April 2018, Issue 71 Treasury Yield Curve · April 2018, Issue 71 Page 5 The tariffs were not the cause of the depression. We now generally blame a weak banking system combined with

E c o n o m i c M e m o r a n d u m April 2018, Issue 71

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The New Environment For U.S. Equities (p2) Rising earnings versus rising interest rates and inflation.

Are We In A Trade War? (p4) Tariffs have not helped in the past, will they now?

Navigating Turbulent Waters (p6) Emerging from the worst years the industry has ever seen, container shipping firms may offer significant value for long term investors.

Credit Markets: All Eyes On The Fed (p9) The Federal Reserve has indicated they may be more aggressive in tightening monetary policy than previously anticipated.

Backdoor Roth IRAs (p11) Using non-deductible IRA contributions is a great way to backdoor into Roth IRAs.

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Global equities experienced their first correction, with a subsequent rally, while the yield curve continues to flatten.

Unemployment trolls near record lows as GDP is expected to ramp in 2018.

© 2018 Osborne Partners Capital Management, LLC. All rights reserved.

2017 extended the domestic equities bull market to nine years. Over this span, equities were

able to continuously ascend through a litany of worries and slow earnings growth because of low

valuations, low interest rates, low inflation, and an accommodative Federal Reserve. Over time

these variables slowly shifted, and now as we enter the second quarter of 2018, there is a new

environment for U.S. equities. What is this new environment? What does it mean for U.S.

equities? And what portfolio shifts should be made to defend against it?

The table below succinctly summarizes the environment for U.S. equities over the last five

years, and shows a clear depiction of how the environment has recently changed. First, a

review of each column in the table is helpful. From left to right, we show the year; the forward

Price/Earnings ratio at the start of the year (valuation); the forward Price/Earnings ratio at the

end of the year (valuation); the earnings growth for that year (earnings); the 10-year U.S.

Treasury bond yield at the start of the year (interest rates), the start of year CPI (inflation); PCE

(inflation); and finally the Federal Reserve bias (interest rates).

Per the table, 2013-2015 was an amazing environment for U.S. equities. The combination of

low valuation (13-16x P/Es), record low interest rates, tame inflation, and an “easy” Fed

enabled the S&P 500 to rise over 45% during that period…even with annualized earnings

growth of under 4%. After 2015, the variables began to shift.

Economic Memorandum Page 2

The New Environment For U.S. Equities

By: Justin W. McNichols, CFA

In this article: Rising earnings versus rising interest rates and inflation.

Source: OPCM


In this article: Consumer confidence is rising, but whether it will propel spend-

ing is a question.

First, the Federal Reserve shifted to a tightening monetary stance – the Fed Funds rate would

no longer troll near 0%. Next in 2017, inflation started to normalize. Plus, for the first time in

over ten years, the whispers of high wage growth worries began to surface. By the time 2018

started, valuations had reached higher levels in the S&P 500, and bubble-like levels in small and

microcap companies. The final variable to turn occurred when interest rates quickly rose in the

first quarter of 2018. After a quick 12% correction and subsequent rally, we enter April with

the environment flipped toward spiking earnings growth and rising interest rates, rising infla-

tion, and an actively tightening Fed. So what does this new environment mean for U.S. equities?

Generally, U.S. equities should be a more difficult and volatile asset class. There will be an

increasing battle between market participants believing the economy will expand for a few

years – buy financials, industrials, materials, energy; and those who believe the economy is

peaking and a recession is on the horizon – buy consumer staples, defensive parts of healthcare,

utilities, telecom service. Meanwhile, the high growth, high valuation areas, FANG for example,

have and will show increased volatility. As a firm, we are mainly finding more “value in value”

equities, and continue to believe the major underperformance of defensive sectors will likely

continue for now. In the meantime, what portfolio shifts provide a higher probability of

improved risk-adjusted returns?

