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A RETIREMENT MEDIA, INC. PUBLICATION TRUTH FOR THE AMERICAN RETIREEwww.crashproofretirement.com 1

2.1 FUZZY MATHWhen Is 9% Really3%? And Other

Stock Market Mysteries.

CRASH PROOF COURIER VOLUME II ISSUE II SPRING 2012

ARTICLES:2.1 FUZZY MATHSTOCK RETURNS

When is 9% really 3%? And otherstock market mysteries. (Page 1)

2.2 SHAMS & SCAMSSENIOR SCAMSIf youre retired, the biggest threatto your wallet could be...(Page 2)

2.3 IN THE MEDIA

FLEECING ON FILMThe securities industrys greed anddishonesty have not goneunnoticed in Hollywood.(Page 4)

2.4 CONSUMER REPORTIS WALL STREETPUMPING YOU DRY?Gas prices have made retireesthink twice about...(Page 5)

2.5 WHATS GOINGDOWN

BONDS SAYING BONVOYAGETraditionally municipal bonds

were seen as rock-solidinvestments, but no more...(Page 6)

Q&AQUESTIONS TO THEEDITOR (Page 7)

In our Summer 2011 issue, wereported on the real worldreturns from Crash Proof-type

vehicles, as documented by a majoracademic study at the University ofPennsylvanias esteemed WhartonSch ool. Th oug h we always

understood the growth potential invehicles of the Crash Proof type,the returns charted by Wharton forthe years 1997-2010 were evenmore robust than wed expected.Subsequent in-house calculations

based on the Wharton teamsoriginal data extend the chartthrough January 2012 and confirmthat financial instruments in theCrash Proof class beat the Dow

handily in total account growth: Astarting $300,000 Crash Proof

portfolio would have ballooned tonearly $700,000 over that 14-yearspan. By contrast, a $300,000investment in the broad S&P 500

w o u l d h a v e t o p p e d o u t a t$519,000 after 14 years. But thestory doesnt end there. Since1976, Boston-based Dalbar, Inc.

has arguably ranked among the

nations premier sources ofaccurate, up-to-date statistics onreal world stock market returns.In 1994 Dalbar began releasing itsunique Quantitative Analysis ofInvestor Behavior (or QAIB),

which represents an exhaustive

annual analysis of trades. TheQAIB indicates that the average

private investor can expect to fallwell short of the officially quotedreturns for the S&P 500,r e g a r d l e s s o f w h e t h e r h i sinvestment is in stocks or mutualfunds.

Here are just two eye-openinghi gh li gh ts (or lo wli gh ts?) of

Dalbars comprehensive researchfrom different years:

! Stock investors vs. thebroad market: For the 20-yearperiod ending Dec. 31, 2010, theS&P 500 quoted an overall averageannual return of 9.14%. In reality,the typical private investor instocks achieved an average annualreturn of just 3.83%. (please turn

page)

LOU HARVEYDALBAR FOUNDER

Founder and CEO of Dalbar, Lou Harvey is relentless in hispursuit of real world metrics that consumers can use inplanning their investments.
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A RETIREMENT MEDIA, INC. PUBLICATION TRUTH FOR THE AMERICAN RETIREEwww.crashproofretirement.com 2

CRASH PROOF COURIER VOLUME II ISSUE II SPRING 2012 Mutual fund investors vs. the broad market:

For the 20-year period ending Dec. 31,2008, the S&P 500 quoted an overallaverage return of 8.35%...but the typical

private investor in stock-based mutual fundsachieved an average annual return of just

1.87%. Inflation averaged 2.89% per yearduring that time.

These findings are not flukes. An earlier study by giantmutual fund rating company Morningstar showed that

between 1989 and 1994, when mutual funds wereexperiencing dramatic growth as accumulation

vehicles, the typical stock mutual fund quoted anaverage return of 12.5% per yearbut the averageinvestor in those funds lost2.2%.

Dalbars research suggests several related conclusions: You cannot successfully time the market. You

get on too late or get off too soon or vice versa. Your guesses about major market movements

are likely to be wrong much of the time.

