1 1 peter c. karp karp capital management october 24, 2012 sir's area 2 $ums investment group...
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Peter C. Karp
Karp Capital ManagementOctober 24, 2012
SIR's Area 2 $ums Investment Group
“Turning on a Dime”
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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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Budget DeficitProperty Tax Declines
Va
llejo
,
CA
Cre
dit
R
isk Cha
pter
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Ratings Migration
Dodd-Frank Act
Liqu
idity Pension
ReformDeficit Financing
OP
EB
Ref
orm
Tax ReformLow RateEnvironment
Jefferson County, AL
Market Complexity
Harrisburg, PA
Sto
ckto
n, C
A
Downgrades
Tax Reform Vol
cker
Rul
e
State Aid Cuts
Falling Revenues
Fis
cal
Clif
f
Issuer Transparency
Higher Volatility
Political Stalemate
Meredith Whitney
Disappearance of AAA Insurance
….Cast Clouds Over The Market
Negative Headlines…
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Major Drivers In Washington, DC
Fiscal Cliff
Regulatory Agendas
2012 Elections
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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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Could cause a 20% to 30% decline in corporate profits
Sources: Congressional Budget Office/Fidelity and other economists.
What Is The Fiscal Cliff?
Could result in a 3%-5% drag on GDP
Could drive unemployment up to 9 percent
But, continuing on current path, could result in debt reaching 90% of GDP by 2022…
Scheduled tax hikes and spending cuts =
up to $606 billion
Bush-era tax cut expiration $221
billion
Other changes $116b
Payroll tax relief & extended
unemployment insurance $121b
Budget sequester $65b
Tax extenders $65b
Healthcare reform taxes $18b
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* Includes 3.8% tax on unearned income from the federal healthcare law and reinstatement of the personal exemption and itemized deduction phase outs.
15.0% 15.0%
35.0% 35.0%
25.0%
44.6%
40.8%
55.0%
10%
20%
30%
40%
50%
60%
Top Capital Gains Rate Top Dividend Rate Top Income Tax Rate Estate and Gift Tax Rate
Today If allowed to expire*
Potential Tax Rate Impact
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What To Expect In The Next Few Months
October November December January February
Fiscal year 2013 begins
Election day
Holidays
“Lame Duck” session of Congress
“Fiscal cliff”
Debt ceiling reached
New Administration & Congress
President proposes FY 2014 budget
Thanksgiving
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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. KarpKarp Capital ManagementSan Francisco, CATel: (415) 345-8185 [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.