Private Placement

1. Market Maker | Capital
marketmakercapital.com
marketmakered@gmail.com
(949) 735-4139
Private Placement
Memorandum

2. Table of Contents
Synopsis Of Operation
Introduction 3
Macro Forecast 4-5
Market Focus 6-9
Trends in 2018 10-11
The Opportunity 12
Fund Manager 12
Exhibits
A 10
B 10
C 11
D 11
Investor questionnaire & Subscription Agreement
Investment Management Agreement
Page 2

3. In a overvalued market environment an investor is subject to huge amounts of risk and
very little return. Market Maker | Capital's model is to protect assets and gain substantial
rates of return, then to acquire assets at much lower prices. Because when do you buy
insurance, before the storm or during?
.
Market Maker | Capital's focus is on Alternative
Investment Solutions for clients that range from: individual
investors, family RIA offices, or Institutional Broker Dealers.
Traditional Securities, in a low rate environment, give very
little Rates of Return and leaves the investor with all of the
risk of principle. Alternative Investments, let clients leverage
and protect capital with much higher rates of return and
much less risk.
About Us
Page 3
Introduction

4. Now with peak spending behind the baby boom
generation and downsizing their homes or moving to senior care
living demand has collapsed. This trend started in 2000 when
the markets retreated 85% from their all time highs.
An entire generation is delusional that markets only go up
in value. In the late 1970's the government created a tax
deferred vehicle (401k) to move away from expensive pensions.
As the peak population of boomers entered the work force they
were buying into the market every two weeks as they
contributed to their 401k. This created Demand for stocks and
houses from 1978-2000.
As the first wave of Baby Boomers started withdrawing
their 401(k). If you have an oversupply of stocks in 2000 and
forced selling with no buyers of stocks and mutual funds, the
markets are going to collapse and they did. To steam the
bleeding the federal reserve began an interest rate cutting cycle.
Demand Destruction
.
With capital markets at all time highs and interest rates
near all time lows investors are struggling to capture returns and
taking large amounts of risk to produce small returns. With the
largest generational workforce retiring or retired in the next few
years, it will destroy the demand side economies of sovereign
nations and a systemic event will unravel all markets.
The Generational Spending Wave is the Ultimate Leading
Indicator. Know what a generation’s spending wave will look
like, you simply move the birth index forward by 46 years (after
adjusting for immigration). At 46 years old, most people are
peaking in their spending, having bought the largest house
they’ll own when they were about 41 and helping their kids
through high school, maybe college, and then into the big, wide
world. The demographic climaxes in average peak spending led
to the rising boom from 1983 to 2007, then the slowdown in
2008 that will continue until 2020, when trends flatten and
bottom out into late 2022 before turning up again.
Demographic Trends
Page 4
Macro Forecast

5. In 2000 you had a tech bubble, in 2008 a
housing bubble, and in 2018 an all asset bubble
created by low interest rates, quantitative easing, and
easy money lending standards. The credit bubble is
not just a private sector issue but also for sovereign
governments.
Debt to GDP of the U.S. as of 2015 was
344%. To give perspective, at the market top of the
great depression the debt to GDP was 180%. Once
the market crashed, GDP went down and the debt to
GDP spiked to 300%. Currently we have 3 times the
debt as before the great depression. Once the
current market crashes debt to GDP should spike
close to 500%.
With the federal reserve on an interest
tightening path it will increase the cost of the debt
outstanding to astronomical levels.
At market tops, another leading indicator is
margin debt. Borrowed money from broker/dealers to
buy stocks. In 2000 margin debt was 250% of the
market, 2008 it was 325% of the market, and currently
450% of the market. That's $700 billion of the market
is bought on borrowed money. Federal reserve
raising rates will increase the cost of borrowing and
exhaust any buyers.
.
Credit Bubble
With cheap liquidity and low interest
rate environment it allowed companies to buy
back their own stock, limiting supply and
increasing the value. Those companies with
large amounts of cash on hand have been
buying back their stock hand over fist. The
tech sector.
Cutting of interest rates and opening of
lending standards led to a credit and housing
bubble from 2004-2008. Once that bubble
popped the fed reserve, with rates near zero,
they printed money with quantitative easing
programs.
With a large amount of boomers out of
the work force and the next generation earning
low wages, there was no one left to buy
securities.
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Macro Forecast

