A Helpful Guide To Investing From Fortress Financial Services

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Table Of Contents
Page 3 Page 5 Page 8 Page 11 Page 13 Fortress Financial Services Bullish On Bank Stocks The P ositive Effects Of The Arab Spring On Dubais Economy Uncontrolled Inflation And Its Harmful Effects On The Economy Fortress Financial Services On US Dollar Resurgence Fortress Financial Services Puts Its Faith In Gold

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Fortress Financial Services Bullish on Bank Stocks

Managing Director Hamed Mokhtar Sees Continued Price Rises in Financial Sector Equities

While US equities have been reaching new highs, there has been one sector that has lagged behind its peers: bank stocks. Managing Director Hamed Mokhtar of Fortress Financial Services is extremely optimistic about their performance over the coming months and explains why: while the S&P 500 is close to matching its 2007 record high, the S&P 500 financial remains 50% below its all-time high, also reached in 2007. This presents an excellent buying opportunity for investors to purchase undervalued bank stocks that, although they have risen over 200% since their financial crisis lows, still have significant upside potential in the medium and long term. Since 2007, banks have rid themselves of myriad toxic assets, improved their balance sheets, experienced higher levels of capitalization, and seen renewed interest in loan demand and credit quality. Many banks, which were on the verge of bankruptcy and saw their stock prices plummet by over 90% during the financial crisis they created, are still suffering from depressed stock prices. While banks are still not as profitable as they once were, their
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potential for renewed, continued profit growth is what makes them attractive as a financial sector to invest in, says Mokhtar. The only way bank earnings are going to go in the immediate future is up, he adds. The improvement in bank stock pricing will accelerate as the US economy continues its recovery and return to growth. While banks have faced stricter regulation under the Dodd-Frank financial reform legislation and tighter controls under the Durbin amendment, they have also shed thousands of workers to remain competitive and have set aside more capital to protect against bad loans. Only one private bank BB&T out of eighteen major financial institutions failed the Feds stress test this year and, recently, a number of big banks have announced that they will reinstate significant dividend repayment policies, following their successful stress test results. On average, banks have increased their dividends by 20%, which is good news for investors. Wells Fargo increased its dividend to $1.20, 34 percent higher than last year, and now features the highest dividend yield in the financial industry at 3.2 percent. JP Morgan is currently paying 3% of its dividend yield and Capital One raised its dividend from $.20 to $1.20. While bank of America did not raise its dividend, it did participate in a $5 billion stock buyback program and plans to redeem $5.5 billion in preferred shared. This increase in dividend payments come in tandem with an increase in stock prices, both of which are very positive for investors in bank stocks, says Mokhtar. Citigroup, which is up 20% for the year, has also announced a $1.2 billion stock buyback program, while Bank of New York Mellon will buy back$1.35 billion of common stock and US Bancorp announced a $2.25 billion stock buyback program and likely dividend increase.
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The Positive Effects Of The Arab Spring On Dubais Economy

Fortress Financial Services Managing Director Hamed Mokhtar Discusses Dubais Recent Economic Resurgence

While much of the Middle East has been embroiled in an Arab Spring which has toppled despotic governments, usurped traditional power structures, and caused economic uncertainty, Dubai has emerged as a direct beneficiary of this revolution, given its security and role as a tourist and trade hub in the region. Dubai is currently being fueled by a boom in tourism, as well as an influx of capital and investors from throughout the region that are eager to enjoy its excellent infrastructure, political stability, and excellent quality of life, says Hamed Mokhtar of Fortress Financial. This boom will continue with the realization of several recently announced largescale projects, such as the construction of Mohammed bin Rashid City, which will include up to 100 hotels, golf courses, a Universal Studios, and new largest mall in the world, as well as the 1.5 billion AED expansion of the Business Bay Canal to the Gulf, he adds.

