Long Term Investment Performance PDF

LONG-TERM INVESTMENT
PERFORMANCE
Source: Created by Raymond James using Ibbotson Presentation Materials • © 2011 Morningstar. All Rights Reserved. 3/1/2011 • Used with permission.
TYPES OF ASSET CLASSES
Stocks Cash alternatives

 Large stocks  Money-market funds
 Small stocks  Treasury bills
 International stocks  Certificates of deposit
Bonds Real assets

 Government bonds  Real estate
 Corporate bonds  Commodities
 Municipal bonds  Gold
 High-yield bonds
 International bonds
Source: Created by Raymond James using Ibbotson Presentation Materials • © 2011 Morningstar. All Rights Reserved. 3/1/2011 • Used with permission.
® ®
IBBOTSON SBBI
STOCKS, BONDS, BILLS AND INFLATION 1926 – 2010
$16,055
$10,000
$2,982
Compound Annual Return

1,000 Small Stocks 12.1%
Large Stocks 9.9
Government Bonds 5.5
Treasury Bills 3.6
• Inflation 3.0
$93
100
$21
$12
10
0.10
1926 1936 1946 1956 1966 1976 1986 1996 2006
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. • Hypothetical value of $1 invested at the beginning of 1926.
Assumes reinvestment of income and no transaction costs or taxes. This is for illustrative purposes only and not indicative of any investment. • Source: Created by Raymond James
using Ibbotson Presentation Materials • © 2011 Morningstar. All Rights Reserved. 3/1/2011
® ®
IBBOTSON SBBI
STOCKS, BONDS, BILLS AND INFLATION 1991 – 2010
$20
Small Stocks 12.5% $12.57
Large Stocks 9.1
10
Treasury Bills 3.5
• Inflation 2.5
$5.75
$5.05
$1.97
$1.64
0.60
1991 1996 2001 2006
THE PAST 10 YEARS
2001 – 2010

$3 Small Stocks 9.6 %
2.3 $2.51
• Inflation
Treasury Bills 2.2
Large Stocks 1.4
$1.90
$1.26
$1.24
$1.15
0.50
2001 2003 2005 2007 2009
LONG-TERM ASSET CLASS PERFORMANCE
1926 – 2010
Small Large Government Treasury

Stocks Stocks Bonds Bills
Annual Compound Annual Return 12.1% 9.9% 5.5% 3.6%
Standard Deviation 32.6% 20.4% 9.5% 3.1%
12-Month Highest Return 316.4% 162.9% 54.4% 15.2%

Rolling
Periods
Lowest Return -75.9% -67.6% -17.1% 0.0%
Average Positive Return 31.4% 21.7% 8.6% 3.7%
Average Negative Return -19.0% -14.3% -3.9% 0.0%
Percent Periods Positive 71.8% 73.3% 78.1% 98.4%
Percent Periods Negative 28.2% 26.7% 21.9% 1.6%
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. • Assumes reinvestment of income and no transaction costs or
taxes. This is for illustrative purposes only and not indicative of any investment. • Source: Created by Raymond James using Ibbotson Presentation Materials • © 2011 Morningstar.
All Rights Reserved. 3/1/2011
BOND MARKET PERFORMANCE
1926 – 2010
$500
$285.34
$133.38
High-Yield Corp Bonds 6.9% $92.94
100 Corporate Bonds 5.9
Municipal Bonds 4.3 $34.88
Treasury Bills 3.6 $20.55
10
0.10
1926 1936 1946 1956 1966 1976 1986 1996 2006
GROWTH AND VALUE INVESTING
1970 – 2010
$500
Compound Annual Return $303.48
Small Value 15.0%
Large Value 10.5
Small Growth 8.8
100 Large Growth 7.6
$59.19
$32.06
$20.09
10
0.50
1970 1975 1980 1985 1990 1995 2000 2005 2010
STOCKS, COMMODITIES, REITs, AND GOLD
1980 – 2010
$100
REITs 12.3%
U.S. Stocks 11.4 $36.02
International Stocks 10.1 $28.08
Commodities 7.5
$19.98
Gold 3.2
$9.35
10
$2.68
0.50
1980 1985 1990 1995 2000 2005 2010
WHAT IS ASSET ALLOCATION?
Asset allocation is the

