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Market Views - Economic Outlook 2015

Outlook 2015

Economy

2014 brought a close to the Fed’s Quantitative Easing (QE) program. Interestingly, these efforts were mostly ineffective as the Federal Reserve (Fed) pumped in $3.4 trillion into our system since 2007 but we only saw growth of $1 trillion in Gross Domestic Product (GDP).

There are concerns going forward. The full time jobs situation has been underwhelming and median household income has generally been falling. The U.S. Dollar has been strengthening versus many of our trading partners. While this helps importers manage costs, it might be detrimental for exports, which comprise 13% of our economy. Corporate tax rates remain largely uncompetitive as other developed nations enjoy a top corporate tax rate that averages 14% lower.

Still, we remain a land of opportunities. We are a leading nation in producing energy, agriculture, industrial metals and ideas (patent grants). Consumers, who comprise roughly two-thirds of our economy, are now at their most optimistic levels in five years. Additionally, pre-election years, like 2015, are historically strong for the economy and recessions are rare.

Overall, we anticipate economic growth in 2015. Unfortunately, such growth will remain below our nation’s true capacity.

Positives Negatives
Positive Natural resource leader Negative Scarcity of full time jobs
Positive Cheap energy Negative Strong U.S. dollar hinders exports
Positive Consumers gaining confidence Negative High tax rates
Positive Pre-election year strength Negative Burdensome regulations
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The views and opinions expressed are those of James Investment Research, Inc.

This information is of a general nature and does not constitute financial advice. It does not take into account your individual financial situation, objectives or needs, and should not be relied upon as a substitute for financial or other professional advice to assess, among other things, whether any such information is appropriate for you and/or applicable to your particular circumstances. In addition, this does not constitute an offer to sell, or the solicitation of an offer to buy, any financial product, service or program. The information contained herein is based on public information we believe to be reliable, but its accuracy is not guaranteed. Investing involves risks, including loss of principal. Past performance is no guarantee of future results. The James Advantage Funds are distributed by ALPS Distributors, Inc. 1290 Broadway, Ste. 1100, Denver, CO 80203 (Member FINRA). ALPS is not affiliated with James Investment Research, Inc. CAPE – (cyclically adjusted PE) a valuation measure, generally applied to broad equity indices, that uses real per-share earnings over a 10-year period. Price to Sales – a valuation ratio that compares a company’s stock price to its revenues. Price to Book – a ratio used to compare a stock’s market value to its book value. Dividend Yield – a financial ratio that shows how much a company pays out in dividends each year relative to its share price. Tobin’s Q Ratio – The Q ratio is calculated as the market value of a company divided by the replacement value of the firm’s assets. QE – (Quantitative Easing) an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Relative Earnings Yield – the earnings per share for the most recent 12-month period divided by the current market price per share compared to interest rates.

Past performance is not indicative of future results.

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You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling 1-800-995-2637 or click here to view or download a prospectus online.

Mid, Small and Micro Cap investing involve greater risk not associated with investing in more established companies, such as greater price volatility, business risk, less liquidity and increased competitive threat. Fund holdings and sector weightings are subject to change without notice. Past performance is no guarantee of future results.
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Distributed by ALPS Distributors, Inc. 1290 Broadway, Ste 1100, Denver, CO 80203 (Member FINRA)