1. HALF-TIME 2013 Tuesday, July 30 th 2013 | 155 Bovet Rd, 1 st Floor Conference Room, San Mateo, CA

2. Introduction

3. Pictures from my recent trip to Greece Acropolis

4. Parliament

15. Greek Medical System 5 Euro for a visit at the county hospital which includes: blood test, EKG, X-ray and antibiotic

16. London

17. Words We Learned (or made up) in 2013 Tapering What does this word mean? A) Taping two pieces of paper together B) Changing the width of your pants C) The Federal Reserve is lowering the amount of assets they buy

18. Words We Learned (or made up) in 2013 The Great Rotation What does this phrase mean? A) The planets are realigning B) A Chicago Blackhawks hockey play C) Theory that there will be massive flows of money out of bonds and into equities

19. Words We Learned (or made up) in 2013 Sequestration What does this word mean? A) Method used to make orange juice B) Ryan Seacrest is taking over your TV C) Large cuts in government spending

20. Words We Learned (or made up) in 2013 The Most Popular Word on Tabloid Covers in the Last Year? A) Shocking B) Wedding C) Baby

21. Agenda

22. Where We’ve Been

23. 2013 Performance (Through 6.30.2013) S&P 500 (Domestic Stocks) +12.6% DJ Global ex US (Foreign Stocks) -1.1% 10-year Treasury Yield +2.49% Gold -28.2% Indices are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.

24. Experts Opinions “The great bond bear market has begun” – Bill Miller Legg Mason From January 11, 2013 NY Times article

25. Experts Opinions “I’m afraid there’s going to be ashes in our stockings this year, and that applies to all asset classes. Bonds are priced not just for perfection, but with close to 0 percent yields. The juice has been squeezed out of the orange.” – Bill Gross Pimco From January 11, 2013 NY Times article

26. Experts Opinions “There are a lot of reasons to be optimistic, but cautiously so.” – Karl Case Wellesley College From January 11, 2013 NY Times article

27. Experts Opinions A Couple 4 th Graders

28. All-Time Highs  Stocks have rallied to fresh all-time highs in 2013  Best first half for stocks since 1999  Is the rally sustainable?  Historically speaking, unwise to sell at all-time highs  Average rally following all-time high is 28% Based on the S&P 500 Index from 1928-2013

29. Government Austerity  Government spending cuts are a drag on economic growth  U.S. tax increases plus sequestration estimated to reduce GDP by nearly 2% in 2013

30. Consumers Remain Resilient  Despite higher taxes, consumers continue to spend more and gain confidence  Consumers confidence at five-year highs The monthly Consumer Confidence Survey ®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch http://www.conference-board.org/data/consumerconfidence.cfm

31. Wage Growth Stubbornly Low  Even those fortunate to have jobs aren’t getting big raises  Wage growth has mostly remained below 2% since 2009  Meanwhile, consumers continue to deleverage  U.S. consumer debt is $1.37 trillion below its 2008 peak

32. Where are the Jobs?  Job growth remains weak  Unemployment rate stubbornly high  Labor force participation has sunk to multi-year lows

33. Is Housing Back?  Housing bubble burst was a major contributor to previous recession  Finally starting to see signs a recovery is underway  Home prices rising at double-digit pace  New housing starts picking up

34. Bernanke Signals Exit Federal Reserve Chief Ben Bernanke surprised investors by signaling economy is healthy enough to slow QE later this year Based on improved forecasts, asset purchases will conclude sometime in 2014

35. Inflation? What Inflation?  Easy Federal Reserve policy hasn’t resulted in inflation  Two key measures, PCE and CPI, indicate the rise in U.S. consumer prices has been consistently below 2%

36. Interest Rates Increase  Investors preparing for shift in Fed policy have stampeded out of previously best performing asset classes  U.S. treasury yields have increased, while Gold has gone down

37. Where We Are  Rising stock and home prices creating “Wealth Effect”  U.S. is still a “Tale of Two Nations”  Consumers gaining confidence despite structural economic issues  Corporations have lowered expectations  Geopolitical tensions bubbling  Stocks trading just below all-time highs

38. Not Many Invited to the Party

39. But… Those That Have Are Spending More  Automobile sales continue to strengthen

40. But… Those That Have Are Spending More  Record breaking art auctions in May

41. Corporations Lower the Bar  Expectations remain that earnings growth will accelerate in 2014

42. Geopolitical Tension  U.S. has decided to send weapons to aid Syrian rebels fighting the Assad regime  Russia isn’t pleased with this response  Ex-CIA employee Snowden situation has created more tension with both China and Russia

43. Where We May Be Going

44. What to Watch  Fed Exit – Impact on Financial Markets  China’s Economy Slowing  European Economy  Money Flows: Will We See Great Rotation?  Geo-Political Risks

45. Fed Exit – Impact on Financial Markets  Federal Reserve believes economy is strengthening  If they’re right, will interest rates continue to rise?  Can consumer spending hold up as borrowing costs rise?

46. China’s Economy Slowing  China still in the midst of transforming economy  Less construction and other investment related growth  Transferring wealth to have consumer spending represent majority of economy  Transition is slow, resulting in GDP estimates being lowered

47. European Economy

48. Money Flows: Great Rotation?  Some market experts predicted a “Great Rotation” will begin in 2013  Massive outflow of $ from bonds back into stocks  Finally started to see some movement after Bernanke signaled change in Fed policy Bond mutual fund flows http://www.businessinsider.com/el- erian-explains-the-great-rotation-2013-2 http://www.valuewalk.com/2013/06/jun e-worst-month-bond-mutual-funds/

49. Geopolitical Risks  Should military conflict arise with another major economy, the effects could be severe  Tensions with China and Russia are higher than at any time in recent history

50. Remember to Laugh!

51. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Investing is subject to risks including possible loss of principal. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings. Leonidas Maheras is a LPL Financial Advisor with, and securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. Thank You For Your Continued Support!