Psychological instincts having to do with basichuman nature inevitably lead to bad investingdecisions.

Or as Dalbar puts it in its QAIB: When the times gettough, investors panic.

Bottom line, if the actual S&P wouldve returned$519,000 on a $300,000 investment over 14 years,chances are your individual returns wouldve beensubstantially less. So if youre chronically falling shortof the index, doesnt someone else have to be beatingthe average? Yes. Its the giant investment firmstrading in their own accounts, according to Dalbarfounder Lou Harvey. These guys are making hugeamounts of money literally being on the other side ofthe mistaken [small] investor, says Harvey. He adds

that the odds are overwhelmingly against any privatestock speculator who hopes to compete with aGoldman Sachs or a JPMorgan.

Which begs a simple question: if the investing deck isthat stacked against youwhy play?

If youre retired, the biggest threatto your wallet could be that smooth

voice on the phone or that alluringemail promising you anything andeverything. Although retirees stillcontrol much of the accrued

wealth in mainstream America,their $2 trillion loss in 2008alone, coupled with ongoinginflation, can cause them to betempted by the promise of easymoney.

Scams targeting retirees have risendramatically in recent years.

Roughly 40% of the complaintsthat come into the Philly FBI officeon a daily basis involve some kindof internet fraud or scam that willtypically target older Americans bylooking to get access to theirretirement income, BrianHerrick, head of the FBIs localcyber-crime unit, told PhilCannella last year in an exclusiveCrash Proof Retirement Showinterview.

The scams fall into severalcategories:

Phishing Scams: The mostprevalent scams rely on whatsknown as phishing. Scammersuse this tactic to obtain fromunsuspecting retirees personalinformation such as Social
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ARETIREMENT MEDIA,INC. PUBLICATION TRUTH FOR THE AMERICAN RETIREE 3www.crashproofretirement.com

CRASH PROOF COURIER VOLUME II ISSUE II SPRING 2012Security numbers, ATM PINs and bank account andcredit card information. Phishers use a number ofspecific methods to get what they want, but usuallyresort to phone calls, emails, or posts on online socialnetworks in which they claim to be with a governmententity or other organization.

One recent phishing scam told retirees that they wouldbe subject to a $10,000 fine if they failed to file theirtaxes by January 31st. Marks were then directed to a

phony Internal Revenue Service (IRS) website and toldto input personal information. The IRS issued a

warning informing taxpayers that the IRS would neversend unsolicited emails and would never ask for

personal information through the Web.

Also keep your eyes peeled for emails that seem to

come from known tax-prep software companies likeTurboTax or TaxACT. Scammers will hijack logos fromthese companies to make their emails appear genuine.They will often begin with Dear Sir/Madam or DearCustomer rather than your namea common phishingtip-off. Tax-season scammers will also assume theidentity of a trusted financial institution or aninvestment bank.

Besides the tax frauds, the following are just several oft o d a y s m o r e

popular scams:

Sale of Unregistered

Securities: Con artistswill sell unregisteredsecurities to those withself-directed Individual

Retirement Accounts (IRAs). These types of IRAs allowconsumers to invest in assets unlike ordinary stocks,

bonds, or mutual funds. Some unscrupulous financialadvisors have led IRA holders to believe thatunregistered securities are a good way to make fastmoney before retiring. In reality, the retirees are

participating in a felony and have zero chance ofmaking any money. The Securities and ExchangeCommission (SEC) has issued repeated warnings toinvestors about these scams.

Social Security Scam: This occurs when someoneclaiming to be from the Social Security Administration(SSA) contacts you and offers a bigger check inexchange for a filing fee. Beaware: Actual SSA employees

wil l never init iate this

transaction, are not allowedto charge filing fees, and

would be subject to criminalpenalties if they tried to.