6. Page 6
Lastly US consumers have accumulated an aggregate
$1.04 trillion credit card debt and the private sector is not
refinancing their homes with higher rates so they are
unable to pull cash from their homes.
"The chief economist for Fannie Mae is surprisingly
outspoken about the troublesome outlook for the US
economy. He's worried about the rising cost of debt
service as outstanding credit continues to mount at the
same time interest rates are starting to ratchet higher, too.
He predicts the US will enter recession within a year,
concurrent with a topping out of America's real estate
market. It wouldn't surprise him to see the stock market
falter, too, as central banks around the world begin a
coordinated tightening of monetary policy and -- similar to
the thoughts recently expressed within our podcast with
Axel Merk -- Doug expects Jerome Powell to be much
more reluctant to intervene in attempt to support asset
prices. Having met personally with Powell, Doug thinks
the Fed is now happy to see some of the air come out of
the Everything Bubble (just not too much and not too fast)
-- a market change from past Fed administrations"
Tech Reck Part 2
It looks like Silicon Valley has put a target on its virtual back. We made another tech
bubble on the premise that Americans would write the apps and Asians would make the
hardware, and the miracle of connectivity would bring the world together in Mark
Zuckerberg’s utopian vision. Internet community and Artificial Intelligence were the two
blasts of hot air that inflated the bubble. Social media as a substitute for actual human
interaction and computation as a substitute for human thought were going to waft us into
the future.
The idea that Americans would be the designers and Asians would be the manufacturing
worker-bees had an obvious and fatal flaw. At some point, the advancement of the
technology requires real physical infrastructure, and research and development will come
to grief without a working partnership with the factory floor.
Market Focus

7. . The number of books, articles and non-tech corporates talking about big data, AI and
blockchain is also reflective of this. Even cab-drivers (or should I say Uber drivers) are
talking about some of these trends. A classic sign of the late stages of a boom is when
non-specialists start to become the most vocal advocates for the boom.
Politics is turning against the sector The more fundamental trigger of the bursting of this
“bubble” is the shift in politics on the data/platform industry, especially in the US. President
Obama could be thought of as the “Silicon Valley” President, with his tendency to embrace that
sector and lean on the sector for economic and business strategy. After all, it was President
Obama who was the first one to appoint a Chief Technology Officer.
President Trump by contrast has been more skeptical and instead has focused on the
manufactured sector. It is notable that whenever President Trump talks about the US trade deficit,
he focuses on the goods balance, rather than trade in services or invisibles. Part of the reason for
this is the fruits of the data/platform revolution has not been shared across the economy – if
anything, it has seen income inequality widen as intangible asset-intensive industries tend to
create winner-takes-all-dynamics. The thrust of US policy is therefore moving back towards
tangible asset industries, such as manufacturing, and away from intangible asset industries, like
data/platform companies.
The perception of the accuracy and use of the data are being questioned Part of the explosion
in the use of these platforms was the disruption of the conventional distribution and verification of
information. Before social media, information was distributed and verified by particular institutions
such as press/media companies, universities and government bodies. Social media allowed
distribution to be wrestled away from these institutions thus allowing millions more “publishers”
and importantly the verification was done by crowd sourcing the opinions of other individuals
through user reviews.
Today thanks to the increasing concerns that platforms and data-holders have been “gamed” by
corporations and foreign governments to manipulate consumers and voters, there is a growing
backlash from individuals and governments on how these platforms can operate. For individuals,
this could be resulting in a shift from “crowd-sourced” information to “reputation-based.”
Information and opinion. For governments, this could result in greater regulation on how and
where the data/platform companies can operate.
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Market Focus