There are three portfolio shifts the OPCM investment team has made over the past year. These

shifts will likely persist over time. First, equities outside the U.S. generally have not seen the

same variable shifts as the U.S. There continues to be a meaningful valuation discount versus

the U.S., global central banks are presently not as aggressive as the U.S., inflation is in check, and

earnings growth is strong. Second, natural resources has been the worst performing asset class

over the past ten years. After being underweight for many years, we began to increase our

exposure a few years ago – first in industrial metals, then natural gas, and more recently in

agriculture. As the U.S. monetary policy tightens, usually the dollar peaks. As this occurs, we

enter the sweet spot for natural resources, which are priced in dollars, and experience a

tailwind from strong global economies. Plus, many of the oversupply issues from the last

boom/bust have been corrected. Third, there may be a time within the next year when fixed

income will be capable of driving both portfolio income growth and appreciation with a risk

reduction component. As the Fed completes the interest rate cycle increases, fixed income (and

Apr i l 2018, Issue 71 Page 3



other income related securities) will potentially outperform after a lengthy period of

underperformance.

In conclusion, the main reason multi-asset class and active investing succeeds over time is

because asset classes become over/undervalued due to the variables that affect them. In this

case, after a lengthy period of outperformance, U.S. equities may see relative underperformance

versus other asset classes. Our portfolios will always gradually shift to dampen the effects of

these asset class shifts.

Towards the end of the first quarter, the U.S. slapped tariffs on imported steel, aluminum, solar

panels and washing machines. At first it was on all countries. Then several countries were

exempted. China was not exempt and responded by putting tariffs on wine and pork. Then, the

U.S. announced further tariffs on a variety of Chinese goods, and China responded in kind.

Sounds like a trade war to me, but it just as easily could be “sound and fury signifying nothing.”

Most of these tariffs have yet to be enacted, and this could well be a negotiating posture. But

the actions and threats are unsettling to the markets and to the industries affected.

Tariffs in History

In the U.S., tariffs were originally the main source of income for the fledgling government in the

1800s. This changed in 1914 with the advent of income tax. Since then, tariffs have been for the

protection of U.S. goods and services. At the start of the depression in 1930, the famous Smoot-

Hawley Tariff Act put tariffs on over 20,000 imported goods. Our trading partners retaliated.

Subsequently, U.S. imports decreased 66% from $4.4 billion (1929) to $1.5 billion (1933), but

exports also decreased 61% from $5.4 billion to $2.1 billion. GDP fell from $103.1 billion in

1929 to $75.8 billion in 1931 and bottomed out at $55.6 billion in 1933. Imports from Europe

decreased from a 1929 high of $1.3 billion to just $390 million during 1932, while U.S. exports

to Europe decreased from $2.3 billion in 1929 to $784 million in 1932. World trade decreased

by some 66% between 1929 and 1934. The tariffs proved to be a lose/lose situation.

Page 4

Economic Memorandum

Are We In A Trade War?

By: Charles D. Osborne

In this article: Tariffs have not helped in the past, will they now?



Are We In A Trade War?

Apr i l 2018, Issue 71 Page 5

The tariffs were not the cause of the depression. We now generally blame a weak banking

system combined with deflating asset bubbles, but the tariffs made it worse. This has been the

conventional wisdom since. So after WWII, barriers to trade were slowly eliminated worldwide.

With some hiccups this has worked well for most all economies. There clearly was suffering and

many victims in the process, but overall freer trade helped poorer countries escape poverty and

richer countries have major improvements in their standards of living. Still, here in the U.S. we

are no longer the biggest manufacturer in the world and have an enormous trade deficit that

seems to always get larger. Taxing imports may reverse this trend by aiding some struggling

industries and forcing other countries to open their borders, but this has not worked well in the

past.

Free trade is based on the concept that one country produces a product that is better or cheaper

than other countries, and that those countries likewise are better at producing other products.

Cross border trade benefits both countries. The problems arise when one country wants to

protect a less productive operation based on jobs or national pride. Since 1970, American-based

manufacturing dominance has declined. This has been due to a variety of factors including post

war growth in Asia and Europe, cheap labor in China and elsewhere, as well as trade deals that

helped Mexico and Canada. It is no secret that much of our manufacturing has been outsourced

overseas, and that China specifically has penalized American businesses from 25% tariffs on

Teslas, to demands for technology transfers. In addition, and this is often overlooked, American

companies set up factories overseas to sell to consumers in those countries.

Will Tariffs Work Today?

Right now we have a strong economy and most of the world is on a growth path; much different

than the 1930s. There are no significant asset bubbles, except for possibly cryptocurrencies, and

our banking rules, regulations and safeguards are much stronger. While businesses and

economists overwhelmingly do not like the idea of a trade war, many Americans do, as

witnessed by the upswing in our president’s job approval ratings. Emotionally it appears that

world growth has come at our expense, and barriers to world trade will help. It is called autarky.

