1. presented by Harry S. Dent, Jr. (1993) (2011) Aging Baby Boomers Their Impact on the Economy and Financial Services Industry

2. Shocked by the Financial Meltdown

3. Be at Peace with Change

4. Immigration- adjusted Births Lagged for Peak Spending Dow Adjusted for Inflation The Spending Wave Births Lagged for Peak Spending Data Source: HS Dent Research, U.S. Census Bureau, Bloomberg, 2011

5. Average Annual Family Spending by Age (5-year age groups) 46-50 20 30 8060705040 Age

6. Labor Force Growth, Actual and Forecast (20-Year-Olds Minus 63-Year-Olds) Data Source: Bureau of Labor Statistics, HS Dent, 2011 20-63 Year Olds Labor Force Growth Rate

7. Source: U.S. Census Bureau and U.S. Bureau of Labor and Statistics 20 Year-Olds on a 3-Year Lag Minus 63 Year-Olds Inflation Inflation Forecast Annual Labor Force Growth Annual Inflation (%)

8. Inflation Indicator Data Source: Bureau of Labor Statistics, HS Dent, 2011 LABOR FORCE GROWTH 2.5-YR LAG INFLATION (CPI)

9.  Demographics What You Must Understand Now

10.  Demographics  Debt What You Must Understand Now

11.  Demographics  Debt  Deflation What You Must Understand Now

12. Part One: Demographics  Projecting Trends, not Years, but Decades in Advance  People Do Predictable Things as They Age

13. S&P 500 Adjusted for Inflation 1900-2009, Log Scale

14. 1929 1968 2007 39-40 Year Generation Cycle S&P 500 Adjusted for Inflation

15. Babies Are The Key to The Future

16. The Immigration Adjusted Birth Index Immigration Adjusted Births

17. This Is What You See

18. Potato Chip Purchases by Age Age of Head of Household $ Per Year 42

19. Motorcycle Sales by Age Age of Head of Household $ Per Year 45-49

20. What Would Grow As Baby Boomers Age?

21. Spending on Prescription Drugs by Age 81

22. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 18 Colleges

23. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 21 Offices

24. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 26 Apartments

25. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 26 Shopping Centers

26. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 29-33 Starter Homes

27. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 37- 42 Trade-Up Homes

28. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 46-48 Vacation Homes

29. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 Resorts 54

30. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 Vacation / Retirement Homes 63-65

31. Real Estate Spending Cycles Spending 20 Age 242832364044485256606468 Vacation / Retirement Homes 63-65 Resorts 54 46-50 Vacation Homes 37- 42 Trade-Up Homes 29-33 Starter Homes 26 Apartments / Shopping Centers 21 Offices 18 Colleges

32. Mortgage Interest by Age Average of Annual Numbers 1999-2009

33. Spring Summer FallWinter Stocks/ Economy Generation Spending Boom Consumer Prices/ Inflation Simple Four Season Economic Cycle Eighty Years in Modern Times Source: HS Dent

34. Past Forecasts “For the 1990s and Early 2000s – Our Greatest Boom: Dow Rises to 10,000.” Our Power to Predict, back cover (1989) “After those enormous deficits into 1992, the government will likely be in a balanced budget or surplus by 1998- 2000.” The Great Boom Ahead, pg 62 (1994) “The next great depression will be from 2008-2023.” The Great Boom Ahead, pg 16 (1994) "No amount of government stimulus will prevent it…" The Great Boom Ahead, pg 35 (1994)

35. Top Federal Individual Income Tax Rates 1913 - 2010 Source: IRS Percentage

36. Part Two: Debt  The Greatest Credit Bubble in History  The Great Real Estate Bubble

37. Government $14Trn Financial $17Trn Corporate $11Trn Consumer $14Trn Total: $56 Trn ! Source: Federal Reserve Flow of Funds Report Total U.S. Debt - 2008

