Transcript area-2-investment-grp-oct-2012

SIR's Area 2 $ums Investment Group
“Turning on a Dime”
Peter C. Karp
Karp Capital Management
October 24, 2012
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Agenda
 Global growth is slowing
 European debt problems
 Are we experiencing inflation or deflation?
 Strong Dollar
 The fear of the future problem of the U.S. Treasury
debt
 Karp Capital Management – Who we are
 Summary
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Negative Headlines…
Disappearance of AAA Insurance
Higher Volatility
Downgrades
Chapter 9
Harrisburg, PA
Stockton, CA
….Cast Clouds Over The Market
Jefferson County, AL
Dodd-Frank Act
Falling Revenues
State
Aid
Cuts
Deficit Financing
Tax Reform
Volcker Rule
Vallejo,
CA
Pension
Reform
Fiscal
Cliff
Political
Stalemate
Liquidity
Budget
Deficit
Ratings Migration
OPEB
Reform
Credit
Risk
Low Rate Market Complexity
Tax Reform Environment Property Tax Declines
Issuer
Transparency
Meredith Whitney
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Major Drivers In Washington, DC
2012
Elections
Regulatory
Agendas
Fiscal
Cliff
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Most Likely Scenario
Majorities in the House and Senate will be very small
regardless of who wins control in each chamber
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What Is The Fiscal Cliff?
Scheduled tax hikes
and spending cuts =
up to $606 billion
Bush-era tax cut
expiration $221
billion
Payroll tax relief &
extended
unemployment
insurance $121b
Other changes
$116b
Budget sequester
$65b
Tax extenders
$65b
Healthcare reform
taxes $18b
Could result in a 3%-5%
drag on GDP
Could cause a 20% to
30% decline in
corporate profits
Could drive
unemployment
up to 9 percent
But, continuing on
current path, could
result in debt reaching
90% of GDP by 2022…
Sources: Congressional Budget Office/Fidelity and other economists.
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Potential Tax Rate Impact
60%
55.0%
Today
If allowed to expire*
50%
44.6%
40.8%
40%
35.0%
35.0%
30%
25.0%
20%
15.0%
15.0%
10%
Top Capital Gains Rate
Top Dividend Rate
Top Income Tax Rate
Estate and Gift Tax
Rate
* Includes 3.8% tax on unearned income from the federal healthcare law and reinstatement of the personal
exemption and itemized deduction phase outs.
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What To Expect In The Next Few Months
Election day
“Lame Duck” session of Congress
Fiscal year
2013 begins
October
Thanksgiving
November
Holidays
December
New Administration
& Congress
January
President
proposes
FY 2014
budget
February
Debt ceiling reached
“Fiscal cliff”
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Mutual Funds and ETFs
Since December 2007,
investors have favored
fixed–income
securities, plowing
over 1.1 trillion of net
flows into bond mutual
funds and ETFs while
equity funds have only
received around $33
billion..
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Current valuations…
…suggest decent return expectations.
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Today’s Flows May Offer…
…Only Low Yields and Low Diversification
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Consider What Can Happen When You…
…Introduce Non-Traditional Asset Classes
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Karp Capital Management
 Ranked one of the top 25 Wealth Advisors in the Bay Area
 Over $170MM in Assets Under Management
 Access to top Financial Institutions & Service Providers
 Portfolios Designed & Managed In-house for Individuals,
Qualified & Non-Qualified Retirement Plans
 Single Point of Contact to Manage your Investments
 Unbiased Advice, No Hidden Agendas or Competing Objectives
 Local Personalized Service and Customized Solutions
 Total Fee Transparency – Documented by ADV Form,
requirement of SEC
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Contact
Peter C. Karp
Karp Capital Management
San Francisco, CA
Tel: (415) 345-8185 1-877-900-KARP
[email protected]
karpcapital.com
Although information in this document has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or
fairness, and it should not be relied upon as such. All opinions and estimates herein, including forecast returns, reflect our judgment on the date of
this report and are subject to change without notice. Such options and estimates, including forecast returns, involve a number of assumptions that
may not prove valid. Further, investments in international markets can be affected by a host of factors, including political or social conditions,
diplomatic relations, limitations or removal of funds or assets, or imposition of (or change in) exchange control or tax regulation in such markets. The
past performance of securities or other investments does not necessarily indicate or predict future performance, and the value of investments and
income arising there from can fall as well as rise; the investor may get back less than what was invested; and no assurance can be given that any
portfolio or investment described herein would yield favorable investment results. We or our associated persons may act upon or use material in this
report prior to publication. This document may not be reproduced or circulated without our written authority.
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