Where do we go from here? Ken Karr, CFP MBA Adam Drake, CFA HIGHLAND INVESTMENT ADVISORS, LLC

Market Worries  Global Recession  Financial System Dysfunction  Corporate & Consumer Credit Contraction  Diminished Confidence  Uncertain Global Response Political, Fiscal, and Monetary HIGHLAND INVESTMENT ADVISORS, LLC

Where Are We Now?  Markets still work - for every seller there is a buyer.  Highest expected returns occur when perceived risks are the greatest.  Paranoia running rampant.  Valuations are depressed… but this is good news for investors. HIGHLAND INVESTMENT ADVISORS, LLC

Fear still elevated, but moderating HIGHLAND INVESTMENT ADVISORS, LLC  The Chicago Board Options Exchange (CBOE) Volatility Index, a popular measure of the volatility of S&P 500, is often referred to as the fear index.  Index hit all-time high in late October, but has since moderated slightly.

Volatility… a paradigm revisited HIGHLAND INVESTMENT ADVISORS, LLC

Are Valuations Low or Just “Fair”? HIGHLAND INVESTMENT ADVISORS, LLC

LONG Term, Valuations Look Attractive HIGHLAND INVESTMENT ADVISORS, LLC

Credit Market Dysfunction HIGHLAND INVESTMENT ADVISORS, LLC

Economy Has Stalled HIGHLAND INVESTMENT ADVISORS, LLC

The Market’s Response To Crisis October 1987: Stock Market Crash August 1989: US Savings and Loan Crisis September 1998: Asian Contagion Russian Crisis Long-Term Capital Management Collapse March 2000: Dot-Com Crash September 2001: Terrorist Attack After One Year After Three Years After Five Years Annualized Return: October 1973: OPEC Oil Embargo Performance of a Normal Balanced Strategy: 60% Stocks, 40% Bonds HIGHLAND INVESTMENT ADVISORS, LLC

Average Duration: Bull Market: 32 Months Bear Market: 11 Months Months = Duration of Bull/Bear Mkt. % = Total Return for the Bull/Bear Mkt. 44 months 193% 34 mos. -83% 2 months 92% 6 months 100% 3 months 26% 4 months 12% 23 months 133% 6 mos. -30% 2 mos. -19% 6 mos. -21% 4 mos. -10% 9 months 61% 5 months 22% 4 mos. -16% 31 mos. -30% 49 months 210% 6 months -22% 116 months 491% 13 mos. -50% 5 mos. 12% 7 months -10% 5 months -15% 48 mos. 105% 6 mos. -22% 9 mos. 55% 15 mos. 35% 20 mos. -17% 61 months 282% 3 mos. -30% 30 mos. 71% 2 mos. -15% 92 months 355% 24 mos. 63% 14 months -40% 61 months 108% 8 mos. -16% 19 mos. -29% 21 months -43% 3 mos. -11% 5 mos. -15% 25 months -45% 43 months 90% 26 mos. 52% 30 mos. 76% 33 mos. 86% 14 mos. -14% S Bull And Bear Markets S&P 500 Index (USD) Monthly Returns: January 1926-December 2008

S&P 500 $2,048 Long-Term Returns vs. Short-Term Volatility S April 1999 Daily Returns Total Month of April Return: 3.9% During this month, the S&P 500 had 10 days of negative returns out of 21 trading days Monthly Returns Total Annual Return: 21% During this year, the S&P 500 had 5 out of 12 months with negative returns. Even during periods of positive stock returns, investors may experience substantial volatility. Short-term volatility is a typical characteristic of stock market investing. Long-term returns are the sum of short-term volatility. J F M A M J J A S O N D % -0.49% -3.11% -2.36% -3.12% -2.74% 21.04%

“You already paid for the risk, you might as well stick around for the return.” David Booth, CEO Dimensional Fund Advisors HIGHLAND INVESTMENT ADVISORS, LLC

Highland Investment Advisors Portfolio Management Solutions  Diversification is the antidote to risk  Structure is the strategy  Risk and return are related  Low costs mean you keep more of what you make  Ignore market noise! HIGHLAND INVESTMENT ADVISORS, LLC