U.S.

Equities: Fisher Capital Management Reports

As mentioned previously, stocks finished a volatile month in October with a volatile final week of
trading, as investors began to question whether the market¹s impressive rally had surpassed the
economy¹s ability to generate growth in output and profits.

To be sure, throughout the market’s impressive rebound, the technical picture for stocks
gathered steam, as excess liquidity helped drive the market higher.

Fisher Capital Management, US Equities Reports: As one technical achievement passed

another, we began to postulate that the market’s technicals appeared significantly better than its
fundamentals.

Some of these concerns may be coming to fruition over the near term, as a few technical
strengths appear to have softened in recent weeks. Indeed, as the S&P 500 Index approached
the 1,100 level during the middle of October, the market ran into strong resistance, falling by
approximately 5% from that high by month-end.

Fisher Capital Management, US Equities Reports: This may prove to be an important

development because at 1,100, the S&P 500 was within about 20 points of achieving a 50%
retracement, whereby the market could have recouped 50% of the loss from the October 2007
high of 1565 to the March 2009 low of 666. Given all the cash parked in money markets and
shortterm Treasury bills, another surge or two above 1,100 is certainly possible. Yet 1,121 is a
number that should be on the radar for all investors, because if it is achieved, very little technical
resistance exists on the path to 1200.

In addition to the strong resistance, stocks failed to hold a key support level on the last day of
October. The market’s 50-day moving average (DMA) was 1,052 heading into Halloween
weekend, but investors were spooked by poor readings on personal spending and consumer
confidence, resulting in a close (1,036) below the important 50- DMA level. An important test will
be in the first several trading days of November to see whether or not the market can sustain its
rally above this key support level.

Fisher Capital Management, US Equities Reports: This weakness was exacerbated by a surge
in the market’s “fear gauge” toward the end of October. The Chicago Board Options Exchange
Volatility Index, or VIX, which measures the cost of using options as insurance against declines
in the S&P 500 Index, surged in the final few days of trading last month.

While the VIX had been at a 14-month low in the middle of October, the 25% jump at the end of
the month suggests investor skittishness about market direction over the next several weeks,
particularly as the catalyst of earnings season draws to a close.

Fisher Capital Management, US Equities Reports: Fortunately, the fundamental picture has
brightened. Better than expected economic data suggests the possibilities for an improvement
in corporate performance. Interest rates and inflation remain low, providing a healthy backdrop
for corporations that have been very aggressive cutting costs from their expense structures.

Indeed, recent earnings news has been somewhat positive, with 70% of the companies in the
S&P 500 Index having reported an average decline in earnings per share (EPS) of 12% for the
third quarter, exceeding expectations.
Fisher Capital Management, US Equities Reports: Given our projections for a “less spectacular”
economic recovery in 2010, though, we continue to believe that consensus estimates for
corporate profit growth of up to 35% next year are too high. Consequently, our operating EPS
projections remain more than 12% below consensus expectations ($75.00) for 2010.

Businesses can’t cut costs forever, and at some point we believe revenue growth is a necessity
to help justify valuations for a market that is already trading at a price/earnings (P/E) ratio of 16
to 17 times our $65.00 estimate for next year. Until we begin to see an improvement in the
longer-term trends for housing, employment, credit, sales, and profits, we suspect the market
will be unwilling to pay anything more than historically average P/E multiples (16 to 17 times) for
a dollar of earnings. Therefore, we continue to believe the market, as defined by the S&P 500
Index, will likely be fairly valued within the current range of 1,050 to 1,100 over the next six
months.

Fisher Capital Management, Korea is a leading global financial institution holding extensive
relationships with financial institutions, institutional investors and corporations across the world.
As a full service company Fisher Capital Management, Korea provides a full range of
investment banking services including advanced risk management, corporate strategy and
structure, plus raising capital through debt and equity markets. With this as our backbone we
continue to provide a client service second to none.