Planning Strategies Q410

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Successful Planning Strategies for Life & Investments

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Planning Strategies Q410

  1. 1. Successful Planning Strategies for Life & Investments Barry Mendelson, CFP® 925-988-0330 x22 [email_address] As of December 31, 2010
  2. 2. Opinions expressed are those of Barry Mendelson, CFP® and Just Plans Etc. This presentation should not be construed as investment advice. The information contained in this presentation is compiled from sources believed to be reliable. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. The markets can remain irrational longer than you can remain solvent. Disclosures
  3. 3. Barry Mendelson, CFP® Local investment and personal finance guru. More than 15 years experience working for leading financial services companies including Charles Schwab, AXA Rosenberg, Neuberger Berman, and Franklin Templeton. Prior to joining Just Plans Etc. in 2010, was a Vice President in Charles Schwab & Co’s $200 billion investment management division. Certified Financial Planner™ certificate holder since 2008. B.A. in Business Economics & Accounting from U.C. Santa Barbara in 1995. Just Plans Etc. Founded in 1983 and based in Walnut Creek, California - Just Plans Etc. is a fee-only wealth management firm and SEC registered investment advisor. Just Plans provides investment management and financial planning services to more than 100 individuals, families, and companies. The firm specializes in tax-efficient investing and helping investors realize meaningful value from qualified retirement plans, concentrated stocks positions, stock options, and other forms of equity. As a fiduciary, the firm puts the interests of the client above all else. About
  4. 4. 1. Investment Planning 2. Personal Planning 3. Chairs 4 Charity Agenda
  5. 5. 1. Investment Planning Agenda
  6. 6. Returns by Style Jan-10 Apr-10 Sep-10 Dec-10 1,000 1,050 1,100 1,150 1,200 1,250 1,300 Source: Russell Investment Group, Standard & Poor’s, FactSet, J.P. Morgan Asset Management. All calculations are cumulative total return, including dividends reinvested for the stated period. Since Market Peak represe nts period 10/9/07 – 12/31/10 , illustrating market returns since the most recent S&P 500 Index high on 10/9/07. Since Market Low represents period 3/9/09 – 12/31/10 , illustrating market returns since the S&P 500 Index low on 3/9/09. Returns are cumulative returns, not annualized. For all tim e periods, total return is based on Russell - style indexes with the exception of the large blend category, which is reflected by th e S&P 500 Index. Past performance is not indicative of future returns. Data are as of 12/31/10 . Jan-07 May-08 Sep-09 Dec-10 600 800 1,000 1,200 1,400 1,600 S&P 500 Index S&P 500 Index 2010: +15.1% 4 Q10 : +10.8% Since 10/9/07 Peak: - 13.6% 4 Q 2010 Since Market Low (March 2009) 2010 Since Market Peak (October 2007) Charts reflect index levels (price change only). All returns and annotations reflect total return, including dividends. Since 3/9/09 Low: +93.1% Value Blend Growth Value Blend Growth Large 10.5% 10.8% 11.8% Large 15.5% 15.1% 16.7% Mid 12.2% 13.1% 14.0% Mid 24.8% 25.5% 26.4% Small 15.4% 16.3% 17.1% Small 24.5% 26.9% 29.1% Value Blend Growth Value Blend Growth Large -19.9% -13.6% -4.7% Large 99.8% 93.1% 94.3% Mid -5.9% -3.5% -2.0% Mid 140.3% 132.9% 126.6% Small -5.3% -2.9% -1.0% Small 134.2% 134.0% 133.6%
  7. 7. Various Asset Class Returns 10-yrs 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 4Q10 '01 - '10 REITs REITs DJ UBS Cmdty MSCI EME REITs MSCI EME REITs MSCI EME Barclays Agg MSCI EME REITs Russell 2000 MSCI EME 26.4% 13.9% 23.9% 56.3% 31.6% 34.5% 35.1% 39.8% 5.2% 79.0% 28.0% 16.3% 350.0% DJ UBS Cmdty Market Neutral Barclays Agg Russell 2000 MSCI EME DJ UBS Cmdty MSCI EME MSCI EAFE Market Neutral MSCI EAFE Russell 2000 DJ UBS Cmdty REITs 24.2% 9.3% 10.3% 47.3% 26.0% 17.6% 32.6% 11.6% 1.1%* 32.5% 26.9% 15.8% 178.0% Market Neutral Barclays Agg Market Neutral MSCI EAFE MSCI EAFE MSCI EAFE MSCI EAFE DJ UBS Cmdty Asset Alloc. REITs MSCI EME S&P 500 Russell 2000 15.0% 8.4% 7.4% 39.2% 20.7% 14.0% 26.9% 11.1% -23.8% 28.0% 19.2% 10.8% 84.8% Barclays Agg Russell 2000 REITs REITs Russell 2000 REITs Russell 2000 Market Neutral Russell 2000 Russell 2000 DJ UBS Cmdty REITs Asset Alloc. 