We can go it alone. Of course the result of taxing imports will be higher overall prices which

most likely will tamper this nationalistic enthusiasm. Trade wars reduce domestic growth, not

enhance it.


The alternatives asset class is one that typically doesn’t garner much attention and can be easy

to overlook. The individual holdings themselves typically aren’t flashy, and, on balance,

alternatives make up a smaller portion of your portfolio than U.S. stocks, international stocks or

bonds. Despite this, its significance to your overall portfolio shouldn’t be ignored as the value it

provides is often realized when other asset classes are reeling. At OPCM, our alternatives

typically take one of two forms: a hedge or a “niche” investment. The hedge portion is a bit more

obvious, and is commonly used to mitigate some form of risk present in the portfolio (currency

or interest rate risk, for example). The niche investment is more opaque, but, in general,

describes attractive and unique investment opportunities where we believe there is significant

price dislocation. Examples of this may be private equity, distressed companies or industries or

even M&A (merger and acquisition) arbitrage. Of late, we have become increasingly interested

in a potential niche investment that would fall under the distressed industry category: container

shipping. More specifically, it is our belief that the companies which own container ships

potentially offer significant value for long term investors. This is an industry that has seen a

classic boom-bust cycle in recent years, but there are increasing signs that the clouds hovering

over this industry may be parting, and attractive opportunities exist for patient investors willing

to endure some choppy waters.

Container shipping is an old industry that has been a pillar of global trade for decades. It is a

capital intensive and commoditized service that has historically done well in times of solid

global GDP growth and poorly when growth falters. The business itself is straightforward: goods

are loaded into a steel container box at various distribution facilities, loaded onto a truck or rail,

transported to a container ship and sent to the destination port whereby it will be sent to the

receiving party via truck or rail. This oversimplifies the process, but is more or less how things

work. There’s a good chance that the shirt you are wearing, your car or your TV has spent some

time on a container ship. Typically, the companies responsible for transporting goods

(companies such as Maersk or COSCO) lease the ships from owners. The leases can be as short

as a month and as long as 15+ years, with the length of the lease typically a function of supply/

demand of ships and underlying economic strength. Compared to other forms of transportation

Page 6

Economic Memorandum

Navigating Turbulent Waters

By: Jay M. Skaalen, CFA

In this article: Emerging from the worst years the industry has ever seen,

container shipping firms may offer significant value for long term investors.


like rail or truck, container shipping is by far and away the most economical to transport goods

around the globe.

With global GDP expected to be at the highest level in years, this would seem to be an ideal

environment for the containership business. Instead, this industry is just barely on stable

footing and is less than two years removed from conditions that were far more dire than what

was experienced during the global financial crises. Years of steady declines in shipping prices

culminated in August of 2016 when Hanjin, the (then) world’s seventh largest shipping line,

filed for bankruptcy resulting in over $10 billion worth of goods being stranded on ships that

were stuck floating directly offshore of the world’s largest ports. What led the industry to this

point? There were multiple contributing factors, but the biggest culprit was excess supply. Ship

owners were aggressive in the aftermath of the financial crises in 2010, and ordered a large

amount of new ships fueled by the expectation that the global economy was recovering and

pricing would firm. While shipping rates did bounce back in 2010 and 2011, the combination of

new ships being delivered and another wave of new orders in 2013-2014 proved too much for

the industry to handle. Capacity was steadily outpacing demand which led to a multi-year

period that saw excessive ships pursue insufficient volumes of goods resulting in a total

collapse in pricing. In the second half of 2016, the price of a mid-sized vessel cost nearly 80%

less than it did in 2011 and charter rates for vessels were over 70% below where they peaked

in 2007. These were depths that no industry observers anticipated even a year or two earlier.

Page 7


Apr i l 2018, Issue 71


The Hanjin bankruptcy sent ripples through the entire industry and was the clearest signal

possible that no party could afford to remain complacent. Almost immediately, companies put

the brakes on new ship orders, started scrapping older vessels to sell the metal and clamped

down on costs where they could. But, possibly the most notable development in the aftermath,

was a rise in industry consolidation. From the beginning of 2016 until the end of 2017, the

market share of the top five containership liners grew from 45% to nearly 57%. Weaker

companies with lower market shares were the first to be snapped up, creating a more

concentrated industry with healthier balance sheets, and, for the first time in a long time, a

desire to restore more rational decision making to the industry after years of gluttony. Since

then, we have seen many industry metrics begin to improve more meaningfully. The most

important metric, containership charter pricing, is up 85% year to date and over 280% since

December 2016. Despite this improvement, pricing is still 50% below where it was at the

beginning of 2011. For the first time in a while, management teams are starting to express some

optimism, noting that the worst of the recent industry woes are very likely behind them.

