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Peter C. Karp Karp Capital Management October 24, 2012. SIR's Area 2 $ums Investment Group “Turning on a Dime”. 1. 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

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Peter c karp karp capital management october 24 2012

Peter C. Karp

Karp Capital Management

October 24, 2012

SIR's Area 2 $ums Investment Group

“Turning on a Dime”



  • 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

Negative Headlines…

….Cast Clouds Over The Market

Disappearance of AAA Insurance

Harrisburg, PA

Chapter 9

Higher Volatility

Stockton, CA


Low Rate


Market Complexity

Tax Reform

Property Tax Declines

Budget Deficit



State Aid Cuts



Ratings Migration

Deficit Financing



Political Stalemate

Pension Reform

Jefferson County, AL




Dodd-Frank Act

Volcker Rule

Meredith Whitney



Falling Revenues

Tax Reform

Major drivers in washington dc
Major Drivers In Washington, DC

  • Fiscal Cliff

  • Regulatory Agendas

  • 2012 Elections

Most likely scenario
Most Likely Scenario

Majorities in the House and Senate will be very small regardless of who wins control in each chamber

What is the fiscal cliff
What Is The Fiscal Cliff?

Could result in a 3%-5% drag on GDP

Scheduled tax hikes and spending cuts = up to $606 billion

Could cause a 20% to 30% decline in corporate profits

Bush-era tax cut expiration $221 billion

Could drive unemployment

up to 9 percent

Payroll tax relief & extended unemployment insurance $121b

Other changes $116b

But, continuing on current path, could result in debt reaching 90% of GDP by 2022…

Budget sequester $65b

Tax extenders $65b

Healthcare reform taxes $18b

Sources: Congressional Budget Office/Fidelity and other economists.

Potential tax rate impact
Potential Tax Rate Impact

* Includes 3.8% tax on unearned income from the federal healthcare law and reinstatement of the personal exemption and itemized deduction phase outs.

What to expect in the next few months
What To Expect In The Next Few Months

Election day

President proposes FY 2014 budget

“Lame Duck” session of Congress

Fiscal year 2013 begins

New Administration & Congress








Debt ceiling reached

“Fiscal cliff”

Mutual funds and etfs
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..

Current valuations
Current valuations…

…suggest decent return expectations.

Today s flows may offer
Today’s Flows May Offer…

…Only Low Yields and Low Diversification

Consider what can happen when you
Consider What Can Happen When You…

…Introduce Non-Traditional Asset Classes

Karp capital management
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


Peter C. Karp

Karp Capital Management

San Francisco, CA

Tel: (415) 345-8185 1-877-900-KARP

[email protected]

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.