Successful Planning Strategies for Life & Investments
Barry Mendelson, CFP®925-988-0330 [email protected]
As of December 31, 2010
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Opinions expressed are those of Barry Mendelson, CFP® and Just Plans Etc.
This presentation should not be construed as investment advice.
The information contained in this presentation is compiled from sources believed to be reliable.
Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
The markets can remain irrational longer than you can remain solvent.
Disclosures
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Barry Mendelson, CFP®
Local investment and personal finance guru. More than 15 years experience working for leading financial services companies including Charles Schwab, AXA Rosenberg, Neuberger Berman, and Franklin Templeton. Prior to joining Just Plans Etc. in 2010, was a Vice President in Charles Schwab & Co’s $200 billion investment management division. Certified Financial Planner™ certificate holder since 2008. B.A. in Business Economics & Accounting from U.C. Santa Barbara in 1995.
Just Plans Etc.
Founded in 1983 and based in Walnut Creek, California - Just Plans Etc. is a fee-only wealth management firm and SEC registered investment advisor. Just Plans provides investment management and financial planning services to more than 100 individuals, families, and companies. The firm specializes in tax-efficient investing and helping investors realize meaningful value from qualified retirement plans, concentrated stocks positions, stock options, and other forms of equity. As a fiduciary, the firm puts the interests of the client above all else.
About
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1. Investment Planning
2. Personal Planning
3. Chairs 4 Charity
Agenda
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1. Investment Planning
Agenda
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Returns by Style
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Jan-10 Apr-10 Sep-10 Dec-101,000
1,050
1,100
1,150
1,200
1,250
1,300
Source: Russell Investment Group, Standard & Poor’s, FactSet, J.P. Morgan Asset Management.
All calculations are cumulative total return, including dividends reinvested for the stated period. Since Market Peak represents period 10/9/07 – 12/31/10 , illustrating market returns since the most recent S&P 500 Index high on 10/9/07. Since Market Low represents period 3/9/09 –12/31/10 , illustrating market returns since the S&P 500 Index low on 3/9/09. Returns are cumulative returns, not annualized. For all time
periods, total return is based on Russell- style indexes with the exception of the large blend category, which is reflected by the S&P 500 Index. Past performance is not indicative of future returns.
Data are as of 12/31/10.
Jan-07 May-08 Sep-09 Dec-10600
800
1,000
1,200
1,400
1,600
S&P 500 Index
S&P 500 Index
2010: +15.1%
4Q10: +10.8%
Since 10/9/07 Peak: -13.6%
4Q 2010
Since Market Low (March 2009)
2010
Since Market Peak (October 2007)
Charts reflect index levels (price change only). All returns and annotations reflect total return, including dividends.
Since 3/9/09 Low: +93.1%
Value Blend Growth Value Blend Growth
Larg
e
10.5% 10.8% 11.8% Larg
e
15.5% 15.1% 16.7%
Mid 12.2% 13.1% 14.0% Mid 24.8% 25.5% 26.4%
Smal
l
15.4% 16.3% 17.1% Smal
l
24.5% 26.9% 29.1%
Value Blend Growth Value Blend Growth
Larg
e-19.9% -13.6% -4.7% La
rge
99.8% 93.1% 94.3%M
id -5.9% -3.5% -2.0% Mid 140.3%132.9%126.6%
Smal
l
-5.3% -2.9% -1.0% Smal
l
134.2%134.0%133.6%
Various Asset Class Returns
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10-yrs2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 4Q10 '01 - '10
REITs REITs DJ UBSCmdty
MSCIEME REITs MSCI
EME REITs MSCIEME
Barclays Agg
MSCIEME REITs Russell
2000MSCIEME
26.4% 13.9% 23.9% 56.3% 31.6% 34.5% 35.1% 39.8% 5.2% 79.0% 28.0% 16.3% 350.0%DJ UBSCmdty
Market Neutral
Barclays Agg
Russell 2000
MSCIEME
DJ UBSCmdty
MSCIEME
MSCI EAFE
Market Neutral
MSCI EAFE
Russell 2000
DJ UBSCmdty REITs
24.2% 9.3% 10.3% 47.3% 26.0% 17.6% 32.6% 11.6% 1.1%* 32.5% 26.9% 15.8% 178.0%Market Neutral
Barclays Agg
Market Neutral
MSCI EAFE
MSCI EAFE
MSCI EAFE
MSCI EAFE
DJ UBSCmdty
Asset Alloc. REITs MSCI
EMES&P500
Russell 2000
15.0% 8.4% 7.4% 39.2% 20.7% 14.0% 26.9% 11.1% -23.8% 28.0% 19.2% 10.8% 84.8%Barclays
AggRussell 2000 REITs REITs Russell
2000 REITs Russell 2000
Market Neutral
Russell 2000
Russell 2000
DJ UBSCmdty REITs Asset
Alloc.11.6% 2.5% 3.8% 37.1% 18.3% 12.2% 18.4% 9.3% -33.8% 27.2% 16.7% 7.4% 80.2%Asset Alloc.
