Jerusalem Investing Meetup Group Feb2008

Slide 1: Jerusalem Investing Meetup Group February Meeting

Slide 2: Putting it all together Building an investment portfolio

Slide 3: First things first

Slide 5: What is my risk profile?

Slide 6: Risk Tolerance Risk Return • how much money is at • historical returns vs. actua stake • desire to outpace inflation • how willing am i to deal • diversification across with losses assets • can i stomach volatility • diversification across • how soon will i need this geography money

Slide 7: Risk • how much money is at stake • how willing am i to deal with losses • can i stomach volatility • how soon will i need this money • how far am I from retirement • if market goes down, i would...

Slide 8: Return • historical returns vs. actual • desire to outpace inflation • diversification across assets • diversification across geography • financial goals • how market exposure corresponds to other assets, career, business

Slide 10: But, need to optimize risk- return

Slide 12: OR, how to get more return for same level of risk

Slide 13: Remember tax efficiency

Slide 14: need to take taxes into account(ant)

Slide 15: Step 2: Asset Allocation

Slide 16: Both an art and a science • determine exposure to different asset classes • how this impacts performance and risk • domestic vs. international • stocks vs. bonds

Slide 17: Where to begin?

Slide 18: Endowments Harvard, Yale publish their yearly reports, useful for asset allocation

Slide 19: Online Research Most investment banks provide allocation suggestions

Slide 20: International exposure

Slide 21: BUT,

Slide 22: hard to cookie-cutter this

Slide 23: your financial situation is unique

Slide 24: For those looking to be more active

Slide 25: CORE + Satellite

Slide 26: Core + Satellite = Secret Sauce Core Satellite Major holdings Take some more risk Risk management Single stocks Funds/ETFs Themes

Slide 27: Last step: Finding the right vehicle

Slide 28: Once you have your allocation, how do you invest in it?

Slide 29: 2 ways to go (or some of each) Single Stocks Funds/ETFs • few single stocks may • pay management fees approximate a sector or • diversification affects geography returns • leaders in sectors • hot-hand dynamics • returns can exceed or • less pressure to pick underperform market individual winners

Slide 30: Which is better?

Slide 31: Like all good questions, it depends...

Slide 32: Active vs. Passive?

Slide 33: Passive vs. Active Investing Passive Active • Index Funds • rare outperformance • Market returns • hedge fund • Bear market realities discoveries • new product • hot-hand syndrome development • new opportunities for o Vanguard exposure to alternative o WisdomTree assets • new exposure to alternative assets