The following is an outline of a PowerPoint® presentation written by Bobbie Turner for a leading financial institution. The project, which was targeted to financial consultants, included the provision of slide content, as well as detailed scripts leading the presenter through each point to be covered. Two excerpts, highlighted in bold red, can be accessed by clicking on them.

A:   Economic Indicators

1.   Components of GDP

a.   Consumer spending

b.   Business spending

c.   Government spending

d.   Net exports

2.   Relationship between GDP and the business cycle

a.   How GDP is used to help gauge stages of the business cycle

b.   Real GDP versus Nominal GDP

c.   The Bureau of Economic Analysis—where to find GDP estimates

3.   Consumer Confidence: a Barometer for Consumer Spending

a.   Importance of consumer spending to the economy

b.   Relationship between consumer spending and consumer confidence indicators

c.   Correlation to the stock market

d.   Housing starts

4.   Business Spending: A more accurate read?

a.   Importance of business spending to the economy

b.   Purchasing Managers Index—a leading indicator

5.   Inflation: Why rapid changes in CPI can be devastating to the economy

a.   CPI defined

b.   Causes and dangers of inflation

c.   Causes and dangers of deflation

d.   What inflation means for the economy and the markets

e.   What inflation means for investors

B:   Fixed Income Markets

6.   The Yield Curve

a.   Explanation of term structure (zeros vs.  coupon bonds), relationship between bond prices and yield

b.   What is the yield curve, what does the slope of the curve represent

7.   Spread Sectors: Characteristics of

a.   government agency issues

b.   asset backed securities

c.   mortgage backed securities

d.   investment grade corporate bonds

e.   high yield corporate bonds

8.   Shape of the Yield Curve

a.   What does it mean when the yield curve is steepening?

b.   What does it mean when the yield curve is flattening?

c.   What does it mean when the yield curve is inverted?

9.   Duration

a.   Explanation of bond duration

b.   Its effect on volatility and performance

C:   Equity Markets

10.   Growth vs. Value

a.   Table comparing characteristics of value vs. growth stocks: Definition of value vs. growth investment philosophies

b.   Tendency for value & growth stocks to be negatively correlated

11.   Small, Mid and Large Cap Stocks

a.   Definitions and characteristics of small, mid and large caps

b.   Effects of business cycle on stock prices of small, mid and large caps

12.   Small Cap Mutual Funds

a.   Liquidity issues

b.   Challenges associated with growth

13.   U.  S.   vs. International

a.   The benefits of international: more opportunities, less risk through diversification

b.   Promising trends in the international arena

i.     Stricter accounting standards

ii.    Deregulation and privatization

iii.   Structural reforms

iv.   Improving efficiency and productivity

c.   Impact of currency fluctuations on international investments

14.   Sectors: defensive vs. economically sensitive

a.   How different industries are affected by the business cycle

D:   Implications for Investors

15.   Diversification reduces risk by decreasing correlations

a.   Diversification can improve risk adjusted returns

b.   Line graph showing less volatility for a diversified portfolio, more volatility for stand-alone asset classes

16.   Asset Allocation Strategy

a.   Has a greater impact on an investor’s long term returns than individual stock or bond selection

b.   Things to consider for each of your clients (risk tolerance, long- and short-term financial goals)

17.   Stock Overlap

a.   The hidden risks associated with stock overlap

b.   Ways to track stock overlap in client portfolios

c.   Morningstar’s X-Ray Portfolio analytics

18.   Portfolio risk parameters: Standard deviation

a.   Risk is measured by volatility, defined in terms of standard deviations

19.   Portfolio risk parameters – definitions of commonly used risk parameters

a.   Beta: a security or portfolio’s risk relative to a benchmark

b.   R-squared: measure of how much of a security or portfolio’s movements can be explained by movements in the benchmark

c.   Sharpe ratio: an indication as to whether a security or portfolio’s returns are the result of wise investment decisions or excess risk-taking