2008 june mike on markets by karen bosso

Mike

on

Markets

the

Vol 2

Iss 1

Jun 08

Michael Bosso

Is Your Portfolio Bleedin’ Green?

If you are currently one of my clients, you may skip this article. Go on now. But if you are like the vast majority of investors, you’ve probably seen significant decreases in account value. Even if New Year’s resolutions are a memory and April 15th has come and gone, it’s never too late to take a hard look at your financial situation. Without using the “S” word (should), just know it’s a really good idea to give your portfolio a checkup once a month, or at the very least once each quarter. And once a year it deserves a complete physical. Now, before images of paper gowns and “procedures” cross your mind, just stop. The only instrument required for this type of exam is a copy of your latest statement(s) and a telephone if you aren’t sure you like what you see.

For instance, my major focus is individual stocks, but I won’t touch 99.9% of options trading—too risky. Some investment reps. rely almost exclusively on mutual funds, whereas I use them sparingly. Still other advisors won't work with or don’t even have access to index-linked CD's or Reverse Convertible bonds—two of the main reasons my clients got to skip to the next article.

With a healthier portfolio as the goal, you’ll look at both its anatomy—individual parts or securities, and its physiology—how those parts are working together to keep the financial “body” happy and functional.

You’ll ask questions to figure out what worked, what didn’t, and why. Suggestions can be found under the two Portfolio Rx Sections in this newsletter.

   

FBR Wealth Management One Lincoln ~ Ste. 375 10300 Greenburg Road Portland, OR 97223

Even though we don’t like to admit it, no advisor is right 100% of the time. And just like your health, at the end of the day you’re still the one ultimately responsible for your portfolio's performance.

Office 503-595-1662 Toll Free 877-421-9991 Fax 503-595-1666 Cell 971-212-9464 mike@teamfbr.com

If your examination results come back unsatisfactory, perhaps you owe yourself a second opinion.

Like a doctor, an investment representative’s job is to

  

Financial Advisor

guide you to the greatest health, the largest gains, based upon the risk tolerance you’ve discussed and the securities and skills s/he has to offer. And just as physicians have differing skill levels or specialties they practice, so too financial professionals. Your advisor may or may not have the knowledge or available tools to get you where you want, and the only way to find out is to ask.

2nd Opinion—Portfolio Rx for Review Time

Inside

Is this a systematic problem with the investment or just a temporary downturn?

Would I buy it again today knowing what I know now?

PG

Have mutual funds been thrown in there chosen solely by category (growth, income, etc.)?

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What kind of crossover do I have within my funds?

Is my account being actively managed or mostly just being “stored?”

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What do I want my portfolio to look like? Do I own stocks within those funds that I would find offensive (ethically or environmentally)?

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Am I working with the right person to accomplish my goals?

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Happy Tax Freedom Day, America!

April 23rd OR

4/16

WA

4/29

NV

4/26

CA

4/30

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MN

4/27

HI

Bleedin’ Green Rx-2nd Opinion

1 Portfolio 2 3 4 5

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Keeping it in Perspective Investment Performance Examples Where Did Buy-and-Hold Come From?

Buy-and-Hold Disrespect??

Spring Cleaning Portfolio Rx—Have you had your Correlation Checked?

European Imports Index-Linked CD’s Reverse Convertibles Cash-Based Investments Thank You Trading Cards — Benjamin Graham Tax & Inflation — Staying Ahead

4/26

Tax freedom days by state. Source: http://www.taxfoundation.org/taxfreedomday/

PG 1

Keeping it in Perspective At face value, I’m not a buy-and-holder, and recent months in the markets graphically illustrate why that is. If, however, you’ve held onto your investments throughout this downturn, I’d like to help you keep it in perspective. To realize that this has happened before, it’s not the end of the world, and how a slight change in perspective can create a sea change of future possibilities.

The markets have corrected about 20%. Many individual stocks have lost 30%, 40%, 50%, or even more in an incredibly short period of time.

Had you made changes early in the correction, you could now start to think about getting back in at a much lower price, but if you didn’t, how much do you have to worry?

I’ll use an example of a typical diversified portfolio which has lost around 15% in the last 12 weeks. So if you had $200,000 12 weeks ago, you now have $170,000. That’s today. But remember this: Over the long haul--say 10 or more years, that same typical portfolio would have had an average return of over 8% even with similar large drops in value happening over that same time frame. Eight percent isn’t bad; it’s not great, but it isn’t bad either. Because of the upward bias of the markets, the law of averages takes care of you. You’ll be fine.

