What's New? Feddern Financial Consulting Group TODAYS NEWS: About a month ago I let the "democracy" word slip in a discussion. I know better.

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1 Subject: Feddern Financial Consulting Group Newsletter In this issue What's New? Feddern Financial Consulting Group TODAY'S NEWS this website on a regular basis TODAY'S 401-k Asset Allocation Changes. Are Storm Clouds Gathering on the Fixed-Income Horizon? KEYS TO THE BEGINNING OF A RECOVERY AAII/LUG's Group Info TODAYS NEWS: About a month ago I let the "democracy" word slip in a discussion. I know better. Americans have been conditioned to use this term. It's not an accurate term and it never has been a correct term to describe our form of government.,

2 The truth is that the United States of America is a constitutional republic. This is similar to a democracy because our representatives are selected by democratic elections, but ultimately our representatives are required to work within the framework of our constitution. In other words, even if 90% of Americans want something that goes against our founding principles, they have no right to call for a violation of constitutional rights. This concept is really hard for some people to swallow Jaw-dropping report: This is what the IRS has been spending your money on Moments ago, the Treasury inspector general for tax administration - the same source as the crushing report exposing the IRS persecution of conservative groups - released a report highlighting the spending and "questionable expensing" by IRS staff who blew through $49 million across 225 conferences between 2010 and The source of the money was largely unused cash meant to hire more enforcement agents. Instead, it was spent on things like the previously mentioned Star Trek parody, ad hoc drawn paintings of Abraham Lincoln, and "motivational speakers" whose primary requirement is to be flown in first class. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Check this website on a regular basis It's truly eye-opening. We just passed the $16 T-mark AND We're closing in on $17

3 AND Another One on Silver: TODAY'S 401-k Asset Allocation Changes BE AWARE: As of we are nearly fully invested in all platforms (except bonds): but we have raise all the" PROTECTIVE STOPS!" And we have had numerous SELLS as of Today. ``````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````` Click this link for an incredible website for calculators for your 401-k AND financial planning ````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````` This market is due for a pullback. You know it and I know it. The real question is, what are you going to do when it happens? We had an excellent attendance at our first free LUGS meeting on SAT 6-8 on "How to mitigate the downside risk in your portfolio while participating in the upside." The next session will be on SAT 7-13 at 10A here in our conference room.

4 Some investors will let it scare them off... others will stand frozen in fear. And they'll all lose big because of it. So I want to make sure you are 100% prepared when the inevitable pullback happens. Because when it does, you don't have to be like a deer-in-the-headlights! It is possible to get out of the way...and use Inverse Funds for a profit-making opportunity. We will spend some appreciable amount of time reviewing and analyzing them. Then look for the next opportunity as the down-draft will end and new bull market will begin. We at FFCG began our detailed research on downside risk way back in 1999! So we've had some experience in avoiding catastrophes like 2008 and recognize opportunities like 2003 and Its not rocket science, but it did take a fair amount of work to develop our methodology using what's called point and figure analysis which was originally began by Charles DOW when he became the first editor of the Wall Street Journal in Over the years, we have developed a unique and really educational 1½ hour seminar that you may or may not have seen. But since we constantly update the material, we've decided to offer the seminar in my office conference room on the second SAT of each month. This will be a standing meeting. Please me if you plan to attend and feel free to invite any guests. We ARE limited to 9-10 people in my conference room. Make no mistake, this is not a sales presentation on any product; but simply an emplanation of how we operate our 1 Risk. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Feddern Ultimate 401-k (40 No-Load Index Funds) Welcome Dynamark Graphics Group No Change Ahead Human Resources 401-k (34 Load-Waived Funds)

5 No Change Socially Responsible Portfolio No Change OneAmerica 401-k (25 Load-Waived Funds) VISIT OUR WEBSITE FOR SPECIFIC RECOMMENDATIONS We have added a new set of indicators provided to me by the folks at NetSignal which are used for the broad markets and give a general indicator of BUY or SELL. The following market signal changes were issued by NetSignal as of: US STOCKS - BUY ( ) FOREIGN STOCKS- BUY ( ) EMERGING MARKETS - BUY ( ) GOLD - SELL ( ) (If your company's 401-k could use our expertise in active asset allocation, let me know. We have a daily monitoring service that is designed to mitigate the downside risk for the participants. We did not lose any money in 2008! We doubt that your current provider - broker, agent, representative, trust officer, etc. has any concept of fiduciary responsibility and how to provide you and the others with meaningful, DAILY advice on what to own, when, AND how much...and most importantly WHEN NOT TO OWN!!!!)