R e a l E s t a t e

S c a m s : In oneespecially insidiouss c a m , y o u r e

p e r s u a d e d t otransfer your title or

s e l l y o u r h o m ebelow market valuet o a s o - c a l l e d f o r e c l o s u r erescuer. Struggling

homeowners have been assured that they can stay in theirhomes as renters, then buy the home back at a later date.Tragically, the scammers evict the victim and take the

house.

These scams represent just a small sampling of whatyoure up against; the FBIs Herrick reports that there are

also auction frauds, work-at-home frauds, prescriptionfrauds, etc. Retirees who want to avoid being victimizedmust remain informed, vigilant and, sadly, skeptical ofanyone and everything. The FBI hosts a web site,

www.lookstoogoodtobetrue.com, which lists dozens ofthe most common schemes. Take a good long look.
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CRASH PROOF COURIER VOLUME II ISSUE II SPRING 20122.3 IN THE MEDIA

FLEECING CAPTURED ON FILM

The securities industrys greed and dishonesty have not gone unnoticed in

Hollywood. Several recent documentaries and feature films have tackled the

topic of the 2008 Wall Street meltdown and its causes. We suggest you

watch these films, if you havent already.
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U.S. retail unleaded gasoline averaged $3.94 per gallonon April 9, 2012, according to the U.S. EnergyInformation Administrationup about 57 cents since

January 1. And with peak travel season on the horizon,the American Automobile Association (AAA) estimatesthat prices could climb as high as $4.25 per gallon forregular unleaded in the coming months.

Clearly this is a particular problem for those living on

fixed incomes. Adults 58-and-over engage in 36% of allleisure travel in the U.S., says the U.S. Travel

Association, which represents the domestic tourism andtravel industries. Pennsylvanias 1.6 million drivers aged65-and-over make up about 18% of all of theCommonwealths drivers, according to AAA.

The mainstream media usually imply that skyrocketinggas prices are due to supply shortfalls stemming fromdiplomatic sanctions and/or increasing public demandamid an improving economy. The facts, however, do not

support such claims; some data even suggest that oil andgas prices should be trendingdownward. Dramaticallyramped-up gasoline production in North Dakota as wellas totally new production areas in Texas and Utah couldspur a new U.S. oil boom. Canada is poised to take onadded importance as a U.S. supplier in the coming years.Meanwhile, Saudi Arabia says it will increase oil suppliesto offset any supply disruptions in the Persian Gulf. Allof these factors should cause gasoline prices to fall, notrise.

But gasoline priceslike all energy costsalso respondto another major influence: Wall Street.

Large investment banks and hedge funds activelyparticipate in the energy industry. They routinely tradeenergy futurescontracts that allow anyone to buy andsell oil, natural gas, heating oil and gasoline on the New

York Mercantile Exchange (NYMEX). Many of these

traders are actually speculators bidding on behalf of a

Wall Street firm. The Wall Street companies have nointerest in owning any actual gasoline; they shed thecontract before theyre scheduled to receive or deliver acommodity, making money off the price spread in theinterim. Commodity Futures Trading Commission(CFTC) data show that major speculators have increasedtheir holdings in gas contracts by 38% since the start ofthe year. More interest in gasoline futures equals higher

prices for the underlying commodity.

Wall Street has lobbied hard against the implementation

of limits on such speculative trading envisioned in2010s Dodd-Frank Banking Reform Law. And as weknow from so many other episodeswhat Wall Street

wants, Wall Street often gets.

So if youre sick of high gas pricestell your broker.

2.4 CONSUMER REPORT

IS WALL STREET PUMPING YOU DRY?

Gas prices have made retirees think twice about those quick

impulse trips to see the grandkids. Relief is not expected

anytime soon. And evidence suggests that the pump pain is

being inflicted by a now- familiar villain: Wall Street.
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2.5 WHATS GOING DOWN

YOUR BONDS ARE SAYING BON VOYAGE

Traditionally municipal bonds were seen as rock-solid investments, mostly

because they were supported by a strong tax base from which cities could

draw as needed to meet obligations.

But no more...

Traditionally municipal bonds wereseen as rock-solid investments,mostly because they were backed bya strong tax base from which citiescould draw to make interest

payments.

