Wealth Management is based on the principle that small changes that can yield enormous gains over time. We will look at portfolio construction in the context of comprehensive wealth management. And we will see how to integrate aspects of your finances to best meet your life goals.

1. Dynamic Portfolio Construction
in the Context of
Comprehensive Wealth Management
David John Marotta, CFP®, AIF®
Marotta Wealth Management
www.eMarotta.com

2. Where in the World
Should You Invest?

3. Comprehensive Wealth
Management
Life Planning
Investment
Management
Financial Planning
Wealth Management

4. Where in the World
Should You Invest?

5. Inflation

6. Where in the World
Should You Invest?

7. Where in the World
Should You Invest?

8. Where in the World
Should You Invest?

9. The Importance of
Asset Allocation
Diversification Improves Returns
Return Year 1 Year 2 Total
A 0% 30% 30%
B 30% 0% 30%
A & B 15% 15% 32.25%

10. Rebalance

11. The Importance of
Asset Allocation
Correlation & Risk - Return

13. Where in the World
Should You Invest?

14. Developing An Optimum
Static Asset Allocation

15. Data 1927-2010

16. Data 1927-2010

25. Developing A Dynamic
Asset Allocation

26. Expense ratio of 0.19%

27. P/E Ratio: Price / Earnings
Price: Market Value per Share
Earnings: Earnings per Share (EPS)
Earnings:
Trailing 4 quarters (trailing P/E)
Projected 4 quarters (projected or forward P/E)
Last 2 quarters and estimates for the next 2 quarters
P/E Ratio: $10
Price: $10 / Share
Earnings: $1 per Share
Earnings:
Trailing 40 quarters (10-year trailing P/E)

28. 12-Month Forward P/E Ratio
Does indicate expected return
Always better to be invested
Ratio of P/E Ratios:
Russell 2000 (Small Cap)
12-Month Forward P/E Ratio = 1.033 (mean)
Russell 1000 (Large Cap)
12-Month Forward P/E Ratio 0.122 (Std Dev)
0.911 1.033 1.155
-1 Std Dev Mean +1 Std Dev
Small is cheap Average Large is cheap

29. Russell 2000 (Small Cap)
12-Month Forward P/E Ratio = 1.033 (mean)
Russell 1000 (Large Cap)
12-Month Forward P/E Ratio 0.122 (Std Dev)

30. R2000 PE / R1000 PE
0.911 1.033 1.155
-1 Std Dev Mean +1 Std Dev
Small is cheap Average Large is cheap
R1000 Return – R2000 Return
Difference in Returns
Outperformance of Large

32. Expense ratio of 0.17%

37. Value and Growth

38. Russell 1000 Growth
12-Month Forward Ratio = 1.459 (mean)
Russell 1000 Value
12-Month Forward P/E Ratio 0.264 (Std Dev)

44. Dynamic Asset Allocation
May boost returns even more
than tilting small and value
Can be adjusted quarterly or annually
Should not increase transaction costs
Can be implemented using
12-Month Forward P/E ratios

45. United States Where in the World
Should You Invest?

46. United States Where in the World
Should You Invest?
Affluence
Automation
Asia

48. Where in the World
Should You Invest?

49. Where in the World
Should You Invest?
World Equity Markets

50. Where in the World
Should You Invest?

51. Freedom Investing

52. Where in the World
Should You Invest?
Index of Economic Freedom

53. Where in the World
Should You Invest?
Index of Economic Freedom

54. Where in the World
Should You Invest?

55. Where in the World
Should You Invest?

56. Where in the World
Should You Invest?

57. Where in the World
Should You Invest?

58. Where in the World
Should You Invest?

59. Where in the World
Should You Invest?

60. Carlos Slim Helu

61. Where in the World
Should You Invest?
Developed and Emerging Markets

62. Emerging Markets Where in the World
Should You Invest?

63. Emerging Markets Where in the World
Should You Invest?

64. Emerging Markets Where in the World
Should You Invest?

65. North Korea at night

67. Santiago, Chile

68. Resource Stocks

69. Where in the World
Should You Invest?

70. Where in the World
Should You Invest?

71. Where in the World
Should You Invest?

72. Safe Spending
Getting Your Retirement
Back on Track

73. Dynamic Portfolio Construction
in the Context of
Comprehensive Wealth Management
David John Marotta, CFP®, AIF®
Marotta Wealth Management
www.eMarotta.com