life Expectancy

0

10

20

30

40

50

60

70

80

90

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Male

Female

Source: US Department of Health and Human Services

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March 2005

. . . and working longer. . . and working longer

Source: Bureau of Labor Statistics

5555--64 Year Old Labor Participation Rate64 Year Old Labor Participation Rate


60%

70%

80%

90%

100%

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

March 2005

. . . and plans to keep working longer. . . and plans to keep working longerPlans for RetirementPlans for Retirement


Source: Staying Ahead of the Curve 2003: The AARP Working in Retirement Study

Work part-time, doing the same type of work you do now 24%

Start your own business/work for yourself, doing the same type of work you do now 5%

Start your own business/work

for yourself, doing something different 5%

Work full-time, doing the same

type of work you do now 5%

Work full-time, doing something different 2%

Never expect to retire 5%

Don’t know 3%

Work part-time, doing

something different 22%

Not work for pay at all 29%

Work part-time, doing the same type of work you do now 24%

Start your own business/work for yourself, doing the same type of work you do now 5%

Start your own business/work

for yourself, doing something different 5%

Work full-time, doing the same

type of work you do now 5%

Work full-time, doing something different 2%

Never expect to retire 5%

Don’t know 3%

Work part-time, doing

something different 22%

Not work for pay at all 29%

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March 2005

. . . and most not for the money. . . and most not for the money

Why keep working?Why keep working?


Source: Staying Ahead of the Curve 2003: The AARP Working in Retirement Study

Be around people 4%Be productive or useful 14%

Do something fun 5%

Don’t know/Refused 3%

Help other people 6%

Learn new things 3%

Pursue a dream 4%

Stay mentally active 14%

Stay physically active 9%

Need health benefits 14%Need money 25%

Be around people 4%Be productive or useful 14%

Do something fun 5%

Don’t know/Refused 3%

Help other people 6%

Learn new things 3%

Pursue a dream 4%

Stay mentally active 14%

Stay physically active 9%

Need health benefits 14%Need money 25%

March 2005

The Next American Dream The Next American Dream Healthy, Wealthy and Active:

The Baby Boomer in 2010Healthy, Wealthy and Active:Healthy, Wealthy and Active:

The Baby Boomer in 2010The Baby Boomer in 2010

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March 2005

The Next American Dream: HealthyMany boomers find themselves in the paradoxical Many boomers find themselves in the paradoxical situation of living an unhealthy lifestyle and taking a situation of living an unhealthy lifestyle and taking a handful of drugs to remain activehandful of drugs to remain active

0%

10%

20%

30%

40%

50%

60%

70%

80%

care about maintaining a healthyweight

currently doing things that helpkeep in shape

Source: Yankelovich Partners Inc.

March 2005

The Next American Dream: HealthyMany boomers find themselves in the paradoxical Many boomers find themselves in the paradoxical situation of living an unhealthy lifestyle and taking a situation of living an unhealthy lifestyle and taking a handful of drugs to remain activehandful of drugs to remain active

0%

5%

10%

15%

20%

25%

30%

have attained goal of adopting ahealthy lifestyle

Obese

Source: Yankelovich Partners Inc., Center for Disease Control

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March 2005

The Next American Dream: WealthyAffluent boomers are confused about investing Affluent boomers are confused about investing and need advice about their financesand need advice about their finances

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

<35 35-44 45-54 55-64 65-74 75+

(th

ou

san

ds)

Median Net WorthMedian Net Worth

Source: Federal Reserve

March 2005

The Next American Dream: WealthyAffluent boomers are confused about investing Affluent boomers are confused about investing and need advice about their financesand need advice about their finances

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

“always know which types of investmentsare right for me”

describe themselves as a “somewhatexperienced” investor

Source: Yankelovich Partners Inc.

edward m. kerschner, cfa chief investment...

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