Times havechanged.

!The 2008f i n a n c i a lmeltdownsent home

v a l u e splummeting

and also contributed to highunemployment. That erosion of the

tax base has made municipal bondsso unattractive that the FederalReserve in March 2010 released astatement interpreted by insiders tomean the Fed was bearish onmunis and would no longer be

purchasing them.

Other factors have had an impact onmunicipal bonds fall from grace.

As was also true in the disastrous

m o r t g a g e - b a c k e d s e c u r i t i e smarket, muni bonds have been

p r o p p e d u p b y i n s u r a n c ecompanies. What really matters is

whether the municipalitys financesare in good shapenot whether themunicipality is able to findinsurance for its bonds, says Joann

Small, CEO of First SeniorFinancial Group. When investingin munis, you need to look at theactual credit rating of themunicipality, apart from the bondinsurance that can make iffy

investments seem like a sure bet.Although some municipalities dohave AAA credit, many do not.Harrisburg, Pennsylvania and

Jefferson County, Alabama, are justtwo municipalities that have filedf o r C h a p t e r 9 b a n k r u p t c y

protection in recent years. TheJeff erson ba nkruptcy wa s th elargest in U.S. history and stemmedfrom losses incurred in a shady deal

with JPMorgan. Jefferson hadturned to JPMorgan when it needed

help managing debt from theconstruction of a sewer system.The county worked out a deal

where its $3 billion debt would beconverted into complex financialinstruments that not only proved to

be essentially worthless but wereriddled with hidden million-dollar

fees. For its role in the boondoggle,Morgan paid penalties of $25million to the SEC and $50 millionto Jefferson County. Morgan alsoagreed to forgo $647 million intermination fees it had soughtagainst the County. As the debtsaga continued, it came to light that

Jefferson County officials hadaccepted bribes to sign off on thedeal21 officials were convicted.

A c c o r d i n g t o S m a l l , m a n yAmerican cities teeter on the edgeof bankruptcy, but investors may bemisled by insurance that can giveTriple-A ratings to toxic bonds. Itdoesnt take much for a city to fallover the edge,says Small. Keep inmind that a bond insurer may not

be required to make good on allthose missing six-month interest

payments until the maturity date ofthe bond, which can be 30 yearsinto the future!!The only

way to digout of thismess is to

get back thetax base thatmade municipal bonds such astrong investment in the past, saysSmall. No easy task when youconsider that municipalities rely

heavily on real-estate taxes. Withp r o p e r t y v a l u e s d o w n a n dhomeowners still walking awayfrom their underwater mortgages,tax shortfalls are commonplace.These uncertainties may continueto make municipal bonds a diceyinvestment for years to come.

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How long has First Senior Financial Group been in

business?

Phil Cannella formed First Senior Financial Group in

2005, although he has been operating companies with the

same Crash Proofing goal continuously since 1976. If you

have been to one of Phils educational programs, you know

that in January 2008 he made the cover of an important trade

magazine, Senior Market Advisor, for the remarkable

achievement of Crash Proofing $40 million worth of assets.

Later in 2008, when Phil saw millions of American retirees

being devastated by market conditions, Wall Street greed and

the economy as a whole, he created The Crash Proof

Retirement Show to educate retirees about safe alternatives

to the risk of stocks, bonds and mutual funds.

You say there are no fees for First Senior Financial

Groups services. How can this be true?

It is absolutely true. You will never pay a dime for your

Crash Proof educationnot at any stage of the process. And,

you can walk away from our three-appointment process at any

time with no further expectations on our part. We ask only

that we be permitted to keep your Crash Proof recipe on file

so that one year later, we can compare how you actually did

during that year with how you would have done, had you gone

the Crash Proof route. And for the record, First Senior never

touches your money, which simply moves from where it is

now to where it will end up, at the major firms we use to

safeguard your financial security.Then how do you make money?

