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 Investing in a Volatile Market




AFN32287_1009
AFN32287_1007
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Agenda
•   Today’s market environment
•   Is this time different?
•   Learning from the past
•   Gauging volatility
•   Investing strategies in a volatile market
•   Looking ahead
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Today’s Exceptional Market Environment

                                         U.S. Stock Market in Decline
       Beginning of
       bear market
                           Fed real effective                                                         Congress passes
                                                                            National housing market
                           rate below 0%        Bear Stearns                                          $787 billion stimulus
                                                                            down 20% from peak
                                                bailout announced                                     package

                                                                                           Barak Obama
                                                                                           elected President
                  U.S. economy
                  enters recession
                                                      Federal Reserve
                                                      takes over AIG

                                                     Lehman Brothers
                                                     files for bankruptcy

                                                     Government takes over
                                                     Fannie and Freddie
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Behind the Bear
•   Bursting real estate bubble
•   Subprime crisis
•   Institutional bankruptcies and bailouts
•   Economic slump
•   Growing risk aversion of banks
•   Changing consumer attitudes
•   Changing demographics
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    Is This Time Different?

                                                                                                                                                              Japan's
                                                                            Recent Bear*               1970’s Bear               1930’s Bear               "Lost Decade"

                              Drop in Market Value (peak                          57%                        48%                      86%                         80%
                              to trough)

                              Duration                                        17 months*                 19 months                39 months                   161 months

                              Annualized Real GDP                               -0.70%                      1.5%                     -9.4%                        1.5%
                              Growth

                              Recession/Depression                            16 months*                 16 months                43 months                 Over 12 years
                              Duration




Sources: Standard & Poor’s; Bureau of Economic Analysis; International Monetary Fund; Economic Planning Agency (Japan); National Bureau of Economic Research. GDP data is based on quarterly data for the
most recent bear market and the 1970’s bear market; it is based on annual data otherwise. Periods of economic contraction do not exactly coincide with bear markets. *Assumes that the most recent bear market
ended on March 9, 2009, and that the recession ended on March 31, 2009. Neither of these has been determined conclusively.
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    Learning From the Past:
    Bear Markets Since 1950




Source: Standard & Poor’s. For the period from January 1, 1950, through December 31, 2009. Stocks are represented by the daily closing price of the
Standard & Poor's 500. Past performance is not a guarantee of future results. (CS000144)
                                                                     ®




     Learning From the Past:
     Stock Markets and Economic Contractions




Source: Standard & Poor’s. For the period from January 1, 1950, through December 31, 2009. U.S. stocks are represented by Standard & Poor’s
Composite Index of 500 Stocks, an unmanaged index that is generally considered representative of the U.S. stock market. Economic contractions are as
defined by the National Bureau for Economic Research. (CS000228)
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Learning From the Past: Conclusions

• Economic cycles don’t tell the whole story
• Every bear is unique
• Fundamental investing concepts and strategies still
  apply
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 Gauging Volatility: Standard Deviation

                                                          S&P 500 Standard Deviation — 1959-2009




Source: Standard & Poor's. Represents the annualized monthly standard deviation of the total returns of the S&P 500 index for rolling 10-year periods
from January 1959 to December 2009. Past performance is not a guarantee of future results.
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Gauging Volatility: VIX

                                                    Volatility Index (VIX) 1990-2009
       100
       90

       80

       70

       60
       50
       40

       30
       20

       10

        0
             1990

                    1991

                           1992

                                  1993

                                             1994

                                                    1995

                                                           1996

                                                                  1997

                                                                         1998

                                                                                1999

                                                                                       2000

                                                                                              2001

                                                                                                     2002

                                                                                                            2003

                                                                                                                   2004

                                                                                                                          2005

                                                                                                                                 2006

                                                                                                                                        2007

                                                                                                                                               2008

                                                                                                                                                      2009
                              Source: Chicago Board Options Exchange. For the period from January 1990 to December 2009.
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Five Investing Strategies for a Volatile Market

•   Don’t panic
•   Take advantage of asset allocation
•   Diversify by sector, size, and style
•   Keep a long-term perspective
•   Consider buying opportunities
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    Don’t Panic




