The Tide Comes In Market Outlook 2013 New Castle Investment Advisors, LLC Presented April 2, 2013 This presentation is not a recommendation to buy or sell any securities for discussion purposes only

2012 Market Review Bull Market Continued in 2012 S&P 500 up 16% MSCI All Country ex-US Index up 19% 7-10 Year Treasuries up 3.7% Real Estate up 17.6% Gold up 6.9% Commodities up 3.5%

How Did We Do in 2012? “S&P 500 Up 12-15%, maybe more…” Overweight Industrials, Health, information Tech—two of the three best sectors. High Yield and medium grade corporate debt outperformers. Treasuries—uncertain. 10-Year Treasuries began at 198bps and ended at 178 bps.

2012 In Perspective More Political Stalemate—fiscal cliff: tax rates basically unchanged, tax code more complicated, Estate and Gift Tax exemption at $5 million; payroll tax eliminated. FED Announces it will buy $45 billion in treasuries per month in addition to the $40 billion of mortgage backed securities it already was buying. QE-Infinity? Announces no rate increases until unemployment hits 6.5% and/or inflation above 2.5%.

The Globalization of Quantitative Easing Liquidity Everywhere—Europe still has problems but ECB Mario Draghi announces third q “bazooka,” essentially indicating ECB will buy unlimited sovereign debt and do “whatever it takes” to hold the euro together; Japan announces its own quantitative easing program--2012; Bank of England Announces Easing--2009

China and the LDM Hard Landing, asset bubble, inflation—all predicted. Didn’t happen. Leadership transition smooth. Q4 GDP accelerated to 8%, full year growth of almost 8%. LDM, debt levels lower than DM, greater productivity, limited inflation. Poised again for out-performace in 2013.

2013 Key Themes--US Continued political two-step—positive for market; Interest Rates stay low; Benign inflation; Continued FED accommodation; Housing Market continues upward; Corporate balance sheets strong, profitability high Consumer balance sheet very good and improving.

2013 Key Global Trends Fear of Eurozone disintegration continues but it holds—pockets of strength. China does well. GDP 7.5%, reforms implemented. Japan still problematic but recent monetary moves from Bank of Japan depressing Yen will mean better economy and stock market. Emerging markets continue to shine.

US Stock Market in 2013 Key Drivers for Upward Movement Improving Employment Numbers. GDP Growth Estimates likely low. Stabile Energy Prices—likely going lower. FED Ease Continues. Improving Housing Market. No Major Economic Policy Changes.

US Market Valuation—Is it Overvalued? Dividend Discount Model says No. P/E Multiple Says No. E/P Multiple Says No. Options Market Says No. Conclusion: Market Has Room to Grow—But Expect Increased Volatility and Correction(s).

The Trend is Your Friend US Corporate Profits—all time high. Cash on Corporate Balance Sheets—all time high. Business Investment, accelerating since Share Buybacks—increasing. Loan Growth—in last 50 years, never has been a recession when loan growth is expanding.

General Market Overview Overweight equities--also look beyond US. Weight Mega-Stocks more. Key Sectors: Tech, Health, Energy. Start paring Duration on Fixed Income holdings. Gold—probably flat. Commodities—could surprise. REITS/Timber—good. Prediction on S&P 500: up 20%-plus year-over-year. But VIX, or market volatility will pick up and at least one market pull-back of 10% or more.