Stocks Bonds
process of combining asset
classes such as stocks, bonds, real
estate, commodities and cash in a
portfolio in order Cash
to meet your goals.
Source: Created by Raymond James using Ibbotson Presentation Materials • © 2011 Morningstar. All Rights Reserved. 3/1/2011
THE CASE FOR ASSET ALLOCATION
2001 – 2010
30% Return
20
10
-10
-20
Bonds 6.6%
50/50 Portfolio 5.2
-30 Stocks 1.4
-40
Year 1 2 3 4 5 6 7 8 9 10
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. Time period illustrated is from 2001 – 2010. This time period was
chosen as a dramatic illustration of stock and bond return behavior and how their often opposite movements reduced portfolio volatility. This is for illustrative purposes only and not
indicative of any investment. Created by Raymond James using Ibbotson Presentation Materials © 2011 Morningstar. All Rights Reserved. 3/1/2011
ASSET ALLOCATION: RISK VERSUS RETURN
1970 – 2010
12% Return
Maximum Risk Portfolio:

100% Stocks
11
80% Stocks, 20% Bonds
1
10 Minimum Risk Portfolio:
0 28% Stocks, 72% Bonds
100% Bonds
9
10% Risk 11 12 13 14 15 16 17 18 19
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. Risk and return are measured by standard deviation and arithmetic
mean, respectively. This is for illustrative purposes only and not indicative of any investment. Created by Raymond James using Ibbotson Presentation Materials © 2011 Morningstar.
All Rights Reserved. 3/1/2011
STOCK DIVERSIFICATION
Risk
• Company Risk
• Market Risk
1 2 4 6 8 16 30 50 100 1,000
Number of Stocks in Portfolio
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. This is for illustrative purposes only and not indicative of any
investment. Created by Raymond James using Ibbotson Presentation Materials © 2011 Morningstar. All Rights Reserved. 3/1/2011
MORE FUNDS DO NOT ALWAYS MEAN GREATER DIVERSIFICATION
IDENTIFYING POTENTIAL SECURITY OVERLAP
Equity Portfolio A Equity Portfolio B
Deep-Value Core-Value Core Core-GrowthHigh-Growth Deep-Value Core-Value Core Core-GrowthHigh-Growth

Giant
Giant
Large
Large
Mid
Mid
Small
Small
Micro
Micro
ASSET ALLOCATION & DIVERSIFICATION IN BULL AND BEAR MARKETS
Bull Market Bear Market

$2,500 $1,500
• Stocks
• 50/50 Portfolio
• Bonds
$2,084
2,000 1,250
$1,160
$1,653
1,500 1,000
$1,274
$767
1,000 750
500 $491 500

Oct Oct Oct Oct Oct Oct Nov Nov
2002 2003 2004 2005 2006 2007 2007 2008
DIVERSIFIED PORTFOLIOS IN VARIOUS MARKET CONDITIONS
PERFORMANCE DURING AND AFTER SELECT BEAR MARKETS
Mid-1970s Recession (Jan 1973 – Jun 1976) 2007 Bear Market and Aftermath (Nov 2007 – Dec 2010)
$1,250
$1,150
• Stocks
• Diversified Portfolio $1,072
$1,014
1,000
$872
750
500
250 Jan Jan Jan Jan Nov Nov Nov Nov

