What's New? Feddern Financial Consulting Group

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1 Subject: Feddern Financial Consulting Group Newsletter What's New? Feddern Financial Consulting Group TODAY'S NEWS: VectorVest published Dr. Dillito's take on the THREE factors driving the Stock Market Corporate Earnings When a major event such as an assassination, earthquake, or international financial crisis occurs, investors instinctively speculate on whether the event will help or hurt the stocks they own. If the event seems likely to help corporate earnings, prices rise. Conversely, if the news is perceived to be harmful, prices fall. 2. Inflation The bug-a-boo of a strong economy is inflation. Inflation, of course, causes raw material, labor and service costs to increase. Unless a company increases productivity and raises prices, profit margins narrow and earnings go down. Rising inflation rates ultimately push stock prices down. It not only lessens the value of financial assets, it erodes the purchasing power of consumers. Left unchecked, inflation destroys monetary stability and leads to a weak economy. 3. Interest Rates The Federal Reserve is charged with the responsibility of maintaining monetary stability.

2 It fulfills this task by controlling the money supply. When the Fed sees inflation increasing, it tightens the money supply and interest rates go up. Ironically, higher interest rates raise costs. It stifles investment, weakens the economy, hurts corporate earnings and eventually leads to a Bear market. Interest rates are perhaps the most powerful force driving the stock market. In summary, prices rise when earnings go up. Prices fall when inflation rises and when interest rates increase For those of you who have an interest, we have developed an on-going managed account using VectorVest Market Calls and a portfolio search of their stocks. We call it the Holy Grail. Basically it involves selecting 10 stocks from their data base with specific criteria and hold them until the VV system removes them from a BUY rating. At that time we replace it with a new BUY. The portfolio is adjusted only on MONDAYS based on Fridays signals. We will cover this portfolio at our monthly LUGs meeting TOMORROW at 10 A here in my conference room. In this issue TODAY'S 401-k Asset Allocation Changes. More than You Wanted to Know About the Minimum Wage Controversary AAII/LUG's Group Info ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ TODAY'S 401-k Asset Allocation Changes PLAN NAME BUY SELL LINK TO DETAILS and the Five Profiles FFCG-Ultimate: Dynamark Anderson Law uupix,ujpix ryoix dxzlx,uepix unpix Nationwide: Ahead HR Socially Responsible: ryoix

3 OneAmerica: VISIT OUR WEBSITE FOR SPECIFIC RECOMMENDATIONS We have added several new sets of indicators from NetSignal, VectorVest, and our 20-day MA of the S&P 500 which are used for the broad markets and give a general indicators of BUY or SELL. The following market signal changes were issued by NetSignal as of: US STOCKS - BUY ( ) FOREIGN STOCKS- BUY ( ) EMERGING MARKETS - SELL ( ) GOLD - BUY ( ) The following market signal changes were issued by VectorVest as of: Stock Market Call - BUY ( ) The following market signal changes were issued by our LONG/SHORT S&P 500 as of: Market Call - BUY: SSO/UPLIX ( ) More than You Wanted to Know

4 About the Minimum Wage Controversary When Washington residents voted in 1998 to raise the state's minimum wage and link it to the cost of living, opponents warned the measure would be a job-killer. The prediction hasn't been borne out. In the 15 years that followed, the state's minimum wage climbed to $ the highest in the country. Meanwhile job growth continued at an average 0.8 percent annual pace, 0.3 percentage point above the national rate. Payrolls at Washington's restaurants and bars, portrayed as particularly vulnerable to higher wage costs, expanded by 21 percent. Poverty has trailed the U.S. level for at least seven years. The debate is replaying on a national scale as Democrats led by President Barack Obama push for an increase in the $7.25-an-hour federal minimum, while opponents argue a raise would hurt those it's intended to help by axing jobs for the lowest-skilled. Even if that proves true, Washington's example shows that any such effects aren't big enough to throw its economy and labor market off the tracks. "It's hard to see that the state of Washington has paid a heavy penalty for having a higher minimum wage than the rest of the country," said Gary Burtless, an economist at Brookings Institution who formerly was at the U.S. Labor Department. Costs, Benefits Raising the U.S. minimum wage to $10.10 in three steps, as Obama proposes, would reduce employment nationally by about 500,000 workers, or about 0.3 percent, according to a Congressional Budget Office report published Feb. 18. At the same time, the increase would lift 900,000 people out of poverty and add $31 billion to the earnings of low-wage Americans, the report found. While debate persists on the employment effect, "CBO is as qualified as anyone to evaluate that literature, and I wouldn't argue with their assessment," Federal Reserve Chair Janet Yellen said Feb. 27 to the Senate Banking Committee. Looking past the effect on jobs, increasing the minimum hourly wage to $10.10 would also reduce food stamp expenditures by about 6 percent, or nearly $4.6 billion a year, according to a report today from the Center for American Progress. The Washingtonbased research institute, which was founded by Obama adviser John Podesta, released its report as the president reiterated his call for a higher wage floor.

