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Stock To Cash®
Emerging Money Corporation
Stock To Cash is a proprietary program and registered service mark of Emerging Money Corporation. Copyright 2003 by Emerging Money Corporation. All rights reserved. This presentation is intended for professional advisors only.
Tapping Into Your Portfolio
Behavioral Finance• Financial liberation• Error of anchoring• Attaching recency• Subjective decision
making• Belief perseverance• Wishful thinking bias
Dysfunctional Investing• Anger• Grief• Denial• Loss/risk aversion• Blind optimism• Going for broke• Detachment from reality
Market Vulnerability
Definition of Stock to Cash1stock·to·cashPronunciation: 'stok-too-kash also 'S2C"Function: nounDate: 2003
1 a : the business of insuring your stock portfolio b : coverage by contract whereby leading banks undertake to indemnify or guarantee another against loss by the volatility of the stock market c : the sum for which a stock portfolio is insured
2 : a means of guaranteeing protection or investment safety <the stock to cash non-recourse loan is your insurance against downside market risk>
What do you Currently Insure?
• Home• Automobiles• Life• Health• Travel• Freight packages• STOCK PORTFOLIO?
Stock to Cash Benefits
• Market Protection• Liquidity • Growth• Tax Savings
Stock to Cash® Features • 90% LTV• Non-callable• Non-recourse• All interest accrues• Dividend credits• Renewal options• Tax advantages
Stock To Cash is a proprietary program and registered service mark of Emerging Money Corporation. Copyright 2003 by Emerging Money Corporation. All rights reserved.
If Market Goes Up …• Pay back loan• Recover stocks• Recover dividends• Keep all appreciation• Pay NO upfront taxes• Have money working in
two places at the same time
If Market Tanks …
• Walk away from loan• Pay no principal• Pay no interest• 90% protected• Keep reinvested assets
and any upside growth
Gambling Insurance• Start with 10 chips• Give one to the dealer• Put the rest in your pocket• Dealer gives you 10 new
chips to play with• If you lose, walk away
with the 9 chips• If you win, give some to
the dealer
Gambling Means You Gamble
• Playing cards• Slot machines• Dice• Horses• Sporting events• Stock portfolio
Alternative Protection Strategies
• Get out of the market• Buy puts• Sell calls• Collar Loans• Variable Prepaid
Forwards
S2C Beats the Competition
Collar
Loans
Variable
Pre-Paid Forwards
Stock to Cash
90% cash immediately? Sometimes No Yes
Full downside protection? Principal Only Principal OnlyPrincipal and
Interest
Full upside potential (no cap)? No No Yes
Considered taxable by IRS? No Maybe No
When is interest paid? Ongoing Ongoing Accrues
Must interest be collateralized? Yes Yes No
Stock to Cash® Simplicity• Lender pays 90% and
contractually guarantees return of shares
• Lender purchases option contracts to avoid all risk to lender
• Investment-grade counter-parties protect lender and guarantee return of shares
Lender
Borrower
Counter-Party
Examples in this presentation are based on actual facts, but have been modified to protect the identity of the investor.
“Charles Schwab” Case Study
• 850,000 shares of Charles Schwab (SCH) – Hedged 3 years ago @ $35 a share
($30,000,000)– Cost basis: $1,000,000
• Client received $27,000,000 • 52 week low: $6.25 a share ($5,312,500)• Currently at $13 a share ($11,050,000)
Examples in this presentation are based on actual facts, but have been modified to protect the identity of the investor.
.
“Charles Schwab” Case Study
• 850,000 shares of Charles Schwab (SCH) – Hedged 3 years ago @ $35 a share
($30,000,000)– Cost basis: $1,000,000
• Client received $27,000,000 • 52 week low: $6.25 a share ($5,312,500)• Currently at $13 a share ($11,050,000)
Examples in this presentation are based on actual facts, but have been modified to protect the identity of the investor.
.
