Text of Media Hype. Media Hype Rule 1: Don’t fall in love with one stock
Media Hype Rule 1: Dont fall in love with one stock.
3 Questions about Facebook When was it first launched? How many active users? What % of the U.S. population uses Facebook? Facebook Inc. began trading publicly in mid-May, priced at $38. Since the public offering, the stock as of September 30th $21.60. The company is the subject of dozens of shareholder lawsuits Down 45% from IPO price. Dont Fall in Love February 2004 Over 1 billion 42% Sources: Facebook Inc. and Yahoo! Finance
4 These are the best stock picks?? ERICSSON$26$10 FAMILY GOLF CENTERS$23ZERO GENERAL MOTORS$73BANKRUPT HOMEBASE$73BANKRUPT KNIGHTSBRIDGE TANKERS$22$15 LIBERTY MEDIA GROUP$40$50 MCI WORLDCOM$59GONE CHARLES SCHWAB$58$53 STORAGE TECHNOLOGY$37$88 Expert Picks 1998 Todays STOCKshare price share price Source: Article Expert Picks by Vestory, Mar 30, 2012 http://www.vestory.com/2012/03/30/expert-picks/
5 Investment Media Hype Source: Jim Cramers Mad Money Stock Picks for Thursday, January 6, 2011. The S&P data are powered by Standard & Poors Index Services Group. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Cramer Cant Beat the Index!! Id be mad about my money!
Media Hype Rule 2: Understand that they sell fear.
7 $31.7 Trillion as of December 31, 2011 In US dollars. Market cap data is free-float adjusted from Bloomberg securities data. Many small nations not displayed. Totals may not equal 100% due to rounding. Dimensional makes case-by-case determinations about the suitability of investing in each emerging market, making considerations that include local market accessibility, government stability, and property rights before making investments. For educational purposes; should not be used as investment advice. 1. An example large cap stock provided for comparison. Capitalization over time ($ trillions): Developed Markets Emerging Markets Frontier Markets Bloomberg Index Affiliation World Market Capitalization
8 What you know that the market doesnt. Quotes from the AP Press: Before 8 a.m. Stock Futures Rise on Hope for Greece Bailout. 45 minutes later... Stocks Down on Greece Default Fears Greece has been in sovereign default during 105 of the last 200 years. Facts About Greece Source: Clients Corner: What Do You Know That The Market Doesnt? August 2011, Vol 11, Issue 8 http://www.nickmurraynewsletters.com
9 S&P has increased 11 % compounded annually. Those gains came despite 10 bear (down) markets and 10 recessions. Do you think the 2008 financial and auto bailouts were unprecedented? To name a few, remember $293 billion bailout of the savings and loan industry (1989) $10 billion bailout of New York City (1975) First Bailout of Chrysler (1980) Bailout of Lockheed (1971) Unemployment = topped 8-10% in 16 out of 61 years. The Last 61 Years History Lesson Source: Schroeder, Richard. Why You Should Keep Investing in 2012 (And Even Up Your Ante) Investment Update, 1 Jan 2012, Vol 16, Issue 7
Media Hype Rule 3: Ignore them and keep your emotions in check.
11 After hearing the experts
Thanks for listening. Any questions..
13 Important Disclosures Regarding Simulated Strategies Our investment strategy is based on the principles of Modern Portfolio Theory (MPT) The tenets of MPT provide for a passive long-term buy-and-hold strategy implemented through globally diversified portfolios. Mutual funds representing asset classes where academic research has demonstrated higher expected returns for the level of risk taken are combined in a single portfolio. Portfolios are constructed in a manner to provide diversification for the purpose of reducing the risk caused by volatility. Portfolios are rebalanced to maintain agreed upon asset allocations. Historical performance information is provided to demonstrate the methodology used in building portfolios using the aforementioned investment strategy. This information should not be considered as a demonstration of actual performance results, and should not be interpreted as such. The results are based on back-tested data and not actual accounts. The back-tested data used in creating the simulated strategies includes simulated data where live funds were not in existence to provide actual returns. The simulated data was developed in the belief that it represents the historic performance of the live funds. Live funds will differ from simulated strategies. Simulated data does not reflect deductions of fund expenses that an investor would pay and does not represent results of actual trading. Live funds may exclude securities with characteristics not otherwise excluded in certain databases used in some simulated strategies. Sources and Descriptions of Data (following these disclosures) is an integral part of and should be read in conjunction with this explanation. Back-tested data does not represent the impact that material economic and market factors might have on an investment advisors decision-making process if the advisor were actually advising an investor. The back-testing of performance differs from actual account performance because an investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. The back-tested results assume ordinary and capital gains and dividends are reinvested, regular rebalancing and no income taxes. Information about advisor fees and expenses is available upon request.