6 See the newest annual report from kiplinger on the best 401-k funds: CLICK HERE No Change Are Storm Clouds Gathering on the Fixed- Income Horizon? We at FFCG have been OUT of the bond market in all platforms beginning at the first of May. Long thought to be an investment with a guaranteed return, the upside/downside ratio on traditional fixed-income products is unsustainably low, a white paper warns. --- Fixed-income investment managers have enjoyed the greatest success of all industry business models during the past decade, according to "Next Generation Fixed-Income Managers," a white paper from Casey, Quirk & Associates, a management consultant to the global asset management industry. A long-term dip in interest rates globally has helped fixed-income asset managers double revenue since 2000, and businesses that predominantly manage fixed income currently are more profitable than their equity counterparts. But if interest rates climb, older Americans with holdings in fixed income within 401(k) plans and other portfolios are likely facing losses if they maintain their fixed-income exposure in traditional strategies. This is just a perfect storm for the "Modern Portfolio" advocates. What investors have been told for a very long time, said Yariv Itah, a partner at Casey Quirk and lead author of the white paper, is that as you grow older, you need to put more money into fixed income. "Most investors don't remember the last time you could lose money by

7 investing in government bonds," Itah told PLANADVISER. "People just assume that the fixed-income portfolio is a safer investment. Because this is not the necessarily the case This is one of the fallacies of the Target Date Funds that move your money very heavily into bonds the closer you get to retirement. We've just been in that environment for a long time. Since the 1970s fixed income was considered a stable investment with a guaranteed return, and Itah said that they were unable to find a single three-year period, over the past 30 years, in which an investor would lose money by investing in government bonds. Currently one quarter, or $1.2 trillion of defined contribution (401-k) assets are invested in fixed income, according to Casey Quirk's research. If interest rates rise to even half their historical average, DC plan losses will likely top $180 billion. And, Itah pointed out, participants age 55 and older tend to have four to six times as much fixed income in their portfolios as people in their 30s, so older investors stand to lose more. "The 20/10 allocations in fixed income in a target-date fund can be four to eight times higher than in the 20/40 or 20/50 target-date fund," Itah pointed out. "Older investors are much more exposed by design to fixed income: the glide paths all lead in that direction." Older investors tend to have more assets overall, which further increases their exposure to fixed-income risk. While younger people don't have as great exposure to fixed income, they may still assume this is a less-risky part of their portfolio, Itah said, which is not true. Casey Quirk has suggested that asset management firms communicate expectations with clients. Whether institutional or individual is less important as setting expectations, "so that investors understand the downside and the critical asymmetry in investing in bonds in today's market because of interest rates, which have nowhere to go but up," Itah said. High-net-worth and retail advisers, and institutional and individual investors are increasingly aware of this asymmetry, Itah said, and of the risk-reward profile of bonds. An effective investing strategy is not necessarily decreasing exposure to investment in debt, but to shift away from the products that are closest to the benchmark, Itah advised, and more toward products with other drivers or return like credit, emerging market debt; leveraged loans and private lending. These are still debt investment, but

8 they have other return drivers than interest rates. "It's not so much about age but how much of your portfolio is invested in government bonds, or in core or core plus mutual funds that are very close to the benchmark," Itah explained. "If it's over 25% or 30%, that's a substantial risk that you have to be aware of." These kinds of anomalies are what we at FFCG address everyday in an effort to keep accounts from losing! KEYS TO THE BEGINNING OF A RECOVERY ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 1. The Real Estate market must stabilize. If not reversing, at least not continuing to fall. Inventory still huge and getting worse! The National COMMERCIAL COLLAPSE IS JUST BEGINNING! Hold on to your hat. This is a superior example of government stimulus gone awry. The consensus is that housing will decline another 20-30% from current levels... and probably THIS YEAR! However, one dichotomy is that the best performing sector in 2011 was Real Estate; and the first 1/2 of 2012 RE is also leading the way...go figure. Rental units are highly coveted. 2. Unemployment must stabilize. If not reversing, at least not continuing to rise. Last report was indeed unstable! AND IT CONTINUES TO REMAIN ABOVE 8%! The REAL RATE is much closer to 20% if you really count ALL without a job! Of course there's very little motivation to really search for a job with unemployment payments now running 99 weeks!!! 3. Corporate earnings (profits) must stabilize. If not reversing, at least not continuing to fall. SOME POSITIVE SIGNS. But top line growth (new sales) have just not been there. There's just so much cost cutting that can be done. We'll see what the rest of 2012 brings. 4. Banks must begin to make loans again (especially to small businesses and potential home owners... albeit under ancient premises of buyers being qualified and of all things, a down payment! Lots of "hoopla" from the mega banks, but it appears that there's no real progress. They're hoarding any cash they can get their hands on. And that probably includes Helicopter Ben's newest $600 BILLION! And now, here comes Regional problems compounded by PRIME loan, Alt-A resets in the Commercial end! Beware of your bank's ratings. Community Banks offer the best deal! We are checking them out at least weekly. Call me. I have some personal experience here.