Source: Standard & Poor’s. This chart shows how a $10,000 investment would have been affected by missing the market's top-performing days over the
20-year period from January 1, 1990, to December 31, 2009. Stocks are represented by Standard & Poor's Composite Index of 500 Stocks, an
unmanaged index that is generally considered representative of the U.S. stock market. Past performance is not a guarantee of future results. (CS000076)
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Take Advantage of Asset
Allocation
                 All Stock Portfolio                    60% Stock Portfolio                        40% Stock Portfolio




                         Total                                   Total                                         Total
                        Return         Risk*                    Return           Risk*                        Return          Risk*

       1-year          26.45%        21.36%                     17.77%         14.03%                        13.06%           9.82%

       5-year           0.41%        16.04%                      2.34%          9.96%                         3.07%           6.94%

       10-year         -0.95%        16.13%                      1.93%          9.73%                         3.06%           6.61%

       20-year          8.21%        15.03%                      7.72%          9.31%                         7.19%           6.49%



                        *Annualized monthly standard deviation. Sources: Standard & Poor’s, Barclays Capital. For the periods ended December 31, 2009. Stocks represented
                        by the S&P 500 index. Bonds represented by the Barclays U.S. Aggregate Bond Index. Cash represented by the Barclays 3-Month Treasury-Bill Index.
                        Past performance is no guarantee of future performance.
                                                                          ®




  Diversify by Sector, Size, and Style
  Sector outperformance varies with the economic cycle
                            Sector Rotation -- 2000 to 2009
                                          2000            2001            2002            2003            2004            2005            2006            2007            2008            2009
                                                                       Consumer       Information                                       Telecom                        Consumer       Information
                                         Utilities      Materials                                       Energy          Energy                          Energy
                                                                        Staples       Technology                                        Services                         Staples      Technology
                                         57.17%          3.50%                                          31.54%          31.37%                          34.41%
                                                                        -4.28%          47.23%                                          36.81%                          -15.44%         61.71%
                                                       Consumer
                                       Health Care                      Materials       Materials       Utilities       Utilities       Energy          Materials     Health Care       Materials
                                                      Discretionary
                                         37.06%                         -5.46%          38.23%          24.33%          16.84%          24.20%          22.55%         -22.81%          48.58%
                                                         2.79%
                                                                                       Consumer         Telecom                                                                        Consumer
                                        Financials     Industrials       Energy                                       Health Care       Utilities       Utilities        Utilities
                                                                                      Discretionary     Services                                                                      Discretionary
                                         25.69%          -5.75%         -11.13%                                         6.48%           20.99%          19.39%          -28.97%
                                                                                         37.42%         19.85%                                                                           41.30%
                                       Consumer        Consumer                                                                                       Information       Telecom
                                                                       Financials      Industrials     Industrials     Financials      Financials                                      Industrials
                                        Staples         Staples                                                                                       Technology        Services
                                                                        -14.64%         32.20%          18.05%           6.48%          19.18%                                          20.91%
                                        16.78%          -6.41%                                                                                          16.33%          -30.49%
                                                                                                       Consumer                        Consumer        Consumer        Consumer
                                         Energy        Financials     Health Care      Financials                       Materials                                                     Health Care
                                                                                                      Discretionary                   Discretionary     Staples       Discretionary
                                         15.68%         -8.95%         -18.84%          31.13%                           4.43%                                                          19.70%
                                                                                                         13.26%                          18.67%         14.18%          -33.48%
                                                                       Consumer                                        Consumer
                                        Industrials      Energy                         Utilities       Materials                       Materials      Industrials       Energy        Financials
                                                                      Discretionary                                     Staples
                                          5.88%         -10.41%                         26.36%          13.21%                          18.64%          12.01%          -34.88%         17.20%
                                                                        -23.81%                                         3.59%
                                                                                                                                       Consumer         Telecom                        Consumer
                                        Materials     Health Care      Industrials      Energy         Financials      Industrials                                     Industrials
                                                                                                                                        Staples         Services                        Staples
                                        -15.72%        -11.94%          -26.34%         25.61%          10.90%           2.32%                                          -39.91%
                                                                                                                                        14.37%          11.95%                          14.89%
                                        Consumer        Telecom                                        Consumer        Information                                    Information
                                                                         Utilities    Health Care                                      Industrials    Health Care                       Energy
                                      Discretionary    Services                                         Staples        Technology                                     Technology
                                                                        -29.99%         15.04%                                          13.29%          7.16%                           13.82%
                                         -20.00%        -12.26%                                          8.18%            1.00%                                         -43.14%
                                         Telecom      Information       Telecom        Consumer       Information        Telecom      Information      Consumer
                                                                                                                                                                        Materials       Utilities
                                        Services      Technology       Services         Staples       Technology         Services     Technology      Discretionary
                                                                                                                                                                        -45.64%         11.91%
                                         -38.81%        -25.87%         -34.11%         11.58%           2.56%           -5.62%          8.40%          -13.21%
                                       Information                    Information       Telecom                         Consumer                                                        Telecom
                                                         Utilities                                    Health Care                     Health Care      Financials      Financials
                                       Technology                     Technology       Services                       Discretionary                                                     Services
                                                        -30.44%                                         1.77%                           7.53%           -18.64%         -55.32%
                                         -40.89%                        -37.42%          7.09%                           -6.36%                                                          8.93%