1973 1974 1975 1976 2007 2008 2009 2010
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. Diversified portfolio: 35% stocks, 40% bonds, 25% Treasury bills.
Hypothetical value of $1,000 invested at the beginning of January 1973 and Nov 2007, respectively. This is for illustrative purposes only and not indicative of any investment. Created
by Raymond James using Ibbotson Presentation Materials © 2011 Morningstar. All Rights Reserved. 3/1/2011
CAN YOU STAY ON TRACK?
$1,200 $100k
$56,036
Stocks $40,139
$1,091 50/50 Portfolio
Bonds $21,754
1,000 10k
$912
800 1k
$746
600 100
1972 1973 1974 1975 1985 1995 2005
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. • This is for illustrative purposes only and not indicative of any
investment. Created by Raymond James using Ibbotson Presentation Materials. © 2011 Morningstar. All Rights Reserved. 3/1/2011
COMPOUNDING &
REBALANCING
Created by Raymond James using Ibbotson Presentation Materials • © 2011 Morningstar, Inc. All rights reserved. Used with permission.
POWER OF REINVESTING
1991 – 2010
$10k

Stocks With Reinvestment 9.1%
Stocks Without Reinvestment 6.9 $5,751
Bonds With Reinvestment 8.4 $5,053
Bonds Without Reinvestment 2.4
$3,808
$1,609
1,000
800
1991 1994 1997 2000 2003 2006 2009
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. • Hypothetical value of $1,000 invested at the beginning of 1991.
Data does not account for taxes or transaction costs. This is for illustrative purposes only and not indicative of any investment. Created by Raymond James using Ibbotson
Presentation Materials. © 2011 Morningstar. All Rights Reserved. 3/1/2011
POWER OF COMPOUNDING
HYPOTHETICAL INVESTMENT IN STOCKS
Investor A Investor B
$80k
Years Contributing: 1991 – 2000 Years Contributing: 2001 – 2010
Annual Amount Contributed: $2,000 Annual Amount Contributed: $4,000
60 $60,858
• Total Amount Invested
• Compounded Value at Year-End 2010
$48,881
40 $40,000
20 $20,000
0
1991 – 2010 2001 – 2010
IMPORTANCE OF REBALANCING
1990 – 2010
80%
• Stock Allocation
• Bond Allocation 75%
72%
70 71%
63%
60
50 50% 50%
40
37%
30 29% 28%
25%
20
10
0 Year-End
1990 1995 2000 2005 2010
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. • Stocks: 50% large and 50% small stocks. Bonds: intermediate-term
government bonds. This is for illustrative purposes only and not indicative of any investment. Created by Raymond James using Ibbotson Presentation Materials. © 2011
Morningstar. All Rights Reserved. 3/1/2011
CONTROLLING RISK WITH PORTFOLIO REBALANCING
THE RISK AND RETURN OF REBALANCED VERSUS NON-REBALANCED
PORTFOLIOS
Risk Return
14% • Non-Rebalanced Portfolio
13.1% • Rebalanced Portfolio
12.9%
12
11.5% 10.6%
10.1%
10.5% 10.4% 10.5%
10 10.0%
9.8%
8.1%
8 7.9%
0 Jan 1970 – Jan 1980 – Jan 1990 – Jan 1970 – Jan 1980 – Jan 1990 –
Dec 2010 Dec 2010 Dec 2010 Dec 2010 Dec 2010 Dec 2010
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. • Risk and return are measured by annualized standard deviation
and compound annual return, respectively. This is for illustrative purposes only and not indicative of any investment. Created by Raymond James using Ibbotson Presentation
Materials.
© 2011 Morningstar. All Rights Reserved. 3/1/2011
COMBATING COMMON
INVESTOR ERRORS
INDIVIDUAL INVESTORS HAVE UNDERPERFORMED
S&P 500 Inflation Average Barclays Capital Average

Stock Aggregate Bond
Fund Bond Index Fund
Investor Investor
Past performance is no guarantee of future results. ©2009 DALBAR, Inc. This information is for illustrative purposes and seeks to demonstrate the virtues of a buy-and-hold
strategy rather than trying to time the market. The calculations assume a $10,000 initial investment over the specified time period from 1988 through 2008.
Please refer to disclosures on the next slide.
24
THE MOST DETRIMENTAL INVESTOR MISTAKES
Buying overvalued Other

investments 1%
8%
Holding on to
investments too long
11%
Not paying
enough attention
to asset allocation
Having too much 33%
money in one
investment
16%
Trying to time the market

