The document discusses developing a personal investment philosophy by identifying one's true purpose for money, market beliefs, and investment strategy. It explains that having a clear investment philosophy based on understanding these principles can help alleviate common investor dilemmas and provide better financial outcomes through a structured, long-term approach. Developing an investment philosophy is presented as key to achieving financial goals with peace of mind.

1. CHOOSING YOUR INVESTMENT PHILOSOPHY

2. Have you ever worried about: Getting high enough returns on your investments? Maintaining your standard of living at retirement? Affording high quality education for your children? The next market crash? The next market boom? Missing out on the latest, greatest stock tip? Making sense of all of the information available? Someone else having a better portfolio? Not having enough money to care for loved ones? Getting bad advice and, worse yet, paying for it? Buying high and selling low? ARE YOU CAUGHT IN THE INVESTORS’ DILEMMA?

3. THE INVESTORS’ DILEMMA NOT ENOUGH MONEY NO PEACE OF MIND Definition Investors’ Dilemma : A cycle explaining the human side of investing. 7 Performance Losses 1 Fear of The Future 2 Forecast and Predict 3 Track- Record Investing 4 Information Overload 6 Breaking the Rules 5 Emotion- Based Decisions

4. UNDERSTANDING THE INVESTORS’ DILEMMA Fear of the Future Forecast and Predict Track-Record Investing Information Overload Emotion-Based Decisions Breaking the Rules Performance Losses

5. How does this dilemma affect you? Describe how the Investors’ Dilemma has affected your investment portfolio. THE RESULT: NOT ENOUGH MONEY

6. THREE PRINCIPLES OF INVESTMENT PHILOSOPHY Definitions Philosophy : Theory of the principles underlying thought, knowledge, and conduct. Principle : A fundamental truth, law, or motivating force.

7. THREE PRINCIPLES PRINCIPLE 2 Your Market Belief + A statement of the most important value that you want to express through the way you use money. Identifying exactly what you believe about how the market works. The method you want to utilize as you create an investment portfolio for the future. Your guide for all future investing decision. = Your Personal Investment Philosophy PRINCIPLE 1 Your True Purpose for Money PRINCIPLE 3 Your Investment Strategy +

8. True Purpose for Money is a statement of the most important personal value you want to express by the way you utilize money. PRINCIPLE 1 True Purpose for Money

9. PRINCIPLE 2 Market Belief Definitions Belief : A state of mind in which trust or confidence is placed. Market : The buying, selling, and trading of all goods, stocks, and services.

10. Two Views of Markets TWO VIEWS OF MARKETS Random price movements Predictable price movements MARKETS WORK The Markets Work hypothesis sees the market as random and unpredictable. Amazingly, the randomness of the market actually indicates that prices quickly and accurately reflect information. MARKETS FAIL The Markets Fail premise presumes that prices react to information slowly enough to allow some individuals to analyze and predict the future.

11. MARKETS WORK MARKETS FAIL EXAMINING MARKET BELIEFS What does it mean? What’s the story? Is there proof? Random price movements Predictable price movements

12. WHAT DO YOU THINK? It is time to make a choice. What makes most sense to you? MARKETS WORK MARKETS FAIL

13. PRINCIPLE 3 Investment Strategy ASSET CLASS INVESTING TWO STRATEGIES FOR INVESTING Structured Funds Speculative Funds SPECULATIVE INVESTING MARKETS WORK MARKETS FAIL

14. Market Returns Asset Allocation Lifelong Investing Stock Selection Track-Record Investing Market Timing EXAMINING INVESTMENT STRATEGIES MARKETS WORK MARKETS FAIL ASSET CLASS INVESTING SPECULATIVE INVESTING

15. BELIEF: MARKETS WORK STRATEGY: ASSET CLASS INVESTING “ In short, asset class investing is consistent with what we know about how free and fair markets function. Active management is not. Asset class investing is supported by the results of scores of empirical studies of fifty years of professionally managed portfolios. Active management is not. Finally, asset class investing allows reliable planning and implementations of portfolio strategies. It is demonstrably successful and the most prudent way to invest money.” ─ Rex Sinquefield, Dimensional Fund Advisors Debate with Donald Yacktman, 1995

16. BELIEF: MARKETS FAIL STRATEGY: SPECULATIVE INVESTING “ Finding the truth is critical because analyzing mistakes is fundamental to growth in all life’s challenges. In the markets, moreover, you can be right for the wrong reasons, and wrong even though you made a great odds-on investment. The reason is subtle, but simple: The markets are not consistently objective. At times, they are emotional, subjective, and psychological.” — Victor Sperandeo, Active Manager, Author Trader Vic II--Principles of Professional Speculation

