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Issue #103 October 2015
SM
OCTOBER – BEST MONTH IN FOUR YEARS
AFTER WORST SEPTEMBER IN RECENT MEMORY
DOES IT MEAN ANYTHING IN THE LONG RUN?
The easy and best answer is an emphatic No. As famed investment advisor Nick Murray has said “The portfolio has no meaning unless it is a servant of a plan.” The Plan is always about not outliving your money but getting there in a way that limits risk as well as can be done. Americans’ number one fear is public speaking. I get it since I have to speak publically quite often. Of all the other fears people can accumulate, the number two fear is outliving your money. Successfully reaching the goal of not outliving your money involves putting together a plan of portfolio management in addition to many other things. These items include budgeting, managing a career or job to maximize income, insurance planning, tax planning, etc.
Focusing on portfolio management, our mantra, is always driven by risk management. As you all know, we manage four basic portfolios. The Multi-Asset Strategy SM has three of them, The Conservative Model, The Moderate Model and The Growth Model. In addition, we manage The World Leaders Model. It is our intention (although no guarantees can ever be given) to achieve 30% less volatility and risk than various measures of the stock market in the Growth Model, 40% less volatility and risk in the Moderate Model and 50% less volatility and risk in the Conservative Model. However, we aim for 100% of the volatility and risk in the World Leaders Model as we attempt to outperform the S&P 500 Index
(again, though no guarantees can ever be given). We can also customize a portfolio to include a certain model in the Multi-Asset Strategy SM along with a percentage in the World
Leaders Model. It is always our concern that the client is in the best possible model(s) in order to achieve their goals with the level of risk tolerance that is uniquely theirs.
As a backdrop for this month’s newsletter, I am enclosing a chart that puts a proper perspective on longterm investing. It is entitled “Buy Low Sell Why?” As you can see, the equity markets, measured here by the Dow Jones Industrial Average are heartier and more robust than the average person may give them credit for. It is why I mentioned in the last newsletter that all advances have been permanent and all pullbacks temporary (with a lot of time going sideways).
Securities offered through Royal Alliance Associates, Inc., member FINRA, SIPC. Advisory services offered through Investment
Advisors Asset Management, LLC, a registered investment advisor. Entities listed are not affiliated with Royal Alliance Associates, Inc.

Using the Dow Jones Industrial Average in this exercise, one can see this concept come to life. The concept of going sideways is not lost on me. I entered the world of investments in the late 1960s. It went sideways with tremendous volatility (including several bear markets, which are drops of at least 20%) until the early 1980s. As mentioned before, over time, financial markets, especially equity markets, tend to move like a staircase. That is, prolonged periods of sideways movement with high volatility followed by spurts of progress.
The problem, of course, is that no one knows the timing of these moves ahead of time on a consistent basis. As such, we need to protect and play more defense at times while putting our foot back on the accelerator at other times. The bottom line is that over time, prices of equities move from the lower left to the upper right.
It is our job to find the historically appropriate portfolios to get each and every investor to the finish line as best we can. We concentrate on what has worked historically, not what is working at the moment. History matters far more than headlines. If one focuses on headlines, the conclusion by many is that “This time is different.” It is not. People and markets seem to repeat patterns over and over. Each has its own story and they are not perfectly in sync to past patterns but they do rhyme. The actual summation of the last 40 years looks like this:
S&P 500 Index – Up 22 times
Dividends – Up 70 times
Earnings - Up 15 times
Consumer Price Index – Up 4.5 times
Managing money so as not to outlive it gets a running start from this history. Combining this with a coherent plan in all areas of finance can translate to a successful financial outcome. We hope this chart and explanation is helpful.
That’s it for now. We want you to know we are following all events closely and doing all we can to be good long-term stewards of your money. As always, feel free to call us as needed. We are always delighted to hear from you. All calls will be returned promptly as you know (usually within 24 hours).
We are eagerly looking forward to working with you in the quarters and years ahead and thank you for all your referrals to date. Also, as always, should the markets dictate an interim newsletter, we will do so.
OUR PHILOSOPHY
Successful investing is a marathon, not a sprint. Sometimes investing is like watching paint dry, marking time, boring and with not much movement. Sometimes it is chaotic and fear based. Greed and fear are often present. We are long-term investors. We believe four to five years is the appropriate time frame to assess risk and reward. At the end of that time, another four to five year time frame takes place. This keeps happening until one is in the distribution phase of life and needs to live off their assets. Therefore, of course, it is where we are at the end of the race that counts.
Although no guarantees can be given, our goal with all our clients is to get to the end of the race in as good a position as possible given their particular life circumstance.
Securities offered through Royal Alliance Associates, Inc., member FINRA, SIPC. Advisory services offered through Investment
Advisors Asset Management, LLC, a registered investment advisor. Entities listed are not affiliated with Royal Alliance Associates, Inc.

Disclosure Statements
Standard & Poor’s 500
A market capitalization-weighted index of 500 widely held stocks is often used as a proxy for the stock market.
Indexes cannot be invested in directly, are unmanaged and do not incur management fees, costs and expenses.
Dow Jones Industrial Average
A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest
U.S. companies are performing .
Risk and Return
The views expressed are not necessarily the opinion of Royal Alliance Associates, Inc. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results.
This newsletter contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed.
Investors should be aware of additional risks associated with international investing due to factors such as greater economic and political instability, increased volatility, currency fluctuation, and differences in auditing and other financial standards and that these risks can be accentuated in emerging markets.
Important Consumer Disclosure
This newsletter contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. References made herein to the market indices are for illustrative purposes only. An investor cannot invest directly in an index. Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. .
Certain information contained herein has been derived from third party sources. Although believed to be reliable, we make no representations as to the accuracy or completeness of any such information prepared by any unaffiliated third party incorporated herein, and take no responsibility therefore. Additionally, certain statements that indicate future possibilities are forward looking statements. Due to known and unknown risks, other uncertainties and factors, actual results may vary materially from those portrayed in such forward looking statements. As such, there is no guarantee that the views and opinions expressed There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.
Investmen t Advisors Asset Management, LLC (“ IAAM:”) is an SEC registered investment adviser with its principal place of business in the Commonwealth of Pennsylvania. IAAM and its representatives are in compliance with the current registration and notice filing requirements imposed upon registered investment advisers by those states in which IAAM maintains clients. IAAM may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from/notice filing requirements. This newsletter is limited to the dissemination of general information pertaining to its investment advisory services. Any subsequent, direct communication by IAAM with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of IAAM , please contact IAAM or refer to the Investment Adviser Public Disclosure web site ( www.adviserinfo.sec.gov
). For additional information about IAAM, including fees and services, send for our disclosure statement as set forth on Form ADV from
IAAM using the contact information herein. Please read the disclosure statement carefully before you invest or send money.
Securities offered through Royal Alliance Associates, Inc., member FINRA, SIPC. Advisory services offered through Investment
Advisors Asset Management, LLC, a registered investment advisor. Entities listed are not affiliated with Royal Alliance Associates, Inc.