11.6% 2.5% 3.8% 37.1% 18.3% 12.2% 18.4% 9.3% -33.8% 27.2% 16.7% 7.4% 80.2% Asset Alloc. MSCI EME Asset Alloc. S&P 500 Asset Alloc. Asset Alloc. S&P 500 Asset Alloc. DJ UBS Cmdty S&P 500 S&P 500 MSCI EME Market Neutral 0.6% -2.4% -5.4% 28.7% 12.5% 8.0% 15.8% 7.3% -36.6% 26.5% 15.1% 7.4% 76.9% . Russell 2000 Asset Alloc. MSCI EME Asset Alloc. S&P 500 Market Neutral Asset Alloc. Barclays Agg S&P 500 Asset Alloc. Asset Alloc. MSCI EAFE Barclays Agg -3.0% -3.4% -6.0% 25.2% 10.9% 6.1% 14.9% 7.0% -37.0% 22.5% 12.7% 6.7% 76.3% S&P 500 S&P 500 MSCI EAFE DJ UBS Cmdty DJ UBS Cmdty S&P 500 Market Neutral S&P 500 REITs DJ UBS Cmdty MSCI EAFE Asset Alloc. MSCI EAFE -9.1% -11.9% -15.7% 22.7% 7.6% 4.9% 11.2% 5.5% -37.7% 18.7% 8.2% 6.4% 47.1% MSCI EAFE MSCI EAFE Russell 2000 Market Neutral Market Neutral Russell 2000 Barclays Agg Russell 2000 MSCI EAFE Barclays Agg Barclays Agg Barclays Agg DJ UBS Cmdty -14.0% -21.2% -20.5% 7.1% 6.5% 4.6% 4.3% -1.6% -43.1% 5.9% 6.5% -1.3% 41.7% MSCI EME DJ UBS Cmdty S&P 500 Barclays Agg Barclays Agg Barclays Agg DJ UBS Cmdty REITs MSCI EME Market Neutral Market Neutral Market Neutral S&P 500 -30.6% -22.3% -22.1% 4.1% 4.3% 2.4% -2.7% -15.7% -53.2% 4.1% -2.5% -1.6% 15.1% Asset Class Source: Russell, MSCI Inc., Dow Jones, Standard and Poor’s, Barclays Capital, NAREIT, J.P. Morgan Asset Management. The “Asset Allocation” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE Index, 5% the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index and 5% in the NAREIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data except commodities repr return for stated period. Past performance is not indicative of future returns. Please see disclosure page at end for index d efi as of 9/30/10, except for the CS/Tremont Equity Market Neutral Index, which reflects data through 8/31/10. “10 - yrs” returns repr esent cumulative total return and are not annualized. These returns reflect the period from January 1, 2000 – December 31, 2010 *Market Neutral returns include estimates found in disclosures. Data are as of 12/31/10 .
  8. 8. Global Commodities 0 500 1000 1500 2000 2500 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Source: Dow Jones/UBS, FactSet, J.P. Morgan Asset Management. Commodity prices represented by the appropriate DJ/UBS Commodity sub - index. Data reflect most recently available as of 12/31/10 . Source: USDA, BP Statistical Review of World Energy, J.P. Morgan Asset Management . Data are as of 12/31/10 . Class '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 0 50 100 150 200 250 300 350 400 450 Commodity Prices Weekly index prices rebased to 100 Precious metals Industrial metals Energy Livestock Grains Oil Demand: Emerging Markets Share Emerging markets as % of total global oil consumption Grain Demand: Emerging vs. Developed Markets Millions of metric tons Emerging Markets Developed Markets 30% 32% 34% 36% 38% '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
  9. 9. Monthly: January 1926-December 2009 CRSP data provided by the Center for Research in Security Prices, University of Chicago. The S&P data are provided by Standard & Poor's Index Services Group. US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). $8,201 Small Cap (CRSP 6-10 Index) $2,590 Large Cap (S&P 500 Index) $85 Long-Term Government Bonds Index $20 Treasury Bills $12 Inflation (CPI) $10,000 $1,000 $100 $10 $1 $0 1926 1936 1946 1956 1966 1976 1986 1996 2006 2009 Growth of Wealth
  10. 10. S&P 500 Index (USD) Daily Returns: January 1, 1926-March 31, 2010 Indices are not available for direct investment; its performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. The S&P data are provided by CRSP (January 1, 1926-August 31, 2008) and Bloomberg (September 1, 2008-March 31, 2010). Returns include reinvested dividends. Bull and bear markets are defined in hindsight using cumulative daily returns. A bear market (1) begins with a negative daily return, (2) must achieve a cumulative return less than or equal to -10%, and (3) ends at the most negative cumulative return prior to achieving a positive cumulative return. All data points which are not considered part of a bear market are designated as a bull market. Performance data represents past performance and does not predict future performance. Average Duration Bull Market: 413 Days Bear Market: 220 Days Average Return Bull Market: 58% Bear Market: -21% Bull and Bear Markets 220% -13% -85% 20% -16% -39% 119% 88% 27% -15% -10% -13% 100% 44% -53% 25% 40% -13% -14% 26% -25% 22% -11% 23% -33% 83% -11% 99% -26% 19% -11% -16% 26% 53% 91% -13% 121% -11% 26% -13% 18% 69% -21% -11% 44% -27% 15% 96% -11% 59% -27% -10% -21% -32% 56% -12% 38% -45% 22% -13% 50% -13% 38% -15% 27% -13% 26% -10% 21% -16% 48% -20% 78% -11% 156% -33% 73% -10% 16% -19% 303% -11% 37% 50% -19% -12% 23% -11% 13% -47% 21% -14% 113% -55% 03/09/2009 -55% 3/31/2010 -20% 1% 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