MSCIEME
Asset Alloc.
S&P500
Asset Alloc.
Asset Alloc.
S&P500
Asset Alloc.
DJ UBSCmdty
S&P500
S&P500
MSCIEME
Market Neutral
0.6% -2.4% -5.4% 28.7% 12.5% 8.0% 15.8% 7.3% -36.6% 26.5% 15.1% 7.4% 76.9%.Russell 2000
Asset Alloc.
MSCIEME
Asset Alloc.
S&P500
Market Neutral
Asset Alloc.
Barclays Agg
S&P500
Asset Alloc.
Asset Alloc.
MSCI EAFE
Barclays Agg
-3.0% -3.4% -6.0% 25.2% 10.9% 6.1% 14.9% 7.0% -37.0% 22.5% 12.7% 6.7% 76.3%S&P500
S&P500
MSCI EAFE
DJ UBSCmdty
DJ UBSCmdty
S&P500
Market Neutral
S&P500 REITs DJ UBS
CmdtyMSCI EAFE
Asset Alloc.
MSCI EAFE
-9.1% -11.9% -15.7% 22.7% 7.6% 4.9% 11.2% 5.5% -37.7% 18.7% 8.2% 6.4% 47.1%MSCI EAFE
MSCI EAFE
Russell 2000
Market Neutral
Market Neutral
Russell 2000
Barclays Agg
Russell 2000
MSCI EAFE
Barclays Agg
Barclays Agg
Barclays Agg
DJ UBSCmdty
-14.0% -21.2% -20.5% 7.1% 6.5% 4.6% 4.3% -1.6% -43.1% 5.9% 6.5% -1.3% 41.7%MSCIEME
DJ UBSCmdty
S&P500
Barclays Agg
Barclays Agg
Barclays Agg
DJ UBSCmdty REITs MSCI
EMEMarket Neutral
Market Neutral
Market Neutral
S&P500
-30.6% -22.3% -22.1% 4.1% 4.3% 2.4% -2.7% -15.7% -53.2% 4.1% -2.5% -1.6% 15.1%
Asset
Class Source: Russell, MSCI Inc., Dow Jones, Standard and Poor’s, Barclays Capital, NAREIT, J.P. Morgan Asset Management. The “Asset Allocation” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE Index, 5% the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity
Index and 5% in the NAREIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data except commodities reprreturn for stated period. Past performance is not indicative of future returns. Please see disclosure page at end for index defias of 9/30/10, except for the CS/Tremont Equity Market Neutral Index, which reflects data through 8/31/10. “10-yrs” returns represent
cumulative total return and are not annualized. These returns reflect the period from January 1, 2000 – December 31, 2010*Market Neutral returns include estimates found in disclosures.
Data are as of 12/31/10.
Global Commodities
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0
500
1000
1500
2000
2500
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Source: Dow Jones/UBS, FactSet, J.P. Morgan Asset Management.
Commodity prices represented by the appropriate DJ/UBS Commodity sub- index.
Data reflect most recently available as of 12/31/10.
Source: USDA, BP Statistical Review of World Energy, J.P. Morgan Asset Management.
Data are as of 12/31/10.
Class'01 '02 '03 '04 '05 '06 '07 '08 '09 '10
0
50
100
150
200
250
300
350
400
450
Commodity Prices Weekly index prices rebased to 100
Precious metals
Industrial metals
Energy
Livestock
Grains
Oil Demand: Emerging Markets Share Emerging markets as % of total global oil consumption
Grain Demand: Emerging vs. Developed MarketsMillions of metric tons
Emerging Markets
Developed Markets
30%
32%
34%
36%
38%
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Monthly: January 1926-December 2009
CRSP data provided by the Center for Research in Security Prices, University of Chicago. The S&P data are provided by Standard & Poor's Index Services Group. US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield).
$8,201Small Cap(CRSP 6-10 Index)
$2,590Large Cap (S&P 500 Index)
$85Long-Term Government Bonds Index
$20Treasury Bills$12Inflation (CPI)
$10,000
$1,000
$100
$10
$1
$0
1926 1936 1946 1956 1966 1976 1986 1996 2006 2009
Growth of Wealth
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S&P 500 Index (USD)Daily Returns: January 1, 1926-March 31, 2010
Indices are not available for direct investment; its performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. The S&P data are provided by CRSP (January 1, 1926-August 31, 2008) and Bloomberg (September 1, 2008-March 31, 2010). Returns include reinvested dividends. Bull and bear markets are defined in hindsight using cumulative daily returns. A bear market (1) begins with a negative daily return, (2) must achieve a cumulative return less than or equal to -10%, and (3) ends at the most negative cumulative return prior to achieving a positive cumulative return. All data points which are not considered part of a bear market are designated as a bull market. Performance data represents past performance and does not predict future performance.