Now when I say “upward bias,” what I mean is that over long periods of time---years, say, instead of months---the overall line on the graph is

moving up and to the right. Yes, there are downturns, from which things recover to their historic average returns. It’s just the way markets work. So if over those same 12 weeks, your portfolio lost anything less than that approximate 15%--you’re ahead of where a lot of folks are.

When the recovery begins, you’ll be starting from a higher spot—you’ll have more to work with. And those examples illustrate part of the conventional wisdom behind the buy-and-hold philosophy---you’ll be fine.

The goal is to beat the indices.

To make money. To win.

So why am I not a buy-and-holder if all of this is true? Because the goal is to beat the average indices. To make money. To be more than just OK. To win. I’ve been accused of being a wee bit competitive, to which I say, “Thank you.”

Anyone can make money when the market is going up. Take bank stocks (please!), or traded Real Estate Investment Trusts, or mutual funds that invested heavily in them. If you’d invested in any of these when they were booming then you probably made a great deal of money.

Which you would have promptly lost when they went bust—if you’d held onto them. A situation similar to the example above only on a grander scale, causing you to lose significantly more than the market averages. An example to me of: not OK.

What would’ve happened if ????.

Even though investments like those may eventually recover, consider the example of the tech bubble of 2000. Eight years later the NASDAQ index which tracks most of the technology stocks, is still more than 30% down from its high point. But, if a tech investor would’ve gotten out of the way (ie: sold) after they’d already lost 10 percent or so, let the stocks “do their drop”, then gotten back in, even after a 20% increase from the lows, they would have more than doubled their (see below) money.

Some will tell you that’s called market timing which they believe to be dangerous. I believe true market timing is when an investor tries to pick absolute lows at which to buy and tip-top highs at which to sell, and that can be quite risky. My belief is that if you know what to look for, the writing is almost always on the wall. Are there really people surprised by the current crisis that knew how far leveraged banks, hedge funds, and financial institutions were? Who out there, that follows markets and the economy daily, couldn’t see that housing prices couldn’t go up at that rate forever?

So why not utilize that information to your advantage? Use the information to gently and wisely move in and out of different types of investments (see Correlations article). Use it to generally, as best you can, avoid a habit of buying at highs and selling at lows. It’s simply moving out of the way and waiting for a better day.

A different perspective.

All examples based on the PowerShares QQQ Exchange Traded Fund which is tied to the NASDAQ 100 Index

Prices: QQQQ’s Share (at the close) 1/3/2000 3/20/2000

3/27/2000 7/5/2000

9/30/2002 10/21/2002 4/10/2008

88.20

115.21 115.40 89.73 20.31 23.80 45.54

Hypotheticals from Morningstar.

Numbers are rounded. Scenarios based on historical data, which may not, (usually doesn’t) work out exactly the same way in the future.

The purpose of this graphic is to illustrate the above article.

If I buy and hold 100 shares...

1/3/2000

$8,820

3/20/2000

11,521

7/5/2000

8,973

9/30/2002

2,031

10/21/2002

2,380

4/10/2008

4,554

Approx. comm.. Pd

Net loss:

<100>

$4336

net investment amt. $8,820

ALL FOUR COMMISSION CHARGES ABOVE ARE ESTIMATES based on what I might charge for trades today in similar scenarios. Commissions shown are NOT reflected in the account values; they are assumed to have been paid separately only for the simplicity of showing overall, net amounts. You know I get paid for what I do, but I wanted to show that for what I’m trying to say — it’s not about the commissions.

If I invest $10,000 on Jan 3 2000...

3/31/2008

4708

Approx. comm. Pd.

Net loss:

<150>

$5442

net investment amt.. $10,000

If I invest $100/mo.

(Dollar Cost Average) from Jan 1 2000 through 3/31/08...

3/31/2008

$11,264

net investment amt.

10,000

Approx. comm.. pd.

<400>

Net gain:

the top 100 stocks traded on the NA SDAQ Stock E xchang e

If I owned 100 shares on 1/3/2000...

1/3/2000 3/27/2000

7/5/2000

$8,820 11,540 8,973

Sell sh ares, buy 5% CD, hold 24 mo., +3 mo. in money mkt., buy 400 shar es back 10/21/02

04/10/2008

Approx. comm .. pd.

Net investment amt.

