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Investment Security Group, Inc

Investment Security Group, Inc. Annual Investment Update September 29, 2010. Ranking of Countries by GDP Courtesy. IMF 2009. Get Global!. Overseas Markets generate 75% of the world’s gross domestic product 75% of publicly traded companies are listed on foreign exchanges

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Investment Security Group, Inc

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  1. Investment Security Group, Inc Annual Investment Update September 29, 2010

  2. Ranking of Countries by GDP Courtesy. IMF 2009

  3. Get Global! • Overseas Markets generate 75% of the world’s gross domestic product • 75% of publicly traded companies are listed on foreign exchanges • 95% of world’s population is outside the USA • Since 1965, global income, per capita has risen ten-fold

  4. “The Good, the Bad and the Not-So-Ugly”

  5. “The Good”

  6. “ The Good” • Improved Economic Fundamentals • Less debt (34% vs. 85% for Dev Mkts)

  7. “The Good” (Continued) • Improved Economic Fundamentals • Less Debt (34% vs 85% for Dev Mkts) • Large Foreign exchange reserves • Effective Monetary Policies (3.5% cpi vs. -.8%)

  8. “The Good” (Continued) • Burgeoning Consumer Demand • Younger populations • Rapidly increasing incomes • Low household debt • E. Asia: 30% • E. Europe: 22% • L.A.: 11.7% • USA: 100% • Undervalued currencies

  9. “The Good”(Continued) • Higher economic growth

  10. “The Good”(Continued) • Deeper, more seasoned financial markets

  11. “The Bad” (Developed Europe) • Troublesome Economic Fundamentals • High Debt Levels • Aging Populations • Stifling welfare systems • Overvalued Currency? • Central bank “disconnect” with country-specific issues • Will the Union Hold?

  12. “ The Not-So-Ugly”(USA) • Similar to Europe, but the 3 D’s are not as extreme (debt, deficits, demographics) • More responsive central bank policies (better coordination between monetary and fiscal policy) • Impressive Corporate Productivity/Profit Margins, healthy cash flow, balance sheets. • High Unemployment, soft housing, high household debt, threat of heavier regulation.

  13. Emerging Markets: Developed Europe/Japan: USA: Tailwinds Headwinds Swirling Winds In Summary

  14. Investing Implications ? • Get in front of the tailwind! • Increase emerging market exposure…..but buy at the right price. • Look for diamonds in the rough. • Think contrarian. Shop for bargains in developed Europe and Japan. • Don’t quit on the USA!

  15. “The US economy remains almost comatose…The current slump already ranks as the longest period of sustained weakness since the great depression…Once in-a-life dislocations…will take years to work out among them: the job drought, the debt hangover, the defense industry, industry contraction, the [banking] collapse, the real estate depression, the health care cost explosion and the runaway federal deficit.”Time Magazine September 1992

  16. Today US: 30% Foreign: 16% 46% Tomorrow Global Equity: 30% Developed Mkts: 10% 40% Stock Market Exposure(Moderate Approach)

  17. Stock Market Exposure(Moderate Approach)Overall Allocation Today Stocks: 46% Hybrid: 21% “Defense:” 33% Tomorrow Stocks: 30% EMKTs: 10% 40% Hybrid: 10% “Defense” 50%

  18. Stay Nimble

  19. Flexible Allocations (Moderate Approach)

  20. Shore Up the Defense!

  21. Economics for GeologistsBy Mike Dibala

  22. Plate Tectonics • Earths surface made up of large plates • Plates in constant motion • Move at different speeds, different directions • Where two plates move against each other geologic “hot spots” exist resulting in increased activity (earthquakes, volcanoes, mountain building etc.)

  23. Sound like the global economy? What are some of the “hot spots”?

  24. Some “Hot Spots” • East vs. West • Old Financial Systems vs. New

  25. Thank You! Investment Security Group, Inc. 303-759-9808 www.investsg.com

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