1. Presented by: H. Swint Friday, Ph.D., CFP.

2. I. PRIORITY 1: UNDERSTANDING THE RISK

3. NASDAQ Composite Index History

5. Japan Nikkei 225 Index

6. House-Price Indicators (1990-2010)

7. U.S. Housing Bubble

8. The Only Constant is Change! The Graham & Dodd P/E for the S&P 500

9. Measuring Risk  Probability of Loss

10. Distributions Give Probabilities of Loss

11. The Type of Distribution Impacts Risk

12. Modern Portfolio Theory

15. DAX Index

17. Portfolio Diversification

21. Expected Return and Risk

24. Beware Misleading Data

29. 1 st Factor: Earnings Are King  P/E ratio measures price paid for $1 in earnings.

30. Dow and DAX P/E Ratios

33. 2 nd Factor OIL: Life Blood of Global Economy Every product has substantial energy component to its cost Leverage effect:  Sale price: $20 $20  COGS: $15 $18 (20% increase)  Profits: $5 $2 (60% decrease)

39. 3 RD Factor: Taxes Warren Buffett Quote: Simple Truth:  Soccer  Ball  Art  Paint  Creating Wealth  Money

40. Wealth Redistribution 1.Every player on team gets chance to shoot for the goal 2.Messi must wait his turn.  Not fair that he gets all the glory.

44. 4 TH Factor: Housing 1. Barometer of Confidence2. Over Confidence

48. 5 TH Factor : Fed Policies

51. THE RICH ARE RICHER

52.  The rich are getting richer. All is going to richest of the rich.

56. Why Are Richest of Rich Getting So Rich? 1.Their Investment Choices:  Business Ownership  Real Estate  Stocks and Bonds 2.They take risks other don’t

57. THANK YOU !