Dealing with distressed industries is not for the faint of heart, and often requires an uncanny

amount of diligence and patience (as does reading an entire article on container shipping!). We

certainly don’t expect fundamentals in the containership industry to get better overnight and

understand that it could be an extended period of time before this industry is out of the woods.

Despite this, distressed investments, along with our other alternatives exposure, can add

significant value to a diversified portfolio due in part to their idiosyncratic returns. These

securities often trade well below their intrinsic value for periods of time until the market

realizes the disparity, often causing a significant upward rerating. We believe a lot of the

containership industry is trading well below its true intrinsic value, but expect this to correct

over time, driven in large part by more rational supply and improved pricing being sustained. In

the meantime, our investment team will continue to look for the most compelling opportunities

within this industry and others.

Page 8

Economic Memorandum



Page 9 Apr i l 2018, Issue 71

The Federal Reserve raised interest rates in March and signaled they intend to raise rates at

least two more times this year and possibly three times in 2019. The Fed Funds rate was

increased a quarter of a point to a range of 1.5-1.75%. This is the sixth rate hike since the Fed

began tightening interest rates in December 2015. This rate hike was widely anticipated, but the

Fed has indicated they may be more aggressive in tightening looking out into 2019 than

investors had previously anticipated. The upward revision is predicated on the notion that U.S.

economic growth will pick up in the second half of this year, although inflation expectations

continue to be very tame.

As we discussed in our last Economic Memorandum, the yield curve has been flattening over the

past few quarters and this trend continued in the first quarter. The spread, or difference in

interest rates, between the benchmark 10-year Treasury and the 2-year Treasury bond declined

from 52 basis points (0.52%) at the beginning of the year to 47 basis points (0.47%) at the end

of the first quarter. In other words, shorter-term rates are moving higher (in line with the Fed’s

moves), while longer-term rates are pricing in future slowing economic conditions. An inversion

of the yield curve (when short-term rates are higher than long-term rates) has preceded every

U.S. economic recession over the past 60 years, but we do not currently see signs of impending

recession. The primary risk we see at this point is the Fed tightening too fast and choking off

economic growth. The course and speed of monetary policy changes going forward will have a

significant impact on the strength and direction of the U.S. economy.

For the first quarter, most types of bond issues declined in price, with the Barclays Aggregate

U.S. Bond Index falling 1.46%. Corporate and government bonds led the decline. Senior bank

loans and short-duration high-yield bonds eked out positive returns, highlighting the

importance of maturity positioning and issue selection. The current slope of the yield curve

leads us to continue targeting high-quality bonds in the 3 to 7 year maturity range.

Credit Markets: All Eyes On The Fed

By: Charles J. Else

In this article: The Federal Reserve has indicated they may be more

aggressive in tightening monetary policy than previously anticipated.


Page 10

Economic Memorandum

Source: Wall Street Journal

To

tal

Re

turn

Source: Bankrate.com

Average Money Market Fund 1.02% 10 Yr. AAA Muni Bond 2.48%

5 Yr. AAA Muni Bond 2.07%10 Yr. AA Corporate

Bond—Long Term3.58%

5 Yr. AA Corporate

Bond—Intermediate3.07% 10 Yr. U.S. Treasury 2.74%

30 Yr. Fixed Rate Mortgage

(Conforming)4.27%

Bond Market Yields 3/31/2018

Credit Markets: All Eyes On The Fed



For middle to high income earners, there are IRS limitations on the tax benefits allowed for both

Roth IRA and traditional IRA ownership.

