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When Reflection Leads to Inflection

January 2014. When Reflection Leads to Inflection. Quarterly Newsletter Q1 2014. Q1 2014. S&P 500 Index at Inflection Points. Q1 2014. S&P Price and P/E Ratio. Source: Standard & Poor’s, FactSet, Robert Shiller Data, J.P. Morgan Asset Management. Q1 2014.

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When Reflection Leads to Inflection

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  1. January 2014 When Reflection Leads to Inflection Quarterly Newsletter Q1 2014

  2. Q1 2014 S&P 500 Index at Inflection Points

  3. Q1 2014 S&P Price and P/E Ratio

  4. Source: Standard & Poor’s, FactSet, Robert Shiller Data, J.P. Morgan Asset Management Q1 2014 S&P 500 Shiller Cyclically Adjusted P/E

  5. Q1 2014 Shiller’s Cyclically Adjusted P/E Ratio 1881-2014 50 45 40 35 30 25 20 15 10 5 0 • “Dot Com” Collapse (2001) (1929) The Great Crash and the Beginning of the Great Depression (2005) Global Financial Crisis Current CAPE Level: 25.35x (1982) Black Monday

  6. Q1 2014 Earnings Growth Without Commensurate Sales Growth 231% Reported EPS 25% Sales Per Share 0% 50% 100% 150% 200% 250% Source: Bloomberg Data

  7. Q1 2014 S & P 500 EPS Growth

  8. Q1 2014 S&P Positive and Negative Preannouncements Price EPS Guidance

  9. Q1 2014 US Unemployment Rate

  10. Q1 2014 While on par with renting nationally, buying is no longer cheaper for 175 of 277 largest metros

  11. Q1 2014 Home Ownership Rate

  12. Q1 2014 Fed Funds Rate and FOMC Interest Rate Projections Source: Federal Reserve, FacSet, JP Morgan Asset Management

  13. Q1 2014 Fed Balance Sheet Source: Federal Reserve, FacSet, JP Morgan Asset Management

  14. Q1 2014 Margin Borrowing CPI Adjusted and S&P 500 Index

  15. Source: Bloomberg, Doubleline Capital Q1 2014 S&P 500 during FOMC Action

  16. Q1 2014 Emerging Markets Currencies versus the US Dollar

  17. Q1 2014 Developed World Markets versus Emerging Markets

  18. Q1 2014 S&P 500 Index at Inflection Points Fed Innovation Bubble? Technology Innovation Bubble Lending Innovation Bubble QE3 End Fed Tapering June 2013 Source: S&P, First Call, Compustat, FactSet, JP Morgan Asset Management

  19. Q1 2014 What Is Our Strategy for 2014? • Fixed Income • Keep bond maturities short to maintain liquidity • Implement Quality Barbell Strategy • Equity • Maintain patience for buy list stocks to reach entry prices • Buy on market dip • Seek opportunities in stocks that have been through trauma and now have clean bill of health

  20. Disclaimers & Footnotes Registered Investment Advisory services provided by Doucet Asset Management, LLC, which is independent of Institutional Securities Corporation (ISC). Securities are offered through Institutional Securities Corporation (ISC) 3500 OaklawnAve. Ste. 400, Dallas, TX 75219, (214) 520-1115, Member FINRA & SIPC. Chris L. Doucet is a Registered Representative of ISC. This presentation is for information purposes only. Nothing in this presentation constitutes an offer to sell or a solicitation of an offer to buy any interest in any security, or in any investment vehicle managed by Doucet Capital, LLC, Doucet Asset Management, LLC, Institutional Securities Corporation, or any of their employees or affiliates. Nothing in this presentation constitutes professional or financial advice, or recommendations to purchase or sell a particular security. Past performance does not guarantee future results. Doucet Asset Management, LLC does not offer tax or legal advice. Please consult your tax advisor for recommendations regarding your specific situation. Certain information discussed in this presentation may constitute forward-looking statements which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. This presentation does not constitute an offer to buy or an offer to sell securities.    Due to various risks and uncertainties, actual events or results or the actual performance of any of the investments discussed herein may differ materially from the events, results or performance contemplated by such forward-looking statements.  Although Doucet Asset Management, LLC believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, it can give no assurance that its expectations will be achieved.

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