Net gain:

9515 18,216 <350> 17,866 8,820

$9,046

$764

PG 2

Then Where did Buy-and-Hold Come From?

The buy-and-hold philosophy arose from several different arenas. The first has to do with the “age” of the money. Old Money means folks who’ve already made their fortunes, or inherited them. They buy and hold to maintain certain portions of their wealth. Really “young” money also buys and holds because they have such long investment horizons (amount of time before they need to spend their money) that they can afford to ride out the ups and downs. Please note that neither of these groups, if they’re truly building wealth, buys and holds their entire portfolio. Just portions of them.

Buy-and-hold also became so embedded in America’s investment psyche because of dividends. Prior to 1990, investors bought stocks expecting to earn a quarterly dividend check or at least be able to reinvest that dividend into more stock. In 1980 the average dividend yield on the S&P 500 was 4.74%. In 2007 it was 1.89%. It comes down to the psychological reason for stock ownership. Folks used to buy-andhold, because they could count on the dividend to keep increasing—they’d received a “pay raise” of sorts. Today, investors must rely much more heavily on stock growth to create wealth.

Am I Disrespecting Buy-and Hold?

No. Buy-and Hold is neither good nor evil; it just is. It’s a technique like any other which has specific applications. I use it myself.

I use it primarily to create a set of core holdings within a portfolio; to give it a base. And I use a fairly specific flavor of stock to do so—usually diversified multinationals. They’re generally less volatile, but they still have to be watched. At one time I might have utilized GM, Chrysler, Enron, or any of 90% of all bank stocks as a core holding.

But things change. With recent news, I’m keeping an especially close eye on GE. Just because a stock was a good choice for longer holding periods 10 years ago, doesn’t necessarily mean it is today.

Another denizen of buy-and-hold philosophy is many investment firms and their representatives.

I’m not denigrating my profession; we deserve to get paid when we help clients manage their investments. But since certain investments pay residual commissions (sometimes referred to as trails)…..and some investment wholesalers pay out something called revenue sharing (generally to the firms, not the reps)…..both of which are based on keeping assets in the investment…..well, I’m sure you get the picture. I’d like to believe that professionals wouldn’t keep a

Today’s investors must rely more heavily on stock growth than dividends. client in an underperforming investment based on residual commissions or revenue sharing. But it’s truth that putting people into investments that don’t pay those things surely lowers most investment rep’s monthly income.

In the investment representative’s defense, buyand-hold is the more conservative method and requires much less thought and effort to stay even with the markets. After all, if the market drops 20%, then it’s the market’s fault, not his/ hers, right?

Finally, some investors adopted buy-and-hold simply because they had to work for a living, didn’t have all day to sit and gaze at the markets, and had to invest somewhere or risk a retirement based solely on Social Security. As I said above, it’s a fairly easy and conservative approach. Perhaps the investor didn’t trust or couldn’t afford a stockbroker or just preferred to do it themselves.

After all, it used to require far more assets than it does today to qualify for professional money management. So a lot of folks made the best choices they could with what was available to them at the time—sat on it and hoped for the best.

As I’ve said before, it’s possible to do OK with buy-and-hold. But now, when you’re having the discussion, and someone recommends any investment strategy, you have some additional knowledge. You better understand why it’s imperative to read the fine print and disclosures that come with investment materials. You know to ask questions if you’re not clear about why an advisor might be making certain recommendations. But mostly you understand why this venerable technique may work better under certain specific circumstances and in some cases was more appropriate in a different age.

Spring Cleaning (things you need to do now):

     

Review your portfolio with your Advisor. If you don’t have one, get one. Advisor and portfolio both. Reallocate your portfolio to stay in balance.

Look for recession-resistant investment strategies such as indexlinked CD’s; Non-Listed, low-leverage REITS, and other non-equitycorrelated securities.

Develop a cash flow strategy to increase incoming cash to off-set market downturns.

Do not, under any circumstances, keep more than $100,000 in any individual FDIC Insured Bank.

Do not get greedy with over-performing asset classes. Realize they will eventually correct and normalize just like housing, stocks, bonds etc…

Avoid long term bonds, realizing that rates will eventually go back up and you will be stuck with a low interest bond you will have to liquidate at a discount if you decide to get rid of it.

PG 3

Have You Had Your Correlation Checked?