                            S&P 500      -9.09%         -11.88%         -22.10%         28.69%          10.87%           4.89%          15.79%           5.50%          -36.99%         26.45%
                                          2000            2001            2002            2003            2004            2005            2006            2007            2008            2009




Source: Standard & Poor’s. Sector performance represented by the performance of the 10 GICS sectors within Standard & Poor's Composite Index of
500 Stocks. Past performance is not a guarantee of future results. (CS000172)
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 Keep a Long-Term Perspective
 The longer the holding period, the lower the variability in returns

                                                                200%
                                                                        160%
                           Highest/Lowest Annual Total Return




                                                                150%


                                                                100%
                                                                               57%
                                                                                        47%    45%
                                                                 50%                                    38%
                                                                                                                   21%          20%           18%   15%

                                                                  0%
                                                                                                                   -4%           0%           2%    8%
                                                                                                        -17%
                                                                                               -26%
                                                                -50%                    -41%
                                                                               -53%
                                                                        -67%
                                                                -100%
                                                                         1      2        3      4         5         10           15           20    30
                                                                                               Holding Period in Years




Source: Standard & Poor’s. For all indicated holding periods between between January 1, 1926, and December 31, 2009. Domestic stocks are
represented by the total annual returns of Standard & Poor's Composite Index of 500 Stocks, an unmanaged index that is generally considered
representative of the U.S. stock market. Past performance is not a guarantee of future results. (CS000070)
                             ®




Consider Buying Opportunities

               Market Valuation Metrics in Selected Bull and Bear Markets

                                                                                                Price/Earnings Ratio

     2000-02 bull market peak (2000)                                                                         30.0

     2000-02 bear market bottom (2002)                                                                       25.9

     2007 bull market peak (2007)                                                                            19.9



     Average bull market peak since 1950                                                                     19.6

     Average bear market bottom since 1950                                                                   16.9

     Average all markets since 1950                                                                          17.8




                     Source: Standard & Poor’s. For the period from January 1, 1950, through December 31, 2009. Price/earnings ratios are based on 4-quarter trailing
                     earnings. Average bull and bear market peak and bottom ratios based on final month average in cycle.
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Special Considerations for
Retirement Plan Assets

• Reallocate, don’t cut
• Never cut contributions below employer match
• If employer cuts match, contributing still makes
  sense
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Looking Ahead
• Economy still in a downturn
• Housing slump continues
• Administration and Congress are confronting the issues
• Increased government oversight of financial markets
  will come
• Other structural changes to markets and economy are
  likely

= Market volatility is likely to remain a given


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Forward, Not Back
• Steps to recovery in process
• Upside greater than downside
• Using time-proven investing strategies is the best
  way to deal with continued market volatility




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Questions?


Investment options are offered through a group variable annuity contract (Forms 902-GAQC-09 or 902-GAQC-09(OR) or 901-GAQC-07 or
901-GAQC-07(OR)) underwritten by United of Omaha Life Insurance Company for contracts issued in all states except New York. United of
Omaha Life Insurance Company is not licensed in New York. In New York, Companion Life Insurance Company, Hauppauge, NY
underwrites the group variable annuity (Form 900-GAQC-07(NY)). Each company accepts full responsibility for each of their respective
contractual obligations under the contract but does not guarantee any contributions or investment returns except as to the Guaranteed Account
and the Lifetime Guaranteed Income Account as provided under the contract. Neither United of Omaha, Companion Life Insurance, nor their
representatives or affiliates offers investment advice in connection with the contract.

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