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Sami Al Qamzi, director general of Dubai Department of Economic Development, said that economic growth in the emirate could surpass 4% this year. Passenger traffic through the emirate's airport rose 13 percent in 2012 to 57.7 million, making it the world's third-busiest, according to Dubai Airports and Emirates Group, which operates Emirates Airlines, posted a 68 percent increase in first-half profits. Dubai airport passenger numbers were up 14.6 per cent year on year in January, and international passenger traffic overtook Hong Kong (56.5 million passengers) for the first time last year. Over 10 million tourists came to Dubai in 2012 a record for the emirate an increase of 9.3% over the previous year. Over the same period, hotel revenues increased 17.9% and the number of hotel guests increased by 9.5% in 2012. Dubai currently has over 56,000 hotel rooms available and this number is expected to grow by an additional 7.1 percent over the next three years. Dubai has been active in driving the Meetings Incentives Conventions and Exhibitions (MICE) business, as it is a major contributor to the tourism industry and it brings 20 to 30 percent of the tourists to the country. An Economic Impact Assessment report prepared by Oxford Economics recently revealed that revenues generated from events at the Dubai World Trade Centre (DWTC) in 2011 contributed Dh6.5 billion towards the emirates economy in 2011. In that year alone, not counting corporate meetings, incentives and exhibitions, Dubai hosted 34 international events. Recently, Real Estate prices have experienced a resurgence as well, following drop of up to 70% in value in 2008. Knight Frank, a global property company, reported that the prices of luxury villas increased an average of 20% in 2012. Citibank reported that the increase in prices signaled a strengthening in cash flows to the
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Dubai sovereign and its government-related entities, most of which have a significant stake in the local economy and, specifically, the property sector. Some areas such as the Palm, Marina, Downtown, and Jumeirah Park have already returned to pre-crisis prices and are continuing to experience robust growth. All of this bodes well for Dubais recovery, says Mokhtar, and there doesnt seem to be any slowing down in sight.

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Uncontrolled Inflation And Its Harmful Effects On The Economy

Managing Director of Fortress Financial Services Hamed Mokhtar Comments on How Excessive Inflation Damages Economic Recovery

Hamed Mokhtar, Managing Director of Fortress Financial Services, recently gave a talk on uncontrolled inflation to investors, in which he outlined the dangers it poses to economic recovery. Inflation, which can broadly be defined as an increase in prices, impacts the cost of living, cost of doing business, bond yields and the cost of borrowing money. It is detrimental to economic recovery because as the cost of goods rise, savings are eroded and buying power is decreased, if it is left unchecked and rises too quickly. If inflation becomes too high the economy can suffer; conversely, if inflation is controlled and at reasonable levels, the economy may prosper. With controlled, lower inflation, employment increases, consumers have more money to buy goods and services, and the economy benefits and grows. There are three causes of inflation. The first cause is called demand-pull inflation. This occurs when demand for a good or
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service rises, but supply stays the same. Buyers become willing to pay more to satisfy their demand. Demand-pull inflation can be accompanied by irrational exuberance. The second cause is costpush inflation. It starts when the supply of goods or services is restricted for some reason, while demand stays the same. When the supply of labor is not enough to meet demand, it can create wage inflation. In the past, inflation in prices generally led to wage inflation, so that companies could retain good workers. However, competition from technological alternatives (such as robotics) and lower-income countries means that wages haven't kept up with prices. Higher prices combined with stagnant wages means your standard of living has decreased. It's another reason for income inequality in the U.S. The third cause is overexpansion of the money supply. That's when a glut of capital in the market chases too few opportunities. It's often a result of expansive fiscal or monetary policy, creating too much liquidity in the form of dollars or credit. A low inflation rate is beneficial to a country, while a high inflation rate is very harmful to an economy. A high inflation distorts consumer behavior. Because of the fear of price increases, people tend to purchase their requirements in advance as much as possible, which can destabilize markets creating unnecessary shortages. High inflation also redistributes the income of people. Fixed income earners such as pensioners - and those lacking bargaining power will become relatively worse off as their purchasing power falls. Trade unions may demand for higher wages at times of high inflation. If the claims are accepted by the employers, it may give rise to a wage-price spiral which may aggravate the inflation problem. During a high inflation period, wide fluctuations in the inflation rate make it difficult for business organizations to predict the future and
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accurately calculate prices and returns from investments, which undermine business confidence. When inflation in a country is more than that in a competitive country, the exports from former country will be less attractive compared to the other country. This means there will be less sales for that countrys goods both at home and abroad and that will create a larger trade deficit. At the same time, high inflation in a country weakens its competitive position in the international market. The third cause of inflation overexpansion of the money supply is the most relevant to the recent financial crisis in the US, as many feared that massive amounts of quantitative easing would lead to soaring inflation rates, which would damage the US economic recovery. These fears proved to be unfounded and inflation rates have remained at or below 2.0% for the past five years. Even as US consumer prices recorded their largest increase in four year last month a jump of 0.7% - gasoline alone accounted for over threequarters of this increase. In short, the hyperinflation that many feared would materialize never did.