Flexibility
• Most stocks qualify • All major exchanges qualify• Preferred pricing available
for low volatility stocks• 2 to 25 year terms• Easy repayment options
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
S2C Flow Chart
$100,000Stock
Portfolio(Minimum portfolio
value)
$100,000Stock
Portfolio(Minimum portfolio
value)
Client Receives
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
S2C Flow Chart
$100,000Stock
Portfolio(Minimum portfolio
value)
$100,000Stock
Portfolio(Minimum portfolio
value)
Client Receives
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$400,000Stock
Portfolio(No caps. Unlimited
growth potential)
$400,000Stock
Portfolio(No caps. Unlimited
growth potential)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
S2C Flow Chart
$100,000Stock
Portfolio(Minimum portfolio
value)
$100,000Stock
Portfolio(Minimum portfolio
value)
Client Receives
$250,000Equity inCollateral
(Loan repaid andcollateral recovered)
$250,000Equity inCollateral
(Loan repaid andcollateral recovered)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$400,000Stock
Portfolio(No caps. Unlimited
growth potential)
$400,000Stock
Portfolio(No caps. Unlimited
growth potential)
Client Receives
- =
+
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
S2C Flow Chart
$100,000Stock
Portfolio(Minimum portfolio
value)
$100,000Stock
Portfolio(Minimum portfolio
value)
Client Receives
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
S2C Flow Chart
$100,000Stock
Portfolio(Minimum portfolio
value)
$100,000Stock
Portfolio(Minimum portfolio
value)
Client Receives
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$50,000Stock
Portfolio(No caps. Unlimited
growth potential)
$50,000Stock
Portfolio(No caps. Unlimited
growth potential)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
S2C Flow Chart
$100,000Stock
Portfolio(Minimum portfolio
value)
$100,000Stock
Portfolio(Minimum portfolio
value)
Client Receives
$0Equity inCollateral
(Loan defaulted andcollateral forfeited)
$0Equity inCollateral
(Loan defaulted andcollateral forfeited)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$50,000Stock
Portfolio(No caps. Unlimited
growth potential)
$50,000Stock
Portfolio(No caps. Unlimited
growth potential)
Client Receives
- =
+
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
SPDA’sSPIA’s
Life Insurance(Real estate, bonds,
CD’s, business)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
$90,000Stock to
Cash Loan(90% non-callable and non-recourse)
S2C Flow Chart
$100,000Stock
Portfolio(Minimum portfolio
value)
$100,000Stock
Portfolio(Minimum portfolio
value)
Client Receives
$250,000Equity inCollateral
(Loan repaid andcollateral recovered)
$250,000Equity inCollateral
(Loan repaid andcollateral recovered)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$150,000Stock to
Cash Loan(5 years includingaccrued interest)
$400,000Stock
Portfolio(No caps. Unlimited
growth potential)
$400,000Stock
Portfolio(No caps. Unlimited
growth potential)
Client Receives
- =
+
Examples in this presentation are based on actual facts, but have been modified to protect the identity of the investor.
“amazon.com” Case Study• 125,000 Shares of amazon.com
(AMZN)– Hedged 23 months ago @ $8 a
share ($1,000,000)• Client Received $900,000• Reinvestment @ 7% is $1,030,410• Currently at $59.63 a share
($7,453,750)• Loan balance @ 12.13% is
$1,131,582• Current stock value – loan +
reinvestment is $7,352,578
Examples in this presentation are based on actual facts, but have been modified to protect the identity of the investor.
“amazon.com” Case Study• 125,000 Shares of amazon.com
(AMZN)– Hedged 23 months ago @ $8 a
share ($1,000,000)• Client Received $900,000• Reinvestment @ 7% is $1,030,410• Currently at $59.63 a share
($7,453,750)• Loan balance @ 12.13% is
$1,131,582• Current stock value – loan +
reinvestment is $7,352,578
Examples in this presentation are based on actual facts, but have been modified to protect the identity of the investor.
.