17. ALIGNING YOUR STRATEGY WITH YOUR BELIEF Markets Work/Asset Class Investing Align: When you think that markets reflect all knowable and predictable information in current prices, then the best approach is to diversify, allocate assets, and invest for a lifetime. There is no need to be concerned with short-term, get-rich-quick schemes. You can disregard media hype and continuous stock market updates, knowing that with a buy and hold strategy, you will have the money you need to reach your goals. Confidence, Peace of Mind Markets Work/Speculative Investing Conflict: If you believe that markets set prices accurately, then attempting to pick stocks, time the market, or utilize track-record investing doesn’t make sense. You are going against your inherent trust in market efficiency when you try to take advantage of it for short-term results. Confusion, Anxiety Markets Fail/Asset Class Investing Conflict: If you believe that it is possible to identify mispricings in advance, then utilizing diversification and asset allocation over the long-term is inappropriate. Believing that markets fail to set prices accurately, it follows that you would want to stay connected to short-term market fluctuations and analyze information so that you can take advantage of the inefficiencies in the market. Despair, Resentment Markets Fail/Speculative Investing Align: If you presume that inefficiencies exist in the market, then you are practically compelled to apply speculative techniques to discover them. This means that you find a way to stay plugged into market analysis and learn about how to take advantage of the current mispricings in order to make money and decrease risk. Sense of Power, Control

18. BRINGING IT ALL TOGETHER PRINCIPLE 2 Your Market Belief + = Your Personal Investment Philosophy PRINCIPLE 1 Your True Purpose for Money PRINCIPLE 3 Your Investment Strategy +

19. Eliminate speculative investment techniques Work with a financial professional who believes that markets work, offers asset class investing, and provides education, discipline and coaching Ignore media hype Set lifelong financial goals that help you to realize your True Purpose for Money Focus on capturing market returns Utilize asset-class or structured funds Diversify prudently Identify your risk tolerance Pursue speculative techniques to capture inefficiencies in the market Work with a financial professional who believes in and implements active management strategies Stay connected to all sources of information (the Internet, magazines, talk shows, news, etc.) Read every article about stocks and options that you can find Wonder and worry about what might happen next Whatever you do, don’t miss the next hot stock tip! HOW TO USE YOUR INVESTMENT PHILOSOPHY MARKETS WORK MARKETS FAIL ASSET CLASS INVESTING SPECULATIVE INVESTING

20. THE 20 MUST-ANSWER QUESTIONS FOR YOUR JOURNEY TOWARD PEACE OF MIND Directions: Answer each question “Yes” or “No.” Your Answer must be 100% “Yes” to qualify as “Yes.”

21. QUESTION 1 Have you discovered your True Purpose for Money, that which is more important than money itself?

22. QUESTION 2 Are you invested in the Market?

23. QUESTION 3 Do you know how markets work?

24. QUESTION 4 Have you defined your Investment Philosophy?

25. QUESTION 5 Have you identified your personal risk tolerance?

26. QUESTION 6 Do you know how to measure diversification in your portfolio?

27. QUESTION 7 Do you consistently and predictably achieve market returns?

28. QUESTION 8 Have you measured the total amount of commissions and costs in your portfolio?

29. QUESTION 9 Do you know where you fall on the Markowitz Efficient Frontier?

30. QUESTION 10 When it comes to building your investment portfolio, do you know exactly what you are doing and why?

31. QUESTION 11 Are you working with a financial coach versus a financial planner?

32. QUESTION 12 Do you have a customized lifelong game plan to guide all of your investing and spending decisions?

33. QUESTION 13 Do you have an Investment Policy Statement?

34. QUESTION 14 Have you devised a clear-cut method for measuring the success or failure of your portfolio?

35. QUESTION 15 Do you fully understand the implications and applications of diversification in your portfolio?

36. QUESTION 16 Do you have a system to measure portfolio volatility?

37. QUESTION 17 Are you aware of the incentives brokerage firms and the financial community have when selling commission-based products?

38. QUESTION 18 Do you know the three warning signs that you are gambling and speculating with your money versus prudently investing it?

39. QUESTION 19 Can you identify the cultural messages and personal mind-sets about money that destroy your peace of mind?

40. QUESTION 20 Are you ready to shift your personal experience of money and investing from a scarcity mode to an abundance mode?

41. 85-100: Amazing Investor Congratulations! You are among the most educated, diligent and confident investors. You have experience in the investment markets and understand what it takes to be successful. Now is the time to support your current knowledge with discipline and educational reinforcement. 65-80: Better Investor As a Better Investor, you have been around the block a time or two and maybe had some less than successful investing experiences. Now is the time to expand your knowledge about investing and begin to make some solid choices about your financial future. To achieve this, seek answers to the questions you missed. 45-60: Common Investor You are not alone. Like many investors, you may frequently find yourself uncertain and confused about how to make the right investment choices. If you don’t already have an Investor Coach that you trust completely, now is the time to build a relationship to last a lifetime. 25-40: Discouraged Investor It’s easy to feel discouraged when you have been doing what you thought were the right things with your money without success. You may have followed all of the advice that you’ve read in financial magazines and newspapers, yet you are not getting the exponential results you had expected. 0-20: Frustrated Investor Flustered and confused, you may wonder where to begin--how is it even possible to wade through all of the information that you are being bombarded with on a daily basis. Sort through the chaos and find a path that is right for you. SCORING: Give yourself 5 points for every “Yes” answer.

42. Learn more about what this means for you THE OPPORTUNITY

43. CONGRATULATIONS! You have developed your Personal Investment Philosophy and have learned how to put it to use.