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Monday, October 06, 2014

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PLEASE SEE I MPORTANT DI SCLOSURE AND ANALYST CERTI FI CATI ON LOCATED I N THE APPENDI X OF THI S REPORT.
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l toke o less oll-eocompossloq mocto vlew of tbloqs. lo o ootsbell, l belleve tbot o New ueol looovotloo, tbe flxeJ-tote self-omottlzloq
mottqoqe looo (wblcb loltlolly beqoo wltb o 15-yeot teoot ooJ, beqlooloq lo 1948 wos locteoseJ to J0-yeots), btooqbt oboot stoblllty
lo boosloq floooce.
lt oll wotkeJ jost floe ootll tbe Jlsmootlloq of 8tettoo wooJs ooJ tbe loevltoble Jeteqolotloo of lotetest totes. Mote
speclflcolly, lkMs become lmpetlleJ by lool volcket's ootl-loflotloo meJlcloe, wblcb cooseJ tbe tbtlfts to become losolveot. 1be ooly
woy tbot J0-yeot lkMs coolJ be molotoloeJ, Jotloq ooJ oftet volcket's teoote ot tbe leJ, wos tbtooqb tbe C5s, wblcb, ootll tbe
1990s, wete tbe ooly bolooce sbeet leoJets wltb ootloowlJe footptlots.
1be C5s' oblllty to Jlvetslfy tlsks, wltb teqotJ to locotloo ooJ motket tlmloq, coolJ oot be motcbeJ, tbeo ot oow. 1bls btooJ
Jlvetslflcotloo, plos ecooomles of scole, eoobleJ tbe C5s to effectlvely moooqe tbe lotetest tote tlsk oo tbelt bolooce sbeets tbtooqb
lotetest tote Jetlvotlves.
5lmllotly, ooly tbe C5s coolJ lssoe mottqoqe bockeJ secotltles tbot ttoosfetteJ lotetest tote tlsk bot oot cteJlt tlsk. (All C5 M85
beoefltteJ ftom cotpotote qootootees.) 1be tlsk ptoflle of ptlvote lobel secotltles--stotlc pottfollos of some-vlotoqe looos lo
llpolJotloo--coo oevet motcb tbe tlsk Jlvetslflcotloo of C5 mottqoqe secotltles.
wbeoevet tbe ptlvote motket folleJ--os lt JlJ wltb tbe 5&l ctlses of tbe eotly 1980s ooJ eotly 1990s, ooJ lo tbe oftetmotb of tbe
collopse of tbe ptlvote secotltles motket lo 2007 oowotJ--tbe C5s bove steppeJ lo to stooocb o motket collopse tbot woolJ bove
beeo mocb wotse.
1be commoo ttop, tbot tbe C5s wete ooly soccessfol becoose of lmpllclt qovetomeot bockloq, ls belleJ by tbelt oomotcbeJ looo
petfotmooce, ooJ, by tbelt cooslsteot ptofltoblllty.
As o book ooolyst, yoo cettololy ooJetstooJ tbe Jlffeteoce betweeo o llpolJlty ctlsls ooJ losolveocy, wblcb ls boseJ oo o oombet of
CAAl tlmloq Jlffeteoces. 1be C5s become "losolveot" becoose of tbe loss of JefetteJ tox ossets ooJ excesslvely pesslmlstlc looo loss
ptovlsloos, wblcb wete botb tevetseJ lost yeot. uollke oll tbe otbet 2008 bolloots, tbe JtowJowos of qovetomeot fooJs wete oevet
oeeJeJ to soppott Joy-to-Joy opetotloos ot ooy cotteot Jebt obllqotloos. Of cootse tbe qovetomeot's oofooJeJ commltmeot qove
tbe C5s tbe oblllty to stoblllze tbe mottqoqe motkets wbeo oll otbet ployets boJ exlteJ. 8ot tbot qovetomeot bockstop beoefltteJ oll
mottqoqe cteJltots, oot jost tbe C5s.
1be woy l see lt, tbe C5 bosloess moJel bos beeo oo exttootJlooty soccess. 1bete oevet woolJ bove beeo ooy kloJ of mottqoqe ctlsls
lf oll leoJets lssoeJ lkMs ooJ followeJ tbe C5s cteJlt stooJotJs.

uovlJ



Monday, October 06, 2014
!" $%&'()*+ ,&-"-."