“amazon.com” Case Study• 125,000 Shares of amazon.com
(AMZN)– Hedged 23 months ago @ $8 a
share ($1,000,000)• Client Received $900,000• Reinvestment @ 7% is $1,030,410• Currently at $59.63 a share
($7,453,750)• Loan balance @ 12.13% is
$1,131,582• Current stock value – loan +
reinvestment is $7,352,578
Examples in this presentation are based on actual facts, but have been modified to protect the identity of the investor.
S2C Applications Unlimited
• Stocks• Bonds• Cash• Mutual Funds• Home Equity• Retained Earnings / C-Corp• Large Purchase• Fund / Buy Business• Investment Property
• Need Income Stream / SPIA• Asset Accumulation / SPDA• Life Insurance Planning• IRA & Qualified Plans• Estate Planning Needs• Uninsurable• Charitable• ESOPs• Retirees With Employer Stock
S2C Applications Unlimited
• Stocks• Bonds• Cash• Mutual Funds• Home Equity• Retained Earnings / C-Corp• Large Purchase• Fund / Buy Business• Investment Property
• Need Income Stream / SPIA• Asset Accumulation / SPDA• Life Insurance Planning• IRA & Qualified Plans• Estate Planning Needs• Uninsurable• Charitable• ESOPs• Retirees With Employer Stock
S2C Applications Unlimited
• Stocks• Bonds• Cash• Mutual Funds• Home Equity• Retained Earnings / C-Corp• Large Purchase• Fund / Buy Business• Investment Property
• Need Income Stream / SPIA• Asset Accumulation / SPDA• Life Insurance Planning• IRA & Qualified Plans• Estate Planning Needs• Uninsurable• Charitable• ESOPs• Retirees With Employer Stock
S2C Applications Unlimited
• Stocks• Bonds• Cash• Mutual Funds• Home Equity• Retained Earnings / C-Corp• Large Purchase• Fund / Buy Business• Investment Property
• Need Income Stream / SPIA• Asset Accumulation / SPDA• Life Insurance Planning• IRA & Qualified Plans• Estate Planning Needs• Uninsurable• Charitable• ESOPs• Retirees With Employer Stock
S2C Applications Unlimited
• Stocks• Bonds• Cash• Mutual Funds• Home Equity• Retained Earnings / C-Corp• Large Purchase• Fund / Buy Business• Investment Property
• Need Income Stream / SPIA• Asset Accumulation / SPDA• Life Insurance Planning• IRA & Qualified Plans• Estate Planning Needs• Uninsurable• Charitable• ESOPs• Retirees With Employer Stock
S2C Applications Unlimited
• Stocks• Bonds• Cash• Mutual Funds• Home Equity• Retained Earnings / C-Corp• Large Purchase• Fund / Buy Business• Investment Property
• Need Income Stream / SPIA• Asset Accumulation / SPDA• Life Insurance Planning• IRA & Qualified Plans• Estate Planning Needs• Uninsurable• Charitable• ESOPs• Retirees With Employer Stock
Qualified Plan Asset Flow
• Stocks grow out of market• $90,000 to $100,000 downside
protected in new IRA• 10% shortfall covered by other
assets or taxable• Retirement distributions continue• Stock gains at cap gains rate• Bonuses available
401(k)Plan
(Assets)
401(k)Plan
(Assets)
TraditionalIRA(Cash)
TraditionalIRA(Cash)
Trustee to Trustee
Transfer Assets
60 Day Distribution
Purchase Stocks
Blue ChipStocks($100,000)
Blue ChipStocks($100,000)
In the Market
RolloverTraditional
IRA($90,000)
RolloverTraditional
IRA($90,000)
Out of Market
90% Stock LoanNon-callableNon-recourse
Stock to Cash® Guidelines• Share price of $5 a share• Market Cap of $1 billion• Average daily trading volume
of 100K shares per day• Minimum portfolio value of
$100K• Minimum per stock of $25K
Getting Started• Sign and submit Registration Form• Schedule an appointment to
discuss cases• Client completes borrower
application• Client completes Disclosure Form
& Agreement