Investment Training Module Topic: Stock Investing Part 2. Jerry Verseput, CFP Joe Phillips (Insured Retirement Income)

Size: px

Start display at page:

Download "Investment Training Module Topic: Stock Investing Part 2. Jerry Verseput, CFP Joe Phillips (Insured Retirement Income)"

Lucinda Bates
7 years ago
Views:

1 Investment Training Module Topic: Stock Investing Part 2 Jerry Verseput, CFP Joe Phillips (Insured Retirement Income)

2 Disclaimer This presentation is for informational purposes only. It does not constitute nor imply investment advice in any way. Investing involves risk, including the risk of losing principle. An investor should consider their own investment objectives and risk tolerance before choosing any investment product. 2

3 Recap From Part 1 1. Traditional mutual fund diversification provides very little actual diversification (large/small cap, U.S./foreign, growth/value) 2. ETFs (Exchange Traded Funds) can provide low-cost exposure to stocks 3. We are currently in uncharted waters Will inflation skyrocket or remain low? Are interest rates headed higher? How fast? Is there a limit to government stimulus? Can the Fed ever end it s involvement in the market at this point? What worked in the past may not work in the future. The environment is different, but some truths remain consistent. 3

4 Competing Philosophies and Styles Traditional or Popular Large/small cap; US/foreign; growth/value Stocks always come back You can t time the market You can t beat the market Buy-and-hold Benchmark: S&P 500 Only invest as much as you re willing to lose What Makes Sense To Me Energy, Technology, Healthcare, etc Recoveries may take longer than you can wait An objective sell point can possibly avoid large losses Avoiding deep losses is more important Monitor and adjust Benchmark: Meeting your financial goals Manage risk (or hire someone who will) to the point that you don t worry about your investments 4

5 Stocks Always Come Back - Rebuttal 180 S&P years The stock market came back, but did you have 13 years to wait? And is everything fine now? 5

6 You Can t Time/Beat the Market - Rebuttal The common argument for this investing wisdom uses data from investors who tried buy-and-hold but bailed out; not those who had clear buy and sell rules Benchmark (Stocks/Bonds): 60%/40% S&P 500 VFM Sector Portfolio Cumulative Returns S&P 500: 22.8% Stocks/Bonds: 54.3% Model Portfolio: 144.6% The performance results shown are the result of a backtested simulation and do not represent an actual portfolio. Backtested simulation results can be skewed due to the benefit of hindsight if decisions do not follow a strict formula. The results for the portfolio and benchmarks do not take into account trading costs or advisor fees. Past performance is not a guarantee of future performance. 6

7 Only Invest What You Can Lose - Rebuttal Intelligent investing does not put all of your money at risk, so this rule-of-thumb can result in overly-conservative portfolios. Better rule-of-thumb: Don t risk so much that you re constantly worried about the market. 7

8 Industry Sectors More traditional than asset classes Sector investing has been around since the beginning of stocks (Utilities, Financials, Healthcare, etc) Asset classes (company size, headquarter location) are tied to mutual funds, which became popular in the early 1980 s ETF Example (Technology Stocks) Stocks Apple (AAPL) IBM (IBM) Intel (INTC) ETF (Exchange Traded Fund) Technology Sector SPDR (XLK) (77 Technology Stocks) Microsoft (MSFT) Verizon (VZ) Cisco (CSCO) 8

9 Industry Sector Allocation Traditional Asset Class US Large Cap US Mid Cap US Small Cap Foreign Developed Foreign - Emerging Highly Correlated Industry Sector Consumer Discretionary (cars, hotels) Consumer Staples (food, retail) Energy (oil & gas, drilling) Financial (banks, insurance) Healthcare (pharma, equipment) Industrial (defense, rail, construction) Materials (chemicals, mining, paper) Technology (software, IT, equipment) Utilities (electric, natural gas) Less Correlated 9

10 Examples To Think About US Large Cap: ExxonMobile US Small Cap: Gulfport Energy Corp Foreign Developed: Royal Dutch Shell US Large Cap: Apple US Small Cap: Maxwell Technologies Foreign Emerging: Samsung Energy: ExxonMobile Healthcare: Pfizer Financials: Wells Fargo Diversified? Diversified? Diversified? 10

11 To Be Continued Next Module: Protecting against losses 11

12 For more information on investment management and financial planning, please contact: Jerry Verseput, CFP Principle Investment Advisor Office location: 101 Parkshore Drive, Ste. 166 Folsom, CA For more information on insurance and Fixed Index Annuities, please contact: Joe Phillips Insured Retirement Income Office location: 9029 Soquel Avenue Santa Cruz, CA Joe Phillips, CA Insurance License # Ronald J. Phillips Insurance Services Inc. CA License #

Investment Training Module Topic: Liquidity vs Safety Tradeoffs. Jerry Verseput, CFP Joe Phillips (Insured Retirement Income)

Investment Training Module Topic: Liquidity vs Safety Tradeoffs Jerry Verseput, CFP Joe Phillips (Insured Retirement Income) Disclaimer This presentation is for informational purposes only. It does not