So you’re sitting in front of the TV watching your favorite business report (because I know you all do) and someone is talking about some potentially great investment. The interviewer says something along the lines of, “And what will this investment do in a down market?” Being the expert hedger that analysts seem to be, he responds with a statement that ends something like this: “Blahblahblah, but we expect little or no correlation to the overall markets based upon historical data derived from proprietary mathematical quantitative research,” or some equally nonsensical statement designed to leave you saying “Boy he is smart. I have no idea what he just said, but it sure sounds like he knows what he’s talking about.”

Let's break down the one important statement in that jumble of words, “Historical Correlation”.

Correlate = Co Relate. How two things relate to each other. Now why is this important to you? Knowledge about the way different investment factors perform under certain circumstances and in relation to each other will help you make better choices. With this knowledge, you can more confidently structure your portfolio for maximum performance.

Investments work either right along with the markets, in reverse of the markets, or somewhere in between. The most familiar investments are positively correlated—the markets go up, the investment gains in value—like stocks.

The easiest example of negative correlation is probably bonds. Most of us know that generally, as stocks go down, bonds go up—and that’s what they call negative, or inverse correlation.

Take a peek at the sidebar: Correlations Examples. That’s the Reader’s Digest version of investment correlation, just a primer. There are also correlations between domestic and international or between asset classes or with the economy in general. It would be impossible to list them all, explain why, and note the exceptions in

a brief article such as this. I do hope it gives you the flavor of what I’m trying to say: Correlations are extremely important.

It’s not understanding them that causes investors to follow the crowd and buy as prices are going up. Everybody’s doing it. It seems intuitively right, just not if you want to make very much money.

For instance, right now people are flocking to bonds; demand is up so they’re selling at a premium (ie: price> face value). Yet we know that once the economy begins to improve, the Fed will start raising interest rates to control inflation.

Because of correlation, bond prices will then drop and people will be stuck with low interest bonds they’d have to sell at a discount to unload.

The object is not to exactly time the markets— that’s crazy making. What you want is to avoid is the emotional habit of buying near the highs and selling near the lows. What you want is a balanced portfolio. One that is both diversified and properly correlated within itself, both negatively and positively.

With a little knowledge, you can take some of the emotion out of the equation. And my clients, at least, will now understand why they used to get the icky feeling when I’d recommend a trade that was counter to what “everybody else” was doing.

I tell my own kids all the time: “Ask me how much I care about what everybody else is doing.”

Unless, of course, it can teach me what not to do.

(I should probably go tell them that part…) And the icky feeling usually goes away the more you see this in action. You learn it’s “just one of those things.”

Having a handle on correlations can make the difference between an overall winning portfolio and one that is susceptible to large swings in value. Please consult your financial advisor, or contact me for more information on how to use this information to your advantage.

Correlation and Diversification Same score, different notes Now that you know the ABC’s of correlation, you’re beginning to understand that although your portfolio may be quite well diversified, if it’s not also properly correlated within itself, it’s less likely to do what you want it to do---make as much money as possible under the greatest variety of conditions. Especially under current or nearfuture conditions.

Like music or dance, it’s a fluid process. Many musicians or dancers have strong limbs, good ears,

years of lessons, and a large repertoire of memorized scores. But it’s how he or she melds those things together live on the stage that transforms a choppy, technical performance into a satisfyingly artistic one.

Good portfolio management isn’t about any one thing. Diversification, correlation, and—to a degree timing—are different steps in the dance, notes in the score. When they’re all working in concert, it’s a beautiful thing.

Portfolio Rx Correlation Examples (Note: These are historical trends, not future guarantees) Gold, metals, and other commodities are negatively correlated to the price of the dollar and positively correlated to inflation: Commodities go up when inflation goes up.

Commodities go up when the dollar goes down.

Oil, like most commodities, typically has a positive correlation to inflation. Inflation is caused by a growing economy’s higher demand for finished goods and by extension, base materials. There’s a lot of speculation right now on oil being in limited supply, so this is skewing the historical picture.

Bonds are negatively correlated to interest rates and to the stock market. As interest rates go down, existing bonds get more valuable. And as the stock market goes down bonds become more attractive and as such demand a higher price.

Utility Stocks are negatively correlated to lower interest rates. Utilities typically carry high debt ratios and when interest rates go down, their loans cost them less. People also tend to buy these more when interest rates go down, because they believe they can make more income from the stock dividend than from a bond, thus driving the stock price upwards.

Publically-Traded REITs have historically been negatively correlated to interest rates.

