Banach Wealth Management

• First Quarter 2009 Total Returns
  S&P 500 (797) -11%
  US 10 Yr Bond (2.68%) -11%
  NASDAQ (1528) -3%
  Foreign (EAFE) Stocks -16%
• U.S. GDP expected contraction = -2.2%
• 2009 earnings expected decline = -20%
• Significant 1st Qtr losses; Markets &
  economy continue to search for bottom

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• Wealth goals signfiy values
• Objectives are based on goal statements
• Grasp link between risks and objectives
• Wealth distribution or growth objectives?

• Household time horizon (longevity)
• Retirement spending (withdrawal rate)
• Risk tolerance (portfolio volatility)
• Investment returns (portfolio volatility)
• Gift commitments (sharing with others)
• Inflation (political policy)
• Taxes (manage efficiently)

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• Year to date Total Returns
  S&P 500 (735) -18%
  US 10 Yr Bond (3.04%) -13%
  NASDAQ (1378) -12%
  Foreign (EAFE) Stocks -23%
• U.S. GDP expected contraction = -1.2%
• 2009 earnings expected decline = -12%
• Large year to date losses; First Half 2009
  partial recovery uncertain

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• Risk taking, tools, and leverage evolved
• New risks and controls recently developed
• Risk taking and luck differ

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• Attitudes and tendencies shape behavior risks
• Emotional, cognitive, & agent negative biases
• Moral, psychological, and physiological basis
• Humility, Prudence, Risk Control, Perseverance
  positive responses to limit behavior risks

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• January 2009 Total Returns
  S&P 500 (826) -8%
  U.S. 10 Yr. Bond (2.86%) -13%
  NASDAQ (1476) -6%
  Foreign (EAFE) Stocks -14%
• U.S. GDP expected contraction -1.2%
• 2009 expected earnings decline -6.0%
• Large Jan. 2009 losses;
  First Half 2009 recovery uncertain

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• 2008 Total Returns
  S&P 500 (903) -37%
  US 10 Yr Bond (2.22%) +28%
  NASDAQ (1577) -40%
  Foreign (EAFE) Stocks -43%
• U.S. GDP expected contraction -0.4%
• 2008 earnings expected decline -15%
• Huge 2008 investment losses; however,
  First Half 2009 partial recovery expected

Nearly all asset classes suffered extraordinary

2008 losses. Leveraging (debt financing) of all

assets decreased along with a dramatic decrease

in risk taking. Equity markets illustrated by …

• Year To Date 2008 Total Returns
  S&P 500 (896) -38%
  US 10 Yr Bond (2.93%) +13%
  NASDAQ (1535) -42%
  Foreign (EAFE) Stocks -47%
• 2008 US GDP expected growth -0.3%
• 2008 expected earnings decline -12%
• Very negative 2008 portfolio returns

Executive Overview
Equity markets continued to crater until Nov. 20.
The 11 week decline was unprecedented since
the Panic of 1893! Yet …