31%
Source: AllianceBernstein Investments. 2005 Survey of Financial Advisors on Asset Allocation

Asset allocation does not ensure a profit or protect against a loss. Investing involves risk and investors may incur a profit or a loss.
25
INDIVIDUAL INVESTORS TEND TO REACT EMOTIONALLY
Net flows by broad investment categories at major inflection points in the market and subsequent performance:
$262.80
2000 Subsequent Stocks Bonds (Barclays
Returns (S&P 500) Capital Agg Index)
($ Billions)
2001 -11.89% +8.43%
2002 -22.10% +10.26%
-$49.90
2002 $140.50
Subsequent Stocks Bonds (Barclays
2003 +28.68% +4.10%

2004 +10.88% +4.34%
-$29.10
$39.29
2008
Subsequent Stocks Bonds (Barclays
-$87.88 2009 +26.47% +5.93%
Stock Funds Bond Funds
The S&P 500 is an unmanaged index of 500 widely held stocks. The Barclays Capital Aggregate Bond index measures changes in
the fixed rate debt issues rated investment grade or higher. Investors cannot invest directly in an index. There is no assurance that
26
past trends will continue into the future. | Source: Investment Company Institute. Morningstar Data. The categories listed above,
Equity and Fixed Income, represent those funds categorized as such by the Investment Company Institute.
DANGERS OF MARKET TIMING
HYPOTHETICAL VALUE OF $1 INVESTED FROM 1991 – 2010
$6
$5.75
2 $1.96 $1.97
0 Stocks Minus
Stocks Treasury Bills
Best 13 Months
THE COST OF MARKET TIMING
RISK OF MISSING THE BEST DAYS IN THE MARKET 1991 – 2010
10%
Return
9.1%
8
6
5.4%
4
3.0% 0.9%
2
0
-1.0% -2.7%
-2
- 4
Invested for All 10 Best Days Missed 20 Best Days Missed 30 Best Days Missed 40 Best Days Missed 50 Best Days Missed
5,043 Trading Days
Daily Returns for All 5,043 Trading Days

10%
Return
-5
-10 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
REDUCTION OF RISK OVER TIME
1926 – 2010
Small Stocks Large Stocks Government Bonds Treasury Bills
150%
120
90
60
Compound
30 Annual Return:
12.1% 9.9%
5.5% 3.6%
-30
-60 1-Year 5-Year 20-Year 1-Year 5-Year 20-Year 1-Year 5-Year 20-Year 1-Year 5-Year 20-Year
Holding
Period
Past performance is no guarantee of future results. • An investment cannot be made directly in an index. • Each bar shows the range of compound annual returns for each
asset class over the period 1926–2010. This is for illustrative purposes only and not indicative of any investment. Created by Raymond James using Ibbotson Presentation Materials.
© 2011 Morningstar. All Rights Reserved. 3/1/2011
BRUTAL DECLINES AMID THE LONG-TERM RISE
$53.5 million
(51)%
(15)% (41)%
(15)%
(30)%
(17)%
(29)% (43)%
(16)%
$100,000
(22)%
(15)%
Past performance does not guarantee future results. No fees or expenses are reflected in the performance of the index. An investor cannot invest directly in an index, and an
index’s results are not indicative of any specific investment. | Source: Compustat; Roger G. Ibbotson and Rex A. Sinquefield, “Stocks, Bonds, Bills, and Inflation: Year-by-Year
Historical Returns,” University of Chicago Press Journal of Business (January 1976); and Bernstein Global Wealth Management | Updated as of 2/1/10 with data from Callan
and Associates. Market data references S&P 500 returns. The S&P 500 is an unmanaged index of 500 widely held stocks.
30
PORTFOLIO CONSTRUCTION
INVESTMENT PROCESS PORTFOLIO CONSTRUCTION
We use a variety of tools to tailor our investment process to your objectives, risk tolerance, time horizon, tax situation
and investment experience.
“Time is your friend; impulse is your enemy."