Their high dividends tend to drive up the demand from income investors. That trend seems to be breaking down at the moment because of anomalies related to the bursting Real Estate bubble. We’ll have to wait and see if that trend re-emerges.

Non-publically-Traded REITs and other Private Placement investments have no correlation at all to the financial markets. Their prices are fixed for a set period of time, making them likely candidates for income investors. Important note: Many non-publicallytraded REITs hold Commercial Real Estate which is only partially correlated to the Residential Real Estate Market. They typically drop far less in value during a general real estate downturn.

Fixed Annuities have no correlation at all as their value does not change. It could be argued that they negatively correlate with inflation because you lose purchasing PG power during periods of higher 4 inflation.

European Imports...Three Vroom Vroom strategies for when the market is slumpy Sometimes it seems like all the really cool stuff comes out of Europe—music, cars, music, fashion, music, pilgrims…. The same holds true in the investment world. The U.S. has recently imported a new fleet of these investment vehicles from Europe that need to be seriously considered. They’ve been around in Europe for a decade or more with fantastic success and are quickly becoming one of the number-one investment options amongst full service brokerage accounts. I’ll outline two of them for you below that some of my clients have found helpful during the recent downturn. And I’ll finish up with a time-honored technique of which no one should be ashamed.

Index-Linked CD’s No, I’m not starting with the time-honored technique for slumping markets. I know, you’re saying “what is so special about CD’s? My local bank sells those…” Well, probably not; these are CD’s with a twist. They’re called IndexLinked CD’s. Here’s the specs:

 They’re linked to the stock market (a basket of stocks or market indices)

 Upon maturity they return the higher of either:  the average return of the underlying indices —or—  their guaranteed interest rate (many, but not all have a guaranteed rate)  You get FDIC principal protection up to the usual $100,000.  No built-in fees.

So, call your stock broker or investment advisor and ask about these if you’re concerned about losing principal. They’re available through most full service brokerage firms.

and Gamble, Microsoft, Deere, Caterpillar, or others which are not as likely to experience large price swings. Remember, the concept of risk vs reward is especially relevant with this type of investment.

Cash-Based Investments Reverse Convertible Bonds The second import from Europe is for those who want to take a little more risk, but do not want the full risk of owning individual stocks. These vehicles are called Reverse Convertible Bonds or Revertibles. They don’t carry FDIC insurance, but they’re interesting investments my clients are particularly fond of because of the income they generate.

These bonds are linked to individual stocks and return full principal as long as that stock doesn’t fall below a certain level (called “barrier price” for those who like the jargon). Here is a hypothetical.

Let’s say this reverse convertible bond is linked to XYZ Corp and pays a coupon (interest rate) of 12% for 6 months. The downside protection, or barrier level, is 25%. As long as XYZ Corp does not experience a 25% drop in share value during that six month timeframe, you receive 100% of your principal at maturity. If XYZ Corp does drop 25% at anytime during that 6 month period, you receive XYZ stock equivalent to what your original investment amount would have purchased at the time you bought the bond.

Many investors find these bonds confusing at first.

Here are some places where you can learn more about them before you invest in them—-or feel free to call me. h ttp:// www.i nv es topedia .c om/ terms/ r/ reverseconvertiblebond.asp

http://www.structuredinvestments.com/assets/ pdfs/siss_revEx.pdf A word of caution: You don’t want to get greedy with these. Some of these bonds pay excessively high interest rates; I’ve seen some higher than 30%.

And more often than not, the high-flyers end up dropping below their protection level, leaving you with less than you started. Stick to the 8%-12% range with blue chip companies like GE, Proctor

And finally, as promised. If your current investments have you stressed-out and/or losing sleep and you don’t have access to principalprotected, or partially-protected investments, there is truly nothing wrong with cash-based investments. I’m speaking of short term CD’s (as long as you don’t go over the $100k limit within an individual bank) and money market accounts. I personally believe markets recover.

But I also believe being able to sleep is more important than possibly missing out on 2 or 3% if the market recovers before you manage to get back in.

Let’s face it, in January of 2000 the Dow was at roughly 12,000 and today in 2008 we are at…..roughly 12,500. The S&P 500 was at roughly 1540 and today we are at…1350. The NASDAQ still hasn’t come close to recovering its 1999-2000 levels. So if it took eight years to recover from the last major bear market, it’s unlikely you’ll miss out on the entire recovery by shifting into some shorter-term securities for the time being. By that I mean vehicles like 3mo. CD’s or money markets within brokerage accounts for easy access when it is time to reinvest.

