1. Future for Investors Prof. Jeremy J. Siegel ~ The Wharton School CFO Forum Tel Aviv Gala Event ~ January 1, 2008

2. 2 The Aging of the Population The Most Critical Long-term Economic Issue Facing the Developed World Long-Term Issues

3. 3 Long Term Demographic Trends Past marked by (1) rising life expectancy and (2) falling Retirement Age But this trend Cannot Continue 1.6 Years 15.9 Years

4. 4 Age Wave -- US

5. 5 Age Wave – Japan

6. 6 Big Questions The Biggest Questions Facing the Developed World Who Will Produce the Goods? Who Will Buy the Assets?

7. 7 Retirement Age must rise dramatically 15.9 Years 11.6 Years

8. 8 But there is Hope n Outside the developed countries, the population of the world is much younger. n Let’s look at India.

9. 9 Age Wave -- India

10. 10 Exchange of goods for assests n Throughout history, the “old” have sold assets to the young in exchange for goods. n Today in US, Florida’s retirees can sell assets to and import goods from the other 49 states. n In the future the US will sell its assets to the rest of the world. n Success of this solution depends on growth in the developing world.

11. 11 World GDP 2005Population 2005 84.8% 15.2% 46.7% 53.3%

12. 12 22.9% 77.1% Population 2050World GDP 2050 12.3% 87.7%

13. 13 Retirement Age with high growth in LDCs 15.9 Years 11.6 Years 15.4 Years

14. 14 Retirement Age with high growth in LDCs

15. 15 The Global Solution The answer to our question: Who will produce our goods? Who will buy our assets? Is the same: The Developing Countries By the middle of this century Developing Countries will own most of world’s capital.

16. 16 Stock Market Capitalization 2006 7.3%92.7% 33.0% 67.0% Stock Market Capitalization 2050

17. 17 Conclusions n I believe that growth in developing world will offset slowing in aging economies and support future equity prices. n Biggest threat to capital markets is retreat from globalization. n Equity Markets depend on integration of world economy.