– John Bogle
Founder, The Vanguard Group
32
INVESTMENT PROCESS
We can build specific investments into your financial plan to help you achieve your financial goals.
33
INVESTMENT PROCESS RISK AND REWARD
Aggressive Global Equity

Balanced with Growth
Emphasis on Growth
Growth
Conservative Balanced
Balanced
Expected Return
Conservative
Lower-Risk Higher-Risk
Portfolios Portfolios
Risk (Standard Deviation of Return)
An efficient frontier represents every possible combination of assets that maximizes return at each level of portfolio risk and minimizes risk at each level of portfolio return.
The above illustration depicts the typical relationship between risk and return. Generally, investors are expected to be compensated in returns for assuming higher levels of risk.
Asset allocation does not ensure a profit or protect against a loss. Standard deviation measures the fluctuation of
34 returns around the arithmetic average return of the investment. The higher the standard deviation, the greater the
variability (and the risk) of the investment returns.
INVESTMENT PROCESS ASSET CLASSES
We employ a variety of asset classes to help balance risk.
• U.S. Equity • Real Estate

• Non-U.S. Equity • Alternative Investments
• Fixed Income • Cash & Cash Alternatives
HYPOTHETICAL INCOME-FOCUSED HYPOTHETICAL GROWTH-FOCUSED

PORTFOLIO PORTFOLIO
35
INVESTMENT PROCESS INVESTMENT OPTIONS
We have access to a wide variety of investments when designing portfolios for our clients
and – with the support of Raymond James research and due diligence, and our own
analysis and understanding of your needs – we choose investments best suited to your
needs, constraints, obligations and goals.
INVESTMENT UNIVERSE
(Professional Asset Managers, Mutual
Funds, ETFs, Annuities, Stocks, Bonds,
REITs, Alternatives, etc.)
Raymond James
Research and Our Quantitative and
Due Diligence Qualitative Analysis
RELEVANT INVESTMENTS
(Quality investments
appropriate to your situation)
Knowledge of Your
Personal Situation
SPECIFIC
RECOMMENDATIONS
(Investments chosen
for you)
36
DISCLOSURES
 Investing in small-cap stocks generally involves greater risks and, therefore, may not be
appropriate for every investor.
 U.S. government bonds and Treasury bills are guaranteed by the U.S. government and, if
held to maturity, offer a fixed rate of return and guaranteed principal value. U.S.
government bonds are issued and guaranteed as to the timely payment of principal and
interest by the federal government. Treasury bills are certificates reflecting short-term
(less than one year) obligations of the U.S. government.
 Diversification does not ensure a profit or protect against a loss.
 Standard deviation measures the fluctuation of returns around the arithmetic average
return of investment. The higher the standard deviation, the greater the variability (and
thus risk) of the investment returns.
 Holding stocks for the long-term does not insure a profitable outcome. Investing in stocks
always involves risk, including the possibility of losing one’s entire investment.
 There is an inverse relationship between interest rate movements and bond prices.
Generally, when interest rates rise, bond prices fall and when interest rates fall, bond
prices rise.
March 1, 2011 • Source: Created by Raymond James using Ibbotson Presentation Materials © 2011 Morningstar, Inc. All rights reserved. Used with permission. 2011 Raymond
James & Associates, Inc., member New York Stock Exchange/SIPC • 2011 Raymond James Financial Services, Inc., member FINRA/SIPC
DISCLOSURES (CONTINUED)
 High-yield (below investment grade) bonds are not suitable for all investors. The risk of default may
increase due to changes in the issuer’s credit quality. Price changes may occur due to changes in
interest rates and the liquidity of the bond. When appropriate, these bonds should only comprise a
modest portion of your portfolio.
 Municipal bond interest is not subject to federal income tax but may be subject to AMT, state or local
taxes. Income from taxable municipal bonds is subject to federal income taxation; and it may be
subject to state and local taxes. Municipal securities typically provide a lower yield than comparably
rated taxable investments in consideration of their tax-advantaged status. Investments in municipal
securities may not be appropriate for all investors, particularly those who do not stand to benefit from
the tax status of the investment. Please consult an income tax professional to assess the impact of
holding such securities on your tax liability.
 Commodities trading is generally considered speculative because of the significant potential for
investment loss. Commodities and precious metals are volatile investments and should only form a
small part of a diversified portfolio. Their markets are likely to be volatile and there may be sharp price
fluctuations even during periods when prices overall are rising.
March 1, 2011 • Source: Created by Raymond James using Ibbotson Presentation Materials © 2011 Morningstar, Inc. All rights reserved.
Used with permission. 2011 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC • 2011 Raymond James Financial
Services, Inc., member FINRA/SIPC Continued on next slide
 Investing in small-cap stocks generally involves greater risks and, therefore, may not be appropriate
for every investor.
 International investing involves special risks, including currency fluctuations, different financial
accounting standards, and possible political and economic volatility.
 U.S. government bonds and Treasury bills are guaranteed by the U.S. government and, if held to
maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are
issued and guaranteed as to the timely payment of principal and interest by the federal government.
Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S.
government.
 Diversification does not ensure a profit or protect against a loss.
 Holding stocks for the long-term does not insure a profitable outcome. Investing in stocks always
involves risk, including the possibility of losing one's entire investment.
 Specific sector investing such as real estate can be subject to different and greater risks than more
diversified investments. Declines in the value of real estate, economic conditions, property taxes, tax
laws and interest rates all present potential risks to real estate investments.
Services, Inc., member FINRA/SIPC Continued on next slide
 Certificates of Deposit are FDIC-insured up to $250,000 per depositor. Coverage applies to total
holdings per bank per depositor. Visit fdic.gov for more information.
Services, Inc., member FINRA/SIPC