8. A move away from global towards regional standards Finally, there is a move to regionalize
standards on big data/AI/platforms rather than globalize. The big three regions are the US, China
and EU. China has a clear policy of a state-centric data/platform model, where Chinese data have
to be held in China with oversight from the authorities. The EU is increasingly flexing its muscles
on the rights of the consumer in relation to data/platform owners. That leaves the pioneering US
companies with the most to lose as they have to retrench from these markets.
The Tech Tax
Having more than 7 million euros in annual revenues from digital services in a given country;
having more than 100,000 users per year in that country; or having more than 3,000 business
contracts for digital services created in a year in that country. On average, the EU estimates that
tech companies pay around 9.5% in tax on their profit on the continent, compared with 23.2% for
traditional industries, though tech lobbyists dispute that figure. Taxes will apply even if a firm
doesn't have a physical presence in the region where the taxes are being levied - the only thing
that matters is where the "value" from its revenues was created.
Important Facts
1. Excess returns & fancy valuations: US tech is best performing sector in QE era, up annualized
20%; ex tech the S&P500 would be 2000 not 2600 today
2. Bubbly prices: US internet commerce stocks (DJECOM) soared 624% in 7 years at their peak,
3rd largest bubble of past 40 years
3. Fat market caps: US tech market cap ($6.4tn) exceeds that of Eurozone ($5.0tn);
FAANG+BAT market cap of $4.9tn exceeds Emerging Markets ($4.6tn).
4. Earnings hubris: tech & eCom companies currently account for almost 1/4 of US EPS this level
that is rarely exceeded, and often associated with bubble peaks; note there are currently just 5
“sells” out of 250 FAANG recommendations
5. breaches” exposed 179 million records of personal names plus financial or medical data;
pending US & EU regulation threaten 4% of tech revenue.
6. Wage disruption: IMF says 50% of the decline in labor’s share of income is attributable to
technology (25% due to globalization); number of global industrial robots by 2020 will be 3.1
million (was 1 million in 2010)
7. Tech is cash-rich, tax-light: sector has $740bn of cash overseas (larger than all other sectors
put together ($510bn); effective rate of tax on US tech companies is 16.9%, lower than the 19.3%
paid across the S&P500
Page 8
Market Focus

9. 8. Tech most lightly regulated sector: just 27K regulations (Chart 7) for tech; by comparison
manufacturing regulated by 215K rules, financial sector by 128K.
9. Tech & trade: US tech has highest foreign sales exposure (58%) of all US sectors
10. Occupy Silicon Valley: tobacco (1992), financial (2010), biotech (2015) industries illustrate
how waves of regulation can lead to investment underperformance.
Finally, putting it all together, is this chart which suggests that it is only a matter of time before the
government bursts the third biggest bubble ever created by central banks.
Market Focus
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10. Technical Picture S&P 500 (Exhibit A)
Exhibit B
Page 10
Trends in 2018

11. Four Horsemen
During the tech bubble of 2000 there were four companies that led the markets higher and were
also their demise. Based on the highest market cap and percentage of the NASDAQ. Intel,
Microsoft, Cisco, and Dell were labeled as the "Four Horsemen." No chart of Dell because they
did so well they are no longer a public company. (Exhibit C)
Boom Bust Cycle
Current tech companies that give the S&P 500 20% of its value and are the largest risk to the
market are the FAANGs. Facebook, Amazon, Apple, Netflix, Google. Not only do these
companies face fundamental and political head winds but technically they look ripe to burst.
(Exhibit D)
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Trends in 2018

12. Page 12
Market Maker | Capital
With capital markets at all time highs and interest rates near all time lows. Investors are
struggling to captor returns and taking large amounts of risk to produce small returns. With the
largest generational workforce retiring or retired in the next few years, it will destroy the demand
side economies of sovereign nations and a systemic event will unravel all markets.
Opportunity is to capture significantly higher rates of return than traditional investments, using
Alternative Investments. The fund will then acquire assets at much lower price levels and add
them to the portfolio. Then rent out those assets to the market collecting monthly premium.
Currently the fund has a projected YTD return of 180% the current S&P 500 benchmark is at
1.3%. Work with a fund manager with 18 years of trading experience in alternative and traditional
investments.
Fund Manager
Jason Reed executed his first IPO at the age of 22. Starting as a precious metals broker-dealer,
then advancing his career as a National Futures Association Commodity Trade Advisor. Active
trader in Alternative Investment Markets for over 18 years.
Institutionally executed spread trades of the yield curve from Eurodollar to 30 year bond using
leverage derivative futures market. Performed statistical and quantitative analysis of reports
utilizing Excel and SQL to analyze price movement in US and foreign markets. Analyzed and
completed hedging of institutional credit markets based on interest rate fluctuations and volatility.
Transformed clients’ financial results through over 8,000 income and wealth objectives planning
consultations, maximizing client income with derivative vehicles using futures and currency
markets.
Proven success in areas of process improvement, financial management, capital markets,
business development, team building, and revenue creation. Possess strong analytical skills to
monitor trends, generate reports, interpret results, identify areas of improvement, and implement
changes to achieve operational efficiencies
Opportunity

13. Dent, Harry S. jr. Teh Sale of A lifetime: How the Great Bubble Burst of 2017-2019 Can Make You Rich. Penguin
Random House, 2016
Durden, Tyler. "Executive on a Mission: Saving the Planet." ZeroHedge, https://www.zerohedge.com/news/2018-
03-26/bofa-we-are-witnessing-third-biggest-assset-bubble-created-central-bank