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Ask This: Stock markets rose over 30% last year, skewing portfolios and potentially exposing investors to excessive risk. Is yours among them? New developments in fixed income markets promise to make 2014 an interesting year. Do you know what they are? Strategies for capturing opportunities in a market correction could help enhance returns in the long run. Have you positioned your portfolio appropriately?
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1Investment Outlook 2014
Investment Outlook
A Live Webcast Hosted by:
GV Financial Advisors
Presenters: David Geller, CEO and
Aradhana Kejriwal, Senior Portfolio Manager
January 23, 2014
2Investment Outlook 2014
Webinar Agenda• 2013: The Year in Review• Current Environment• Current Market• Meet Our Hypothetical Investors
• Karen and Patrick
• Where Should I Invest?
3Investment Outlook 2014
THE YEAR 2013…
Investment Outlook 2014
FEARS in 2013
Failure of Washington
Declines in geopolitical environment
Substantial financial commitments incurred by governments
Significant decline in economic activity – a recession
Government Commitments
Economic Activity
Geopolitical Risk
Washington
Investment Outlook 2014
What happened in 2013?
Bond Market Stock Market• All-time high for S&P 500• Best Yearly Return since 1999• Dow up 30% with best yearly
return since 1995
• Barclays Aggregate down 2.1%• 3rd worst annual return since 1976• Worst return in 15 years
S&P 500 up 32%
Source: Morningstar Direct. Past performance does not guarantee future returns
6Investment Outlook 2014
Forecast Follies…
Past performance does not guarantee future returns
7Investment Outlook 2014
Where did the money go?
Source: Morningstar Direct
Past performance does not guarantee future returns
8Investment Outlook 2014
THE CURRENT ENVIRONMENT
9Investment Outlook 2014
Eye on…
10Investment Outlook 2014
Eye on…
Geopolitics
Unem
ploy
men
t
Washington
Investment Outlook 2014
Economic Summary
1 2 3
Five Words to Remember
Better Low Steep
4
Strong
5
Higher
12Investment Outlook 2014
THE CURRENT MARKET
Sell or Buy?
13Investment Outlook 2014
Market Due for a Correction?
Source: Fidelity InvestmentsPast performance does not guarantee future returns
14Investment Outlook 2014
What's Next?Years with S&P 500 performance greater than 25%
Year Price return Following year's return
1928 1933 1935 1936 1945 1954 1955 1958 1975 1980 1985 1989 1991 1995 1997 1998 2003 2013
38% 44% 41% 28% 31% 45% 26% 38% 32% 26% 26% 27% 26% 34% 31% 27% 26% 30%
-12% -5% 28% -39% -12% 26% 3% 8%
19% -10% 15% -7% 4%
20% 27% 20% 9% ?
Average 32% 6%Source: Strategas Research Partners LLC, as of December 31, 2013
15Investment Outlook 2014
What's next?1
98
0
19
81
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-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
26%
-10%
15%17%
1%
26%
15%
2%
12%
27%
-7%
26%
4%7%
-2%
34%
20%
31%27%
20%
-10%-13%
-23%
26%
9%
3%
14%
4%
-38%
23%
13%
0%
13%
30%
-17%-18%-14%
-7%
-13%
-8%-9%
-34%
-8% -8%
-20%
-6% -6%-5%
-9%
-3%
-8%-11%
-19%
-12%-17%
-30%-34%
-14%
-8%-7%-8%
-10%
-48%
-28%
-16%-19%
-10%
-5%
Intra-year Declines vs. Calendar Year Returns
In the last 33 years, market's returns were positive 81% of the time (27 years). Each year had intra- year declines ranging from -3% to -48%.
GVFA 2014 0001 DOFU 1/2014
Source: Standard and Poors 500, FRED Graphs and Nick Murray, "The Annual End of the World", Interactive, December 31, 2013. Returns based on price only and do not include dividends. Past performance does not guarantee future returns
Investment Outlook 2014
Breaking Point
What is your breaking point?
-48%
-28%
+4%
All Bonds
All Stocks
50/50
+180%
+83%
+26%
What is your breaking point?
Past performance does not guarantee future returns
18Investment Outlook 2014
Cheap or Expensive?
Past performance does not guarantee future returns
19Investment Outlook 2014
Cheap or Expensive?