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LONG-TERM INVESTMENT

Stocks Cash alternatives

 Small stocks  Treasury bills

 International stocks  Certificates of deposit

Bonds Real assets

 Corporate bonds  Commodities

 Municipal bonds  Gold

Compound Annual Return

Compound Annual Return

Small Large Government Treasury

Annual Compound Annual Return 12.1% 9.9% 5.5% 3.6%

Standard Deviation 32.6% 20.4% 9.5% 3.1%

12-Month Highest Return 316.4% 162.9% 54.4% 15.2%

Average Positive Return 31.4% 21.7% 8.6% 3.7%

Average Negative Return -19.0% -14.3% -3.9% 0.0%

Percent Periods Positive 71.8% 73.3% 78.1% 98.4%

Percent Periods Negative 28.2% 26.7% 21.9% 1.6%

Asset allocation is the

to meet your goals.

Maximum Risk Portfolio:

50% Stocks, 50% Bonds

Deep-Value Core-Value Core Core-GrowthHigh-Growth Deep-Value Core-Value Core Core-GrowthHigh-Growth

Bull Market Bear Market

500 $491 500

250 Jan Jan Jan Jan Nov Nov Nov Nov

Compound Annual Return

S&P 500 Inflation Average Barclays Capital Average

Please refer to disclosures on the next slide.

Buying overvalued Other

Trying to time the market

Source: AllianceBernstein Investments. 2005 Survey of Financial Advisors on Asset Allocation

2003 +28.68% +4.10%

Stock Funds Bond Funds

Daily Returns for All 5,043 Trading Days

“Time is your friend; impulse is your enemy."

Aggressive Global Equity

Risk (Standard Deviation of Return)

• U.S. Equity • Real Estate

HYPOTHETICAL INCOME-FOCUSED HYPOTHETICAL GROWTH-FOCUSED

Please refer to disclosures on the next slide.

Please refer to disclosures on the next slide.

 Diversification does not ensure a profit or protect against a loss.

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