PLEASE SEE I MPORTANT DI SCLOSURE AND ANALYST CERTI FI CATI ON LOCATED I N THE APPENDI X OF THI S REPORT.
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Financial Analyst Institutional Sales

Richard X. Bove
Vice President Equity Research
bover@raffcap.com
813.388.2900

Joseph Bove
Vice President Institutional
Sales: bovej@raffcap.com
646.572.3378

Appendix: Analyst Certification and Other Important Disclosures

Analyst Certification

I, Richard X. Bove, certify that with respect to each security or issuer that I covered in this report; (1) all of the views expressed
accurately reflect my personal views about those securities or issuers; and (2) no part of my compensation was, is, or will be, directly or
indirectly, related to the specific recommendations or views expressed by me in this research report.

Regulatory Disclosures

Analyst Stock Ratings Definitions
Rafferty Capital Markets (RCM) ratings, effective January 2, 2013, are defined as follows:

Buy A stock that at initiation displays projected Price-to-Book ratio less than 100% and projected Earnings Direction greater than zero.
The rating may be maintained following initiation as long as it is deemed appropriate, notwithstanding price fluctuations that would
cause the rating to fall outside of the above parameters.
Hold A stock that at initiation displays projected Price-to-Book ratio less than 100% and projected Earnings Direction less than zero;
projected Price-to-Book ratio between 100% and 200% and projected Earnings direction less than 10%; or projected Price-to-Book ratio
greater than 200% and projected Earnings Direction greater than 10%.
Sell A stock that at initiation displays Projected Price-to-Book ratio greater than 100% and projected Earnings Direction less than zero.
The rating may be maintained following initiation as long as it is deemed appropriate, notwithstanding price fluctuations that would
cause the rating to fall outside of the above parameters.
Suspended - Covered stocks in which the rating has been suspended due to a number of unresolved issues that must be clarified before a
rating can be re-applied to them.

Distribution of Ratings
RCM must disclose in each research report the percentage of all securities rated by the member to which the member would assign a
"buy", "neutral" or "sell" rating. The said ratings are updated on a quarterly basis. Below is the distribution of RCMs research
recommendations as of the date of this report:

Buy: 26: 72.2%
Hold: 10: 27.8%
Sell: 0: 0.0%
Suspended: 0: 0.0%

There are 36 stocks under coverage

Market Ratings

Negative A 10% expected decline in S & P 500.
Neutral The S & P is expected to trade within 10% bounds up or down.
Positive A 10% expected rise in the S & P 500.

Valuation and Risks

The primary risks to achieving our target price include general market fluctuations, unexpected shifts in economic activities, and/or
unexpected reversals in company fortunes.



Monday, October 06, 2014
!" $%&'()*+ ,&-"-."

PLEASE SEE I MPORTANT DI SCLOSURE AND ANALYST CERTI FI CATI ON LOCATED I N THE APPENDI X OF THI S REPORT.
"#$% C
Additional Information is Available upon Request to Barbara Martens at Rafferty Capital Markets, LLC, 1010 Franklin
Avenue, Garden City, NY 11530 or 516.535.3800
Other Disclosures

Rafferty Capital Markets ("RCM") is an institutional brokerage firm that does not engage in investment banking. RCM and its
affiliates, including its principals, may own securities of the companies which are subject of this report but do not own 1% or more of
any class of common equity securities of any subject company.

The information and opinions presented in this report are provided for informational purposes only and are not to be used or considered
as an offer or solicitation of an offer to buy or sell securities or other financial instruments.
RCM has not taken any steps to ensure that the securities referred to in this report are suitable for you and it is recommended that you
consult an independent investment advisor if you are in doubt about any such investment.

Information and opinions presented in this report have been obtained or derived from sources believed by RCM to be reliable, but
RCM makes no representation as to their accuracy, timeliness or completeness. RCM accepts no liability for loss arising from the use
of the information presented in this report. Past performance should not be taken as an indication or guarantee of future performance,
and no representation or warranty, express or implied, is made regarding future performance.

Information and opinions contained in this report reflect a judgment at its original date of publication by RCM and are subject to
change without notice. RCM may have issued, and may in the future issue, other reports that are inconsistent with, and reach different
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