38. Unfunded Entitlement Obligations In $Trillions Source: The White House, US Treasury Addition of Medicare Part D Includes Social Security and Medicare $46 trillion

39. Unfunded Entitlement (Medicare + Social Security) + Underfunded Entitlement Expenditures (Medicaid) = Among Largest Long-Term Liabilities on USA Inc.'s Balance Sheet Source: Kleiner, Perkins, Caufield & Byers - www.kpcb.com, USA Inc. February 2011www.kpcb.com

40. Total US Debt Total Debt Obligations 7 x GDP !!! $56 trn + Unfunded Federal Liabilities$46 trn = $102 trn Total US Debt Obligations

41. Projected Federal Deficit for 2020 at Varying Revenue Levels ($ Billions) CBOHS Dent Optimistic HS Dent Realistic Total Revenues$4,416$3,029$2,524 Mandatory Expenditures$3,267 Discretionary Expenditures$1,487 Net Interest$916 Total Expenditures$5,670 Deficit($1,254)($2,641)($3,146) Source: Congressional Budget Office Presidential Budget, HS Dent

42. Long Term House Prices vs. Inflation Source: Robert J. Shiller, Irrational Exuberance, 2nd Edition, Princeton University Press, 2005.

43. Source: Japan Statistics Bureau Prices rose 2.6 times in 5 years Japan Residential Land Price National Index

44. Source: Japan Statistics Bureau Bubbles tend to go back to where they started

45. Source: Amherst Securities Pre-Tax Income Borrowing Power 2.8 times Borrowing Power of a Typical Home Purchaser

46. -55% -65% -33% Average US Home Prices Case-Shiller 10 City HPI: Jan 1994 – Mar 2011 Source: Standard & Poor’s Case-Shiller US 10-City Home Price Index Seasonally Adjusted In Thousands

47. Case-Shiller Top Metro Areas Percent Decline from Peak Values -54% -52% -48% Source: Standard & Poor’s Case Shiller US 20-City Index

48. Case-Shiller Top Metro Areas Percent Decline from Peak Values -54% -52% -48% -36% -34% Source: Standard & Poor’s Case Shiller US 20-City Index

49. Case-Shiller Top Metro Areas Percent Decline from Peak Values -54% -52% -48% -36% -34% -11% - 8% Source: Standard & Poor’s Case Shiller US 20-City Index

50. Miami

51. Dallas

52. The Ticking Time Bomb

53. Total 90-Plus Delinquencies and Foreclosures Source: Information provided by LPS Applied Analytics Inventory is 50X Monthly Sales

54. Part Three: Deflation  The Restructuring of Massive Private Credit will Outweigh Government Stimulus and Rising Debt  The Deleveraging of Credit Bubbles always Leads to Deflation, not Inflation

55. Spring Summer FallWinter Stocks/ Economy Generation Spending Boom Consumer Prices/ Inflation Simple Four Season Economic Cycle Eighty Years in Modern Times Source: HS Dent

56. Monetary Base Year/Year Percentage Change Source: Hays Advisory This must lead to inflation!

57. The Velocity of Money GDP to Adjusted Monetary Base Source: St. Louis Fed, US BEA

58. Household Net Worth Source: Federal Reserve -$26 trn + -$18 trn

59. Source: © The Economist Newspaper Limited, “Repent at Leisure,” June 4, 2010 GDP per $ of Debt

60. Median Household Net Worth by Age of Head Source: Federal Reserve, 2007 Survey of Consumer Finances

61. 1929 Stock Market Peak Source: Edward Wolff, as printed in Wealth and Democracy and New York University, 2010 Net Worth of Top 1% of U.S. Households 1922-2007

62. Source: Edward Wolff, as printed in Wealth and Democracy and New York University, 2010 Financial Assets of Top 1% of U.S. Households 1922-2007

63. Source: New America Foundation Income of Top 1% of Households 1920 - 2010

64. For More Information www.hsdent.com