For an individual with a modified adjusted gross income (MAGI) exceeding $135,000 (single

filers) and $199,000 (married joint filers), the ability to contribute to a Roth IRA is completely

phased out.1 To add insult to injury, if the same individual decided to contribute to a traditional

IRA in tandem with a work retirement plan (e.g. 401(k)), their contribution would not be tax

deductible. Per IRS guidelines, single filers making over $72,000 and married joint filers making

over $119,000 are phased out from IRA deductions if they contribute to a work retirement

plan.2

At first glance, it would appear that middle to high income earners are locked out from the full

tax benefits of both Roth IRA and traditional IRA ownership. Not to fret, however. There is a

strategy that can provide a key to unlock many of these tax benefits by going through the

proverbial back-door. In fact, with the passage of the Tax Cuts and Jobs Acts in 2017, Congress

has left the backdoor wide open.

What is a “backdoor IRA conversion” and what is the benefit?

Simply put, a “backdoor Roth IRA” enables high income earners to bypass income limits by

converting traditional IRAs into Roth IRAs. While contributing directly to a Roth IRA is

restricted if MAGI exceeds limits, there are no limits to convert a traditional IRA to a Roth IRA.

Better yet, a backdoor Roth IRA conversion can allow an individual to convert a much greater

amount than the annual Roth IRA contributions dictate. While the 2018 contribution limits are

$5,500 ($6,500 for those over age 50), there are no limits for conversions.3

The benefits of Roth IRA conversion are many. Roth IRAs allow for growth and distributions to

occur tax-free, assuming withdrawals occur after 5 years of ownership or age 59.5 – whatever

is longer. Most importantly, the owner of a Roth IRA never has to take out required minimum

distributions (RMDs) at age 70.5, which allows the tax-deferral to stretch.

Backdoor Roth IRAs

By: Daniel M. Haut, CFP®, CIMA®

In this article: Using non-deductible IRA contributions is a great way to back-

door into Roth IRAs.


Non-Deductible IRAs are Great Candidates, but Beware the Pro-Rata Rule!

To be clear, a backdoor Roth IRA conversion does not evade taxes. In order to convert a

traditional IRA to a Roth IRA, one must pay taxes on the amount they’re converting.

Due to the large tax obligation that can occur as a result of conversion, the best candidates for a

back-door Roth IRA conversion are those with non-deductible IRAs.

As mentioned at the beginning of the article, when an individual has a MAGI that exceeds IRS

limits and contributes to both a work retirement plan and traditional IRA, any contributions are

post-tax. For individuals with a significant amount of non-deductible IRA monies, a back-door

Roth conversion is a logical strategy. Unlike a Roth conversion from a deductible IRA which

results in a tax on 100% of conversion, a Roth conversion from a non-deductible IRA results in

a much smaller tax bill to Uncle Sam.

However, one still must be aware of the IRS pro-rata basis rule.4 The prorata basis rule states

that the IRS looks at the entire traditional IRA balance when determining the basis of the

converted Roth IRA.

Example: Karen contributes to both her traditional IRA and her work 401(k). She is a married

joint filer with a MAGI of over $199,000 per year. Due to her income, her previous IRA

contributions have all been non-deductible or post-tax. The value of her IRA is $100,000 of

which $65,000 consists of non-deductible contributions and $35,000 of growth. Since Karen’s

income precludes her from contributing to a Roth IRA directly, she decides to do a back-door

Roth conversion with the $65,000 of non-deductible IRA monies. Since the IRS looks at the

entire IRA balance when doing the conversion, this means that 65% of the new Roth IRA or

$42,250 ($65,000 x 65%) will be considered after-tax basis. The remaining $22,750 ($65,000 x

35%) will be considered taxable income for the year of conversion. Assuming Karen is in the

24% marginal tax bracket, this means that $5,460 in taxes ($22,750 x 24%) will be due.

However, this is a small price to pay as future withdrawals from the newly converted Roth IRA

are tax free and the IRS won’t mandate required distributions at age 70.5.

Page 12

Economic Memorandum

Backdoor Roth IRAs


Avoiding the Pro-Rata Basis Rule

This pro-rata basis rule does not apply if you have your other retirement monies in a qualified

plan like a 401(k).

Example: Lia has a work 401(k) valued at $500,000 but has not yet contributed to a traditional

IRA. She earns over the limit to qualify for direct contribution into a Roth IRA. Lia can open and

fund a non-deductible IRA with $5,500 – she is over the limit for deductible contributions as

well – and fund it with post tax dollars. She can then convert 100% of the non-deductible IRA to

a back-door Roth IRA. The entire Roth IRA is considered basis since the 401(k) does not count

as part of the pro-rata basis rule.