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Fortress Financial Services On US Dollar Resurgence

Managing Director Hamed Mokhtar Comments on the Resurgence of the Greenback

The US dollar has benefited tremendously from improving US economic data, record breaking increases in the value of the Dow Jones industrial Average, and increasing woes in the Eurozone over the past twelve months. The greenback, which has long been used as a reserve currency by much of the rest of the world, is staging a comeback, despite record low US interest rates. You are seeing massive capital inflows into the US because the stock market is doing so well, says Hamed Mokhtar of Fortress Financial Services. You are going to see continued strength in the US dollar, which is poised for a bull run, due to improving US economic conditions in relation to the rest of the world, he adds. This is due to a combination of better bond yields, high performing US equities, and the traditional stability and safety offered by the greenback, as well as the traditional view that the US has always led the world out of a global recession. Over the past five weeks alone, the US dollar has jumped 4.5% on a trade-weighted basis, while the euro, British pound, and the
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Japanese yen have all dropped over the same period, according to the Financial Times. The dollar recently reached a seven month high against a basket of global currencies and has gained steadily against its global counterparts since the start of 2013. In January, it was trading at 86.67 yen to the dollar. Last week, it was trading at 96.06 to the dollar. Likewise, the British pound has fallen from 1.62 to 1.51 to the dollar so far this year. The dollar has outperformed eight out of nine major G-10 currencies so far this year. Another major factor contributing to the strengthening of the US dollar is the countrys move towards energy independence. With rising crude and natural gas production caused by the shale gas revolution, the US will be able to reduce its twin deficits and increase competitiveness at the same time. The current account deficit, at 2.8% of GDP, is at its lowest since the mid-1990s and oil and gas extraction added .3% to GDP growth last year a significant figure. Further production will not only decrease US dependence on foreign oil, it will also reduce inflation and make US assets more attractive. Some forecasts predict that the US could surpass Saudi Arabia and Russia in the production of crude oil by 2020 and the US Department of Energy predicts that output will rise from 6.4 million barrels per day in 2012 to 7.8 million bpd by 2014. Mokhtar adds, you are dealing with huge political risk in Italy and Cyprus, that are negatively affecting the euro zone, as well as massive quantitative easing campaigns in Britain and Japan that are dragging those currencies down. Comparatively speaking, the US economy is outperforming its major global competitors and looks to continue to do so for the foreseeable future, all of which is positive for investors in the US dollar. Click here for more info.
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Fortress Financial Services Puts Its Faith In Gold

Managing Director Hamed Mokhtar Remains Bullish On Precious Metals, Despite Recent Price Dips

While US Equities markets have been grabbing headlines with their record breaking performance in 2013, with the Dow Jones Industrial Average recently reaching all time highs, the performance of gold has lagged other asset classes over the last few years, but this has not shaken Fortress Financial Services long -term confidence in the precious metal as an asset class. Hamed Mokhtar, Managing Director of the firm, states While gold has come off its September 2011 high of $1,888.70 per ounce and is currently trading at $1,600 per ounce a decrease of 15% - it still remains the safest asset class in which to invest and it provides an excellent hedge against volatility in the bond, real estate, and equity markets, as well as against inflation. The onset of quantitative easing, and subsequent fears of hyperinflation, led many investors to drive up the price of gold in 2008 and
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there was a fundamental shift in who was buying gold. According to a Financial Post article penned by Diane Francis in December 2012, 80% of gold was purchased for jewelry in 2002, while only 5% of all gold sales were purchased for investment purposes; by 2011 gold demand for investment purposes had jumped to 40%. Furthermore, new gold finds and extraction have become extremely elusive, causing supply levels to remain stagnant. In 1960, every dollar spent on exploration led to a return of over 105 times, in 2000, this return was only 11 times. Gold is one of the few asset classes which has intrinsic value and has been used to leverage against currency fluctuations and has traditionally been viewed as a safe haven investment. The value of bullion tripled from 2007 to 2011, from $600 an ounce to almost $1,900 an ounce. While the 1971 Bretton Woods agreement took the US, and much of the rest of the world, off the gold standard, it has remained one of the only investments that has retained its value throughout time. There is typically an inverse relationship between the strength of the US dollar and the price of gold, and a direct correlation between increases in gold prices and inflation. Bullions price also increased dramatically during the Eurozone financial crisis, as Eurosceptics anticipated the breakup of the continents single currency. Furthermore, increased demand from increasingly affluent Chinese and Indian families, the former which use gold as a savings tool and the later which use it for cultural reasons, particularly jewelry purchases for weddings, have significantly fueled demand. Mokhtar urges investors to remain confident in gold. He states all you have to do is look at recent Central Bank decisions reducing their holdings in Euros and Dollars and increasing their holdings in gold; from 2000 to 2012 their gold holdings have increased from $2
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trillion to $12 trillion in value. Gold is a deep and liquid market with no credit risk and, from 2009, central banks have become net purchasers of gold. It is not only a sound long term investment, it is a required component of any diversified portfolio. For more info, follow this link.

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