If you apply your Crash Proof education and all

documents have been signed and approved, First Senior

receives a one-time fee from the companies that Crash Proof

your nest egg. They consider this a marketing fee. However,

again, not one dime of this marketing fee comes out of your

principal. Your nest egg goes to work for you to see you

through your retirement without market risk or ongoing

market feesguaranteed.

How experienced are First Seniors advisors?

We like to joke that some of our Crash Proof educators

are recovering securities addicts. That is to say, they have

extensive backgrounds in securities sales with such

brokerages as Merrill Lynch, Oppenheimer, E*Trade,

Prudential Securities, Janney Montgomery Scott and

Shearson/Lehman/American Express, to name a few. Other

senior advisors have extensive backgrounds in insurance and/

or financial management.

How can we find out if your company is reputable?

First Senior Financial Group values transparency above

all. We invite you to check us out with the Better Business

Bureau (BBB), the Financial Industry Regulatory Authority

(FINRA), and the Attorney Generals (please turn page)


As the tri-state areas leading consumer advocacy firm for those in retirement years, First Senior Financial Group welcomes your

questions and comments. Were sure that many of your general concerns will be addressed each weekend on The Crash Proof

Retirement Show with company founder Phil Cannella, CEO Joann Small and their special guests. The show airs Saturdays from

11 a.m. to 1 p.m. on WPHT Talk Radio 1210AM. But if you have more personal questions about retirement finances, Medicare,

real estate, or a con or scam youd like to see investigated, email Director of Retirement Media Steve Salerno:

[email protected]. Or just call 1-855-34-TRUTH (1-855-348-7884), and press option 2. Steve and his team will get

you the information you need! In the meantime, we thought wed ask ourselves a few common questions just to get you started.

Q&AQuestions to the Editor :
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offices in Pennsylvania, New Jersey and Delaware. We are

proud of our firms record of helping consumers just like you

safeguard their irreplaceable nest eggs, and we invite you to

schedule a visit at our King of Prussia headquarters for a full

tour. All senior staff are available to answer your questions.

Are there any studies that validate your Crash Proof

methods?

Yes, and there is more research being done all the time.

In particular, a study done by a team from the WhartonSchool, published in 2009 and updated in 2010, shows that

in rolling five-year averages, vehicles of the Crash Proof type

have easily outperformed the S&P 500 since 1997.

Dont all investments carry some risk?

All securities carry some risk. But unlike securities, the

investment vehicles we work with DO NOT lose value in a

declining marketeven during an all-out crashso you can be

assured that your principal will never sink beneath the water

line. Whats more, the statutory corporations in the industry

in which we work cannot legally file bankruptcy, so

consumers need not worry about the sorts of catastrophic

losses experienced, for example, by investors in Lehman

Brothers or GM.

Why cant you be more specific about the product

youre selling?

First of allwe dont sell anything. We will terminate

any advisor that we discover to be selling a client. FirstSenior Financial Group educates consumers about the best

options for safeguarding their nest eggs. More important, the

Crash Proof process is not about a product. It is about a

matrix, a complex recipe that will involve different ingredients

in different combinations according to the needs and goals of

each client. Third, theres a great deal of misinformation and

public misunderstanding about some of the products that

offer the best option for combined wealth protection and

growth. In addition, unfortunately, there are products with

similar names that are loaded with fees and/or offer vastly

inferior performance. We prefer to take the time to explain

these products in detail rather than to try to summarize them

in a thumbnail form that might lead to mistaken impressions.

Remember, we invite you to bring your present advisor along

so that he or she can become educated as well. We will be

happy to answer any questions from advisors outside of our

industry. Or from financial journalists, for that matter.

THIS MUCH Phil Cannella and Joann Small personally

guarantee: At the end of the process, your nest egg will be

Crash Proofed against market risk and ongoing market fees.


Q&AQuestions to the Editor: (continued)

BE ACRASH PROOF RETIREMENT SHOWLISTENER

~CALL THE TRUTH LINE!

1-855-34-TRUTH(87884)

VISIT WWW.CRASHPROOFRETIREMENT.COM
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