Another strategy is to roll over only deductible IRA monies into your 401(k) and leave the

non-deductible monies in the IRA. This would avoid the pro-rata basis rule altogether.

Example: Jim owns an IRA with a balance of $250,000. Of this balance, $100,000 is in

non-deductible contributions and $150,000 is in tax-deferred growth. If Jim has a 401(k) and

the adoption agreement allows it, he can rollover $150,000 of his deductible monies into his

401(k) and leave the $100,000 of non-deductible monies in his IRA. He can then do a backdoor

Roth conversion of the $100,000 non-deductible IRA contributions and avoid the pro-rata basis

rule altogether!

While the backdoor Roth conversion strategy may be beneficial for middle to high income

earners, it may not make sense for everyone. It is important that you consult with your financial

planner or CPA before executing this strategy.


Backdoor Roth IRAs

1 https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-

can-make-for-2018

2 https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-

are-covered-by-a-retirement-plan-at-work

3 https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-contributions

4 https://www.irs.gov/retirement-plans/rollovers-of-after-tax-contributions-in-retirement-plans

https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2018

https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2018

https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work

https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-contributions

https://www.irs.gov/retirement-plans/rollovers-of-after-tax-contributions-in-retirement-plans


Nick graduated with a Bachelor of Arts degree from the University of Kansas.

He spent the first fifteen years of his career in a variety of roles in the

healthcare industry, working first in the Midwest before relocating to San Diego

in 2005 and San Francisco in 2009. In 2014, Nick decided to pursue his passion

for finance and began attending The Wharton School at the University of

Pennsylvania. In 2016, he graduated from Wharton with a M.B.A. with an emphasis in Finance.

Upon graduation, Nick worked as a financial advisor for a registered investment advisor in the

San Francisco Bay Area.

Enjoying the combination of being attentive to the financial markets while addressing the

financial needs of his clients, Nick began looking for an investment management firm that he

felt would be a good long-term fit for himself, his clients and their families. In November of

2017, Nick joined Osborne Partners, where he works in a hybrid role as a Portfolio Counselor

for OPCM clients, and in high-level business development.

Outside of work, Nick enjoys traveling, languages (speaks Spanish and Portuguese), spending

time with family, coaching kids’ soccer and volunteering. Nick has helped in a variety of

volunteer roles over the years from teaching English as a second language at church to working

with the American Heart Association. He lives with his wife and children in Walnut Creek.

Page 14

Economic Memorandum

OPCM Profile: Nick R. Prieto — Director


Additional commentary from our Investment Team can be found on the “Shared

Documents” sub-tab on the client portal as well as the “Our Publications” page on our

general website. In addition, we have a link to five short pre-recorded webinars that cover

our 2018 Investment Outlook.

https://osbornepartners.com/2018webinarslogin/

Passcode: 2018Exclusive


https://osbornepartners.com/2018webinarslogin/


Page 16

Economic Memorandum

The opinions expressed herein are strictly those of Osborne Partners Capital Management, LLC as of the date of the material and is subject to

change without notice. None of the data presented herein constitutes a recommendation or solicitation to invest in any particular investment

strategy and should not be relied upon in making an investment decision. There is no guarantee that the investment strategies presented

herein will work under all market conditions and investors should evaluate their ability to invest for the long-term. Each investor should select

asset classes for investment based on his/her own goals, time horizon and risk tolerance. The information contained in this report is for infor-

mation purposes only and should not be deemed investment advice. Although information has been obtained from and is based upon sources

Osborne Partners Capital Management, LLC believes to be reliable, we do not guarantee its accuracy and the information may be incomplete or

condensed. Past performance is not indicative of future results. Inherent in any investment is the possibility of loss. Osborne Partners Capital

Management, LLC does not provide tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered

CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification re-

quirements.

580 California Street, Suite 1900

San Francisco, CA 94104

Phone: (415) 362-5637

Fax: (415) 362-5996

535 Middlefield Road, Suite 160

Menlo Park, CA 94025

Phone: (650) 854-5100

Fax: (650) 854-5661

Contact Us:

E-mail: [email protected]

Phone: (800) 362-7734

www.osbornepartners.com

Locations:

Our updated ADV is available upon request and on the online OPCM client portal.

Referrals of your friends and family are the greatest compliments we can receive. If you

know of anyone who can benefit from our unique combination of investment management

and active financial planning, please do not hesitate to contact us.

http://www.osbornepartners.com