5 Washington voters in November 1998 approved increasing the state's minimum wage in two stages to $6.50 and tying future annual changes to inflation as measured by the consumer price index. Groups representing retailers, restaurants and hotels opposed the measure, according to a voters pamphlet on the 1998 election published by Washington's Office of the Secretary of State. Employment in those industries has increased in the state of Washington since then, Labor Department data show. Shock Absorbers One possible explanation: Businesses have plenty of ways besides job cuts to absorb the costs of a minimum-wage increase, according to Arindrajit Dube, an economist at the University of Massachusetts at Amherst, whose research found no significant effects on employment. Price increases, reductions in profits and savings from lower turnover can help soak up the shock. "When you put all of these together, then the finding that moderate increases in minimum wages do not appear to have much of an effect on employment is less surprising," Dube said in an interview. Not everyone buys that argument. Minimum-wage laws not only reduce employment opportunities and earnings for low-wage workers, they also reduce demand for their labor as it's replaced by other forms of capital, according to research published in 2008 by David Neumark, an economist at the University of California at Irvine, and William Wascher, an economist at the Federal Reserve Board of Governors in Washington. Boehner, Reid The federal minimum-wage legislation is opposed by business groups such as the National Retail Federation, along with many Republicans, including House Speaker John Boehner of Ohio. In the Democratic-controlled Senate, Majority Leader Harry Reid of Nevada on Feb. 25 postponed a vote on the legislation, a centerpiece of the party's election-year focus on income inequality. The delay until senators return March 24 from a week-long break gives labor unions more time to organize support for the proposal, said a Senate Democratic leadership aide who requested anonymity to discuss strategy. Gridlock in Congress may mean the debate is waged more immediately by states and cities instead of at the federal level. State Minimums As of January, 21 states and the District of Columbia had a higher minimum wage than the federal floor. Cities including San Francisco and Santa Fe, New Mexico, require even higher hourly earnings than the proposed federal level, at $10.74 and $10.66

6 respectively. New Jersey voters in November approved increasing the minimum wage by $1 an hour to $8.25, tying future increases to the consumer price index. In January, after the raise took effect, private employers added 8,320 jobs in New Jersey, according to ADP Research Institute. That was the fastest pace of job growth since December Raising Prices Joe Olivo, the chief executive officer of Perfect Printing, a Moorestown, New Jersey, company that makes materials such as marketing brochures for businesses, was among those who opposed the state's minimum-wage increase. Since it began, he hasn't cut his 48-person staff. Instead, he's looking to pass on the costs by raising prices, a step that he said could impede his business's ability to grow and hire in the future. "If I am losing work and I have less money to grow, what good does it do for those employees that are looking for future work?" said Olivo, 47. "The people that are looking for jobs find it harder." Those kinds of long-term costs leave economists including Charles Brown undecided in the debate. Brown is a professor of economics at the University of Michigan in Ann Arbor who reviewed the CBO's analytical approach. "The report does a very careful job of trying to make the best use of the available literature," Brown said in an interview. "If I balance short-run gains against short-run losses, this looks like a reasonable thing to do. The problem is, we don't have a good handle on how large those long-run effects are likely to be." $15 Minimum Washington's relatively benign experience with a higher minimum has encouraged some communities in the state to push for even more. SeaTac, Washington, a Seattle suburb where the major employer is the region's international airport, voted in November to raise the hourly minimum by more than 60 percent to $15 for 6,300 people who work at the airport, hotels and nearby businesses. Companies including parking lot operator MasterPark LLC had said the higher pay might lead to job losses. Since it passed, 140 MasterPark employees have received raises and the company hasn't cut jobs because that might compromise service, managing partner Roger McCracken said. "We're in the valet business -- that means employees," he said. Instead, the company responded by tacking on a 50-cent daily "living-wage surcharge" to prices. Seattle's Mayor

7 Now, Seattle Mayor Ed Murray, a Democrat elected in November, is following SeaTac's lead as he also promotes raising the city's minimum to $15. A task force of business and labor representatives, advised by academics from the University of California at Berkeley and the University of Washington in Seattle, is meeting monthly and hopes to produce a proposal in April, Murray said in an interview. The Seattle-Tacoma-Bellevue metropolitan area ranks 14th in a list compiled by Bloomberg of 50 cities where it's hard for fast-food workers to gain upward mobility, based on median pay compared with rent, tuition and health-care costs. Advocates such as Murray say a higher minimum would help change that. "We can't rebuild this economy if it's just people who buy 94-foot yachts and play in the derivatives," Murray said. "You build an economy when a middle class is buying microwaves or flat-screen TVs or the next set of clothes for their kids." AAII Group Info ============================ AAII will Meet on THURSDAY at 6:00 PM at the AUDUBON CC 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 preregister by to attend this program, in order for the country club to provide appropriate seating arrangements. Also, indicate if you plan to stay for the dinner afterwards. Please confirm your attendance by to Otto@fedderngroup.com 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.) MAR 20, PM Agenda: How to Trade the S&P for Fun and Profits" - Bruce Richards... And he means REAL Profits!!!! A New Dividend Portfolio from the Highest Yielding Stocks in the S&P Stock and Bond Indicators to Help You Determine "Where We Are" The "Holy Grail" Stock Portfolio Using VectorVest Rules - UPDATED

8 Developing a new Watchlist for Fun and Profit by NEXT Christmas You don't need to be a member of AAII to attend this meeting DINNER: $25 MEETING ONLY: $10 Reservations Requested and Appreciated =================================================================== Louisville Users Group (LUGS) Info ============================ The next LUGS Will Meet on SATURDAY - MAR 8-10:00 AM MAR 8, :00 AM FREE - No Reservations needed AGENDA: How to mitigate the Downside risk in your portfolio while participating in the Upside Comparing the Dow Dividend Royalty to the NEW S&P 500 High Yield Portfolios UpDate on the LONG/SHORT S&P 500 Platform - with Bruce Richards the developer UpDate on the "Holy Grail" 10-stock portfolio 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

9 Otto G. Feddern Feddern Financial Consulting Group 603 North Shore Drive Suite 102 Jeffersonville, IN (502) Office (502) Cell Forward This was sent to by Update Profile/ Address Instant removal with SafeUnsubscribe Privacy Policy. Feddern Financial Consulting Group 603 north shore drive suite 102 jeffersonville IN 47130