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The Pursuit of Personal and Financial Abundance. Wisdom along the way. And in the end, it’s not the years in your life that count. It’s the life in your years. --Abraham Lincoln. Maximizing the Life in Your Years.

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wisdom along the way
Wisdom along the way

And in the end, it’s not the years in your life that count. It’s the life in your years.

--Abraham Lincoln

arkenstone portfolio process the all terrain portfolio
Arkenstone Portfolio Process The All Terrain Portfolio™
  • Academic Foundation
  • Non correlated diversification
  • Capitalizes on market efficiency
  • Minimizes internal expense through use Exchange Traded Funds
  • Adds risk where risk generally generates return
  • Avoids drawdown with disciplined methodology
wisdom along the way1
Wisdom along the way

TANSTAAFL

“There Ain’t No Such Thing As A Free Lunch!”

--Econ 101

“Diversification is one of the economic world’s rare free lunches.”

--Harry Markowitz

Nobel Laureate, Father of Modern Portfolio Theory

Source: 2008 Yale endowment report p. 3

wisdom along the way2
Wisdom along the way

A new perspective on asset allocation

--David Swensen

Yale Endowment Manager & Author

Pioneering Portfolio Management

Unconventional Success

Source: Pioneering Portfolio Management, An Unconventional Approach to Institutional Investing, David Swensen, Unconventional Success, A Fundamental Approach to Personal Investing, David Swensen

all terrain portfolio allocation
All Terrain Portfolio™ Allocation

Generally portfolio is evenly allocated across these assets classes.

wisdom along the way3
Wisdom along the way

“In an efficient market, at any point in time, the actual price of a security will be a good estimate of its intrinsic value.”

--Eugene Fama

The Robert R. McCormick Distinguished Service Professor of Finance

at the University of Chicago Booth School of Business

all terrain portfolio allocation1
All Terrain Portfolio™ Allocation

Generally, the portfolio is evenly allocated across these assets classes. This is a representative sample of what the All Terrain Portfolio looks like in a client’s account. Actual holdings may vary. The costs associated with Exchange Traded Funds are separate from the fees charged by Arkenstone Financial.

wisdom along the way4
Wisdom along the way

“Select Low Cost Funds.”

--John Bogle, Founder Vanguard Funds

Source: "The Little Book Of Common Sense Investing: The Only Way To Guarantee Your Fair Share Of Stock Market Returns" by John C. Bogle (2007)

all terrain portfolio allocation sample
All Terrain Portfolio™ Allocation (sample)

Exchange Traded Funds (ETFs) Provided Efficient Access to the Efficient Markets

Exchange Traded Funds (ETFs)

Provide Efficient Access to the Efficient Markets

Source: Prospectuses of various exchange traded funds as of December 31, 2009 Generally, the portfolio is evenly allocated across these assets classes. This is a representative sample of what the All Terrain Portfolio looks like in a client’s account. Actual holdings may vary. The costs associated with Exchange Traded Funds are separate from the fees charged by Arkenstone Financial.

wisdom along the way5
Wisdom along the way

Take risk where rewarded…the Fama-French model.

--Eugene Fama

The Robert R. McCormick Distinguished Service Professor of Finance

at the University of Chicago Booth School of Business

--Kenneth French

Professor of Finance at the Tuck School of Business at Dartmouth College

wisdom along the way6
Wisdom along the way

Sell discipline avoids drawdown.

--Mebane Faber

drawdown
Drawdown

S&P 500 Drawdowns, 1900-2008

Higher resolution daily data and longer lookback periods can only increase the drawdown amount. Source: A Quantitative Approach to Tactical Asset Allocation Mebane T. Faber, May 2006, Working Paper Spring 2007, The Journal of Wealth Management, February 2009, Update

This chart reflects the performance of the S&P 500 Index. The results portrayed are exclusive of advisory fees brokerage commission or other expenses investors would have paid. Results portrayed do not reflect reinvestment of dividends and other earnings. Potential for profit includes the possibility of loss. Any presentation of back tested performance is hypothetical was compiled after the period represented and does not represent decisions made by advisor during the period described. Past performance is not indicative of future results.

faber study
Faber Study

5 Asset Classes 1973-2008

Buy & Hold v. Timing

Source: A Quantitative Approach to Tactical Asset Allocation Mebane T. Faber, May 2006, Working Paper

Spring 2007, The Journal of Wealth Management, February 2009, Update

Monthly Close Selling

Return: 9.77% B&H 11.27% Timing

Volatility: 9.73% B&H 6.87% Timing

faber study result
Faber Study Result

Buy & Hold vs. Timing Model, 1973-2008, non-log scale

Source: A Quantitative Approach to Tactical Asset Allocation Mebane T. Faber, May 2006, Working Paper Spring 2007, The Journal of Wealth Management, February 2009, Update

This chart reflects the performance of the S&P 500 Index. The results portrayed are exclusive of advisory fees brokerage commission or other expenses investors would have paid. Results portrayed do not reflect reinvestment of dividends and other earnings. Potential for profit includes the possibility of loss. Any presentation of back tested performance is hypothetical was compiled after the period represented and does not represent decisions made by advisor during the period described. Past performance is not indicative of future results.

arkenstone portfolio process the all terrain portfolio1
Arkenstone Portfolio Process The All Terrain Portfolio™
  • Academic Foundation
  • Non correlated diversification
  • Capitalizes on market efficiency
  • Minimizes internal expense through use Exchange Traded Funds
  • Adds risk where risk generally generates return
  • Avoids drawdown with disciplined methodology
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