So there are the three winning ideas for a tough market. Two ideas for those who want to stay invested and have either full principal protection or a reasonable likelihood of preserving your principal and one for the more faint of heart who’d rather wait for friendlier skies—no shame in that.

Feel free to email me with questions about these products, or if you have ideas for future articles.

We especially like the Reuse part…

Thank You To those of you who’ve recommended me to your family and friends.

I am honored.

Mike

If you would prefer to receive my newsletter via email—great!!

Saves stamps, paper, and is easier to share. Just send an email to karen@teamfbr.com with “Make the switch to email newsletter” in the Subject Line.

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share this with a friend when you're finished reading it.

PG

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Trading Cards©

Source: http://www.investopedia.com/university/greatest/benjamingraham.asp

as a one-year-old immigrant from England in 1895. He grew up in Manhattan and Brooklyn, New York. His father died when he was nine years old and the family's hard times, economically speaking, left Graham with a lifetime preoccupation with achieving financial security.

He graduated from Columbia University in 1914 and went to work immediately for a Wall Street firm, Newburger, Henderson & Loeb, as a messenger. By 1920, he was a partner in the firm.

In 1926, Graham formed an investment partnership with Jerome Newman and started lecturing at Columbia on finance, an endeavor which lasted until his retirement in 1956. It is reported that Graham was wiped out personally in the stock market crash of 1929, but the investment partner-

?

“

stantially more than an investor has to pay for it.

He believed in thorough analysis, which we would call fundamental analysis. He sought out companies with strong balance sheets, or those with little debt, above-average profit margins, and ampl e cas h f l ow .

He coined the phrase "margin of safety" to explain his common-sense formula that seeks out undervalued companies whose stock prices are temporarily down, but whose fundamentals, for the long run, are sound. The margin of safety on any investment is the difference between its purchase price and its intrinsic value. The larger this difference is (purchase price below intrinsic), the more attractive the investment - both from a safety and return perspective - becomes. The investment community commonly refers to these circumstances as low value multiple stocks.

You are neither right nor wrong because people agree with you.

To achieve satisfactory investment results is Even the intelligent investor is likely to need easier than most people realize; to considerable willpower to achieve superior results is harder Benjamin Graham keep from following the than it looks. crowd.

Individuals who cannot master their emotions are ill-suited to profit from the investment process.

just gets And when it all to be too much:

“

came to the United States

ship survived and gradually recouped its positions.

Ben Graham learned some valuable lessons from this experience and, in 1934, co-authored a hefty textbook titled "Security Analysis", which is widely considered an investment classic. The Graham-Newman partnership prospered, boasting an average annual return of 17% until its termination in 1956.

It is difficult to encapsulate Benjamin Graham's investing style in a few sentences or paragraphs. Readers are strongly urged to refer to his "The Intelligent Investor" to obtain a more thorough understanding of his investment principles.

In brief, the essence of Graham's value investing is that any investment should be worth sub-

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What You Must Earn to Maintain Your Money’s Purchasing Power

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Hillary Clinton Queen Elizabeth II Barbara Bush June Cleaver My own, of course.

Call in or Email your responses to: karen@teamfbr.com

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Q How many investment bankers can you fit in the back of a pickup truck?

A Only two. You have to leave room for the lawn mowers!

Important Disclosure Information Securities offered through Pacific West Securities, Inc., Member FINRA/SIPC Advisory Services offered through Pacific West Financial Advisors, Inc., a registered Investment Advisor Clearing services offered through Pershing, LLC, a subsidiary of the Bank of New York Mellon Please note that the mention of stocks in this publication is a not recommendation to buy or sell those stocks. Indexes are unmanaged groupings of stocks used to approximate general stock market performance. You cannot invest directly into any of these indexes.

Certificates of deposit offered subject to change and availability. FDIC insured up to $100,000.

Minimum deposit required. Periodic interest payments may not be reinvested in the certificate of deposit. Certificates of deposit sold prior to maturity may result in an uninsured capital loss.

The comments contained herein are for general educational purposes only, do not address the entire topic, and should not be c onsidered investment advice, a solicitation, or a recommendation.

All investments involve risk, including the possible loss of invested principal. Past performance is NOT a guarantee of futu re results. Security transactions involve trade costs. For more specific information on investment risks, you should consult the offering’s prospectus. Prior to implementing any strategy, taxpayers are urged to seek the advice of their tax advisors.

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