9 5. The DOLLAR has to decline. It's started for REAL But now with the Euro going down the tubes today and rallying tomorrow, the dollar seems to be the best of the worst. 6. Auto sales must stabilize at some NEW level. Maybe started! 7. The consumer must get "back in the game of consumin" - NO WAY (except for the carzy APPLE IPhone)... NOT YET at any rate! ANALYSIS OF THE ABOVE: NO Real Hope YET! - 6/10/2013 AAII/LUG's Group Info ============================ AAII will Meet on THURSDAY at 6:00 PM at the AUDUBON CC (note the change in day AND location) AGENDA See the schedule below AAII Monthly Meetings ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The Audubon Country Club is conveniently located off Preston Highway, approximately one mile South of Eastern Parkway in Audubon Park on the left. After entering Audubon Park, take the first right and go all of the way to the end and you will be at the entrance to the Club. Parking is very convenient. Since this meeting is sponsored by the Louisville Chapter of the American Association of Individual Investors, you are always asked to pre-register by to attend this program, in order for the

10 country club to provide appropriate seating arrangements. Also, indicate if you plan to stay for the dinner afterwards. Please confirm your attendance by to There is a charge for attending the meeting of $10 to help defray some of our expenses And this is not a "prospecting seminar" conducted by a financial services firm selling financial products, and your addresses will remain private and protected. You are also invited to stay for the buffet which is an additional $15 (which makes the total $25 for the meeting AND the dinner.) About the American Association of Individual Investors From the beginning, AAII has answered the question, "Where can you go to get unbiased facts and effective knowledge about investing?" AAII was founded in 1978 to provide individual investors with effective investment education materials that with a bit of dedication could outperform the popular market averages. Over thirty years later, the 150,000 members of AAII report investment returns that are consistently higher than those of the stock market as a whole. AAII's purpose is to assist individuals in becoming effective managers of their own assets through programs of education, information and research. AAII Louisville Chapter offers investment education to members in a "person to person" social setting at the Audubon Country Club. Recent presentations have included "Economic Update" by Christopher Waller, Ph.D., Senior Vice President and Director of Research, Federal Reserve Bank of St. Louis, "Tax Ramifications of the Health Care Bill", by Joe Johnston, CPA, Strothman & Company, "Why Real Estate as Part of a Diversified Portfolio, Why Non-Traded REITs", by Scott Crawford, Regional Vice President, Realty Capital Securities, and Senator Rand Paul "A Legislative Update" Monthly chapter meetings regularly discuss attendees favorite stock and mutual fund selections, stock market timing indicators, leading and lagging sectors, and member presentations regarding how they manage their investment portfolios. In general, we discuss anything of interest to the individual investor. Whether you are an active or passive investor, you will find something of interest in the AAII Journal and our monthly meetings. ~~~~~~~~~~~~~~~~~~~~ 2013 Programs ~~~~~~~~~~~~~~~~~~~~ Jan - No Meeting - Standard CC Closed for Vacations ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ FEB 20

11 -PROGRAM Bill Jenkins, Founder and Sam Ellington, Principal with Mainstream HedgeFund Mainstream is a hedge fund headquartered in New Albany, IN They will present their economic update and projection for 2013 as well as their stock market prognostications. Everyone is also encouraged to bring your BEST TWO Stock picks for 2013 along with your brief explanation. We will follow these each month in the VectorVest software and award a nice prize in December for the best positive gains for the year. You must be in attendance for this meeting in order to submit your picks. If time permits: 19 Stock and Bond Indicators to Help You Determine "Where We Are" Especially Since the Election The "Holy Grail" Stock Portfolio Using VectorVest Rules Everyone is encouraged to bring your BEST TWO Stock picks for 2013 along with your brief explanation. We will follow these each month in the VectorVest software and award a nice prize in December for the best positive gains for the year. You must be in attendance for this meeting in order to submit your picks. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ APR - cancelled `````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````` May 16 - cancelled ````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````````` JUN 20 - Speaker: Julie Lavalle Jones, Mayln, LLC Urban Real Estate Development, Enhancing Communities and Environments

12 If time permits: 19 Stock and Bond Indicators to Help You Determine "Where We Are" Especially Since the Election The "Holy Grail" Stock Portfolio Using VectorVest Rules Everyone is encouraged to bring your BEST TWO Stock picks for 2013 along with your brief explanation. We will follow these each month in the VectorVest software and award a nice prize in December for the best positive gains for the year. You must be in attendance for this meeting in order to submit your picks. Reservations Needed and Appreciated (502) Otto Office (502) Otto Cell otto@fedderngroup.com Dinner and Meeting $25 Meeting Only $10 DON'T MISS THIS ONE! You don't need to be a member of AAII to attend the first time ========================================================== ALSO ========================================================== Louisville User Group (LUG) FREE - No Reservations needed

13 SATURDAY - June 8-10:00 AM PROGRAM: How to mitigate the Downside risk in your portfolio while participating in the Upside My Conference Room Coffee and rolls provided FEDDERN FINANCIAL CONSULTING GROUP 603 North Shore Drive - Suite 102 Jeffersonville, IN (502) Office (502) Otto Cell otto@fedderngroup.com Quick Links... Visit our Website Otto G. Feddern Feddern Financial Consulting Group 603 North Shore Drive Suite 102 Jeffersonville, IN (502) Office (502) Cell otto@fedderngroup.com Forward

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