Price-to-Earnings Ratios (P/E Ratios)
20Investment Outlook 2014
• A Retired Couple in Their Early 70’s• Active in Their Community
Rhonda & Ralph’s Investment Portfolio
Total Value: $3.5 million
Allocation: Portfolio currently invested
in bonds for safety
Meet Karen and Patrick(a hypothetical couple)
• A Retired Couple in Their Early 70’s• Active in Their Community
Karen and Patrick’s Current Investment Portfolio
Total Value: $3.5 million
Allocation: Portfolio currently invested in bonds for safety
Investment Outlook 2014
Stocks
2008 (37%)
2002 (22%)
2001 (11%)
2000 (9%)
Bonds
1994(2.92%)
2013 (2.02%)
1999 (0.82%)
19781.39%
Worst Stock and Bond Markets- last 3 decades
Source: Morningstar DirectPast performance does not guarantee future returns
22Investment Outlook 2014
Bonds Teeter-Totter
Bond Prices Fall
Reinvested Income
increases return
Source: GW&K Investment Management, Mellon, Federal Reserve. Disclosures: 1983 represents the first full year when data was available for all indexes listed here. Data represents a variety of high quality bond indexes by Barclays Capital. Past performance is no guarantee of future results. Fixed Income Investments are subject to interest, credit, and market risk. Interest rate risk: the value of fixed income investments will decline as interest rates rise. Credit risk: the possibility that the borrower may not be able to repay interest and principal. Low rated bonds generally have to pay higher rates to attract investors willing to take on greater risk. Market risk: the bond market in general could decline due to economic conditions, especially during periods of rising interest rates.
Investment Outlook 2014
Manage Your Bonds
Keep an eye on…1. Seek active management2. Diversify your bonds3. Don’t chase yields4. Look for out-of-box solutions
24Investment Outlook 2014
An Income-Driven Portfolio
Diversified Bonds42%
Income Driven Equities
38%
Alternatives20%
Sample Portfolio for Karen and Patrick
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own situation before making any investment decisions. Consult a financial advisor.
25Investment Outlook 2014
Where should I Invest?
Investment Outlook 2014
NOISE
Investment Outlook 2014
Questions to Ask…
Portfolio Guided Wealth®
Are you diversified?
Do you have sufficient liquidity?
Do you have an “All-Weather” portfolio?
Is your portfolio strategy causing you anxiety?
Is your portfolio aligned with your Life Priorities?
Do you perceive your portfolio as your TOTAL wealth?
28Investment Outlook 2014
STAY THE COURSE
29Investment Outlook 2014
Q&ACONTACT US: 770-295-5600 OR AT INFO@GVFINANCIAL.COM VISIT US ON THE WEB: WWW.GVFINANCIAL.COM
A REPLAY WILL BE AVAILABLE SHORTLY ON THE WEB
30
DISCLOSURES:The opinions in the preceding commentary are as of the date of publication, are subject to change based on subsequent developments, and may not reflect the views of the firm as a whole. This material is not intended to be relied upon as a forecast, research, or investment advice regarding a particular investment or the markets in general. Nor is it intended to predict or depict performance of any investment. This document is prepared based on information GV Financial Advisors deems reliable; however, GV Financial Advisors does not warrant the accuracy and completeness of the information. Consult a financial advisor as to what investment strategy might be best for you. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review and investment strategy for his or her own situation before making any investment decisions.Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instrument or any derivative related to such securities or instruments (e.g., options, futures, warrants, and contracts for differences). This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report.All opinions, projections and estimates constitute the judgment of the author(s) as of the date of the report and are subject to change without notice. Prices also are subject to change without notice. GV Financial Advisors is under no obligation to update this report; readers should therefore assume that GV Financial Advisors will not update any fact, circumstance or opinion contained in this report.Neither GV Financial Advisors nor its affiliated companies nor any director, officer or employee of GV Financial Advisors or its affiliated companies accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.Examples and historical data contained herein are provided are for illustrative purposes only and not intended to be reflective of results you should expect to obtain. Past performance is no guarantee of future results.Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. You should not assume that any information presented herein would be appropriate in the future. Some of the information is provided by Zephyr Associates in association with Morningstar, Inc.; while these and other sources cited herein are believed to be reliable and assumed to be correct, readers are cautioned that accuracy cannot be and is not guaranteed.More information is available by contacting Aradhana, CFA, Portfolio Manager, at GV Financial Advisors. She may be reached via email at Aradhana.Kejriwal@gvfinancial.com or by telephone at 770-295-5659.GV Financial Advisors is a Georgia corporation registered with the Securities and Exchange Commission as an Investment Advisor under the Investment Advisors Act of 1940.
GVFA 2014 0012DOFU 1/2014
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