  11. 11. Historical returns by holding period - 37% - 8% - 15% - 2% - 2% 1% - 1% 1% 2% 6% 1% 5% 51% 43% 32% 28% 23% 21% 19% 16% 17% 18% 12% 14% - 40% - 30% - 20% - 10% 0% 10% 20% 30% 40% 50% 60% 1 - yr. 5 - yr. rolling 10 - yr. rolling 20 - yr. rolling Annual total returns, 1950 - 2009 Range of Stock, Bond and Blended Total Returns Asset Sources: Factset , Robert Shiller , Strategas /Ibbotson, Federal Reserve, J.P. Morgan Asset Management. Data are as of 12/31/09. 50/50 Portfolio 9.0% $560,441 Bonds 6.2% $333,035 Stocks 10.8% $777,670 Annual Avg. Total Return 50/50 Portfolio Bonds Stocks Growth of $100,000 over 20 years
  12. 12. Lessons Markets are difficult to predict in the short-term. Diversifying globally expands your opportunity set. “ Be greedy when others are fearful and fearful when others are greedy.” – Warren Buffet. Have a long-term perspective.
  13. 13. 2. Personal Planning Agenda
  14. 14. Charles Schwab More than 30 years ago, Charles R. Schwab founded this firm with a clear mission: to empower individual investors to take control of their financial lives, free from the high costs and conflicts of traditional brokerage firms. His vision - to provide the most useful and ethical financial services in the world - continues to guide or values-driven approach to growth, client service, community involvement and employee development. Google Google’s mission is to organize the world‘s information and make it universally accessible and useful. Don’t be evil. (Unofficial). Create a (Family) Mission Statement
  15. 15. Mendelson Family Mission Statement Know that time is our most valuable asset. Experiences are more valuable than possessions. Never stop learning. The world is our home – explore it. Spend time with those we love and respect – and feel the same way about us. Appreciate the world around us and all we have. Seek to make the world a better place and improve the lives of those less fortunate than us.
  16. 16. Know your roles Elliot (Line Worker) Sydney (Line Worker) Kristin (CEO) Barry (Head of Production)
  17. 17. Philanthropy & Volunteerism In support of public education Kristin – Chair, Walnut Country Preschool Kristin – Highlands Elementary PTA Site Council Chairs 4 Charity In support of cancer care and cure related causes Cancer Support Community of the East Bay Leukemia & Lymphoma Society Have a Ball Foundation & Golf Tournament In support of financial literacy Barry – Board member, Financial Planning Association of the East Bay
  18. 18. Goals Short-term: 1 – 5 Years Visit Disneyland, Death Valley during the spring bloom, rent a house on Lake Almanor Straight A’s in school Adopt a family Replace Kristin’s car, buy a boat Long-term: 5 years + Learn to speak Spanish Travel to Asia
  19. 19. Lessons Define your goals. Create a plan. Put it into action. Revisit it frequently.
  20. 20. 3. Chairs 4 Charity Agenda
  21. 21. Chairs 4 Charity www.chairs4charity.org Chairs 4 Charity provides local not-for-profits valuable items to support their fundraising efforts. Chairs 4 Charity’s chairs and benches are made from salvaged, lumber, skis, and snowboards. Source materials and raise awareness with help from Sports Basement – Walnut Creek, San Ramon High PTA, local ski clubs, and other businesses.
  22. 22. Chairs 4 Charity www.chairs4charity.org Inspiration – my sister Leslie’s quilts.
  23. 23. Chairs 4 Charity www.chairs4charity.org Lead by example. Reuse and repurpose materials. Artistic expression. Give back to the community.
  24. 24. Creating a Family Mission Statement: https://docs.google.com/document/d/1LHtM8YhOh67IzpPyOzySlOU2App8w1jZtMp_EGtgWr0/edit?hl=en&authkey=COKBkokJ Creating a Personal Disaster Plan for Your Home, Your Loved Ones and Your Finances: https://docs.google.com/document/d/1Ttxin-U6vYj4f8UPJgltHGTpLDdn5JX5l9Rc9CFepVM/edit?hl=en&authkey=CPShvNkE More articles at: www.justplans-etc.blogspot.com Barry Mendelson, CFP® 925-988-0330 ext. 22 [email_address] www.JustPlans-Etc.com 1399 Ygnacio Valley Rd, Suite 24 Walnut Creek, CA 94598 Resources

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