220%
-13%
-85%
20%
-16%
-39%
119%
88%
27%
-15%-10%
-13%
100%
44%
-53%
25%
40%
-13%-14%
26%
-25%
22%
-11%
23%
-33%
83%
-11%
99%
-26%
19%
-11%-16%
26%
53%
91%
-13%
121%
-11%
26%
-13%
18%
69%
-21%-11%
44%
-27%
15%
96%
-11%
59%
-27%
-10%-21%
-32%
56%
-12%
38%
-45%
22%
-13%
50%
-13%
38%
-15%
27%
-13%
26%
-10%
21%
-16%
48%
-20%
78%
-11%
156%
-33%
73%
-10%
16%
-19%
303%
-11%
37%50%
-19%-12%
23%
-11%
13%
-47%
21%
-14%
113%
-55%
03/09/2009-55%
3/31/2010-20%1%
1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Average DurationBull Market: 413 DaysBear Market: 220 Days
Average ReturnBull Market: 58%Bear Market: -21%
Bull and Bear Markets
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Historical returns by holding period
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-37%
-8%
-15%
-2% -2% 1%-1% 1% 2%
6%
1%5%
51%
43%
32%28%
23% 21% 19%16% 17% 18%
12%14%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
1-yr. 5-yr. rolling
10-yr. rolling
20-yr. rolling
Annual total returns, 1950-2009Range of Stock, Bond and Blended Total Returns
AssetSources: Factset, Robert Shiller, Strategas/Ibbotson, Federal Reserve, J.P. Morgan Asset Management.
Data are as of 12/31/09.
50/50 Portfolio 9.0% $560,441Bonds 6.2% $333,035Stocks 10.8% $777,670
Annual Avg. Total Return
50/50 PortfolioBondsStocks
Growth of $100,000 over 20 years
Lessons
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1. Markets are difficult to predict in the short-term.
2. Diversifying globally expands your opportunity set.
3. “Be greedy when others are fearful and fearful when others are greedy.” – Warren Buffet.
4. Have a long-term perspective.
2. Personal Planning
Agenda
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Charles Schwab
More than 30 years ago, Charles R. Schwab founded this firm with a clear mission: to
empower individual investors to take control of their financial lives, free from the
high costs and conflicts of traditional brokerage firms. His vision - to provide the
most useful and ethical financial services in the world - continues to guide or values-
driven approach to growth, client service, community involvement and employee
development.
Google’s mission is to organize the world‘s information and make it universally
accessible and useful.
Don’t be evil. (Unofficial).
Create a (Family) Mission Statement
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Mendelson Family Mission Statement
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Know that time is our most valuable asset.
Experiences are more valuable than possessions.
Never stop learning.
The world is our home – explore it.
Spend time with those we love and respect – and feel the same way about us.
Appreciate the world around us and all we have.
Seek to make the world a better place and improve the lives of those less fortunate than us.
Know your roles
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Elliot (Line Worker)
Sydney (Line Worker)
Kristin(CEO)
Barry(Head of
Production)
Philanthropy & Volunteerism
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In support of public education Kristin – Chair, Walnut Country Preschool Kristin – Highlands Elementary PTA Site Council Chairs 4 Charity
In support of cancer care and cure related causes Cancer Support Community of the East Bay Leukemia & Lymphoma Society Have a Ball Foundation & Golf Tournament
In support of financial literacy Barry – Board member, Financial Planning Association of the East Bay
Goals
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Short-term: 1 – 5 Years Visit Disneyland, Death Valley during the spring bloom, rent a house on Lake
Almanor Straight A’s in school Adopt a family Replace Kristin’s car, buy a boat
Long-term: 5 years + Learn to speak Spanish Travel to Asia
Lessons
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1. Define your goals.
2. Create a plan.
3. Put it into action.
4. Revisit it frequently.
3. Chairs 4 Charity
Agenda
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Chairs 4 Charity www.chairs4charity.org
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Chairs 4 Charity provides local not-for-profits valuable items to support their fundraising efforts.
Chairs 4 Charity’s chairs and benches are made from salvaged, lumber, skis, and snowboards.
Source materials and raise awareness with help from Sports Basement – Walnut Creek, San Ramon High PTA, local ski clubs, and other businesses.
Chairs 4 Charity www.chairs4charity.org
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Inspiration – my sister Leslie’s quilts.
Chairs 4 Charity www.chairs4charity.org
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Lead by example.
Reuse and repurpose materials.
Artistic expression.
Give back to the community.
Creating a Family Mission Statement: https://docs.google.com/document/d/1LHtM8YhOh67IzpPyOzySlOU2App8w1jZtMp_EGtgWr0/edit?hl=en&authkey=COKBkokJ
Creating a Personal Disaster Plan for Your Home, Your Loved Ones and Your Finances: https://docs.google.com/document/d/1Ttxin-U6vYj4f8UPJgltHGTpLDdn5JX5l9Rc9CFepVM/edit?hl=en&authkey=CPShvNkE
More articles at:www.justplans-etc.blogspot.com
Barry Mendelson, CFP®925-988-0330 ext. [email protected]
www.JustPlans-Etc.com
1399 Ygnacio Valley Rd, Suite 24Walnut Creek, CA 94598
Resources
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