Download - Why Investors Underperform

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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE

Why Investors Under-Perform



“…I wish we had a retirement plan that didn’t require matching six numbers.”



- Fixed Income

- U.S. Equities

- International Equities

- Investment Grade- High Yield- REITs

- Large Cap- Mid Cap- Small Cap

- Global- International

Major Asset Classes

- Value- Core- Growth



Characteristics of Asset Classes

- Behave Randomly

- Behave Independently

- Volatile (in varying degrees)

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Source: Russell, MSCI, Standard & Poor’s, Lehman Brothers, Barclays Capital

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Large Cap Value Vs Large Cap Growth: 1975 - 2007



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Bull Market Performance

Source: Phoenix Investments Standard Deviation (%)



Bear Market Performance

Source: Phoenix Investments Standard Deviation (%)



Potential Individual Pitfalls Vs Institutional Strategies for Success



Traditional Investments vs. Alternative Investments

Investment Asset Classes

Cash Alternative AssetsStocks Real Estate

Domestic and International EnergyLarge, Small and Mid-Cap TimberValue, Core and Growth Private Equity

Bonds Alternative StrategiesTreasury Hedge FundsCorporate Relative ValueConvertible Event DrivenMortgage DirectionalMunicipal Managed Futures

High Yield Fund of Funds

International Exchange Funds



Why consider Alternative Investments?

¨ Diversification through low correlation¨ Attractive absolute return potential

provides the opportunity for

Reduced risk and increased return in a traditional portfolio



7.00%

8.00%

9.00%

10.00%

11.00%

2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

Bonds

Stocks

Managed Futures

Real Estate

Hedge Funds

Alternatives

Efficient Frontier: Stocks/BondsJanuary 1990 – March 2008

Risk(Annualized Standard Deviation)

Ret

urn

(Ann

ualiz

ed)

Stocks are represented by the Standard & Poor’s 500 Stock Index including dividends. Bonds are represented by the Lehman Brothers Aggregate Index. Hedge Funds are represented by the HFRI FOF Composite Index. Managed Futures are represented by the Stark 300 Trader Index. Real Estate is represented by a 50/50 allocation to NAREIT - All and NCREIF - National Indices. Alternatives is represented by equal allocations to Hedge Funds, Managed Futures, and Real Estate.

50% Bonds50% Stocks

Source: Phoenix Investments



7.00%

8.00%

9.00%

10.00%

11.00%

2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

Bonds

Stocks

Managed Futures

Real Estate

Hedge Funds

Alternatives


Ret

urn

(Ann

ualiz

ed)

Stocks are represented by the Standard & Poor’s 500 Stock Index including dividends. Bonds are represented by the Lehman Brothers Aggregate Index. Hedge Funds are represented by the HFRI FOF Composite Index. Managed Futures are represented by the Stark 300 Trader Index. Real Estate is represented by a

50/50 allocation to NAREIT - All and NCREIF - National Indices. Alternatives is represented by equal allocations to Hedge Funds, Managed Futures, and Real Estate.

50% Bonds50% Stocks

Adding 10% Alternatives

Efficient Frontier: Stocks/Bonds/10% AlternativesJanuary 1990 – March 2008




7.00%

8.00%

9.00%

10.00%

11.00%

2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

Bonds

Stocks

Managed Futures

Real Estate

Hedge Funds

Alternatives


Ret

urn

(Ann

ualiz

ed)

Stocks are represented by the Standard & Poor’s 500 Stock Index including dividends. Bonds are represented by the Lehman Brothers Aggregate Index. Hedge Funds are represented by the HFRI FOF Composite Index. Managed Futures are represented by the Stark 300 Trader Index. Real Estate is represented by a 50/50 allocation to NAREIT - All and NCREIF - National Indices. Alternatives is represented by equal allocations to Hedge Funds, Managed Futures, and Real Estate.

Adding 20%Alternatives

Adding 10% Alternatives

50% Bonds50% Stocks

Efficient Frontier: Stocks/Bonds/20% AlternativesJanuary 1990 – March 2008




“Investors Generally Want To Take The Smallest Risk To

Secure The Greatest Possible Return”

Dr. Harry MarkowitzWinner, Nobel Prize

in Economics



The Importance of Asset Allocation

• It is the primary determinant of overall return

• It maximizes the probability of achieving your

target return within your specific risk tolerance

levels

• It helps control risk through broad

diversification

• It increases the possibility of generating your

desired level of incomeDisclosure: Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment loss.



Disclosure: This hypothetical example does not represent the performance of a specific security nor does it reflect the effects of taxation, fees, and inflation.



“You’ll find how to live on Social Security over there in the fiction section.”


NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEESource: Ibbotson Associates



*This hypothetical example does not reflect the effects of taxation, fees, and inflation.

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NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEESource: Phoenix Investments


NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEESource: Ibbotson Associates



How We Are Unique:

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1. Avoid the 3 Greatest Risk Factors of Investing Deconstruction Analysis

2. Highly selective universe of recommended

products Select List

3. Careful monitoring and maintenance of your

investments “Green Screen”

4. Due diligence of investment products by dedicated

team Due Diligence Committee

Deconstruction Analysis

MK Select List

“Green Screen”

Due Diligenc

e Committ

ee



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MK Select List

“Green Screen”

Due Diligenc

e Committ

eeHypothetical Asset Allocation Analysis



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MK Select List

“Green Screen”

Due Diligenc

e Committ

ee

Covered Product Categories include: (166 total

products)

Equity Mutual Funds

Exchange-Traded Funds (ETFs)

Separate Account Managers (SMAs)

Alternative Investments

Annuity Information



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MK Select List

“Green Screen”

Due Diligenc

e Committ

ee

Hypothetical “Green Screen” Analysis

rWh



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MK Select List

“Green Screen”

Due Diligenc

e Committ

ee

Q4/2008 All/2008

Travel Miles 27,222122,112Travel Days 22 138

Onsite Visits 28 155

Conference Calls 274 649Visits to Memphis 69 160Emails 168 681

Total Contacts 539 1,645

DDG Due Diligence ‘Touches’ in 2008



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Morgan Keegan Ranks Among Top Ten Underwriters in

Nation for 2008*Regional Rankings: AL, AR, KY, LA, MS, TNRanked #1 for the 16th consecutive year as senior manager on 219 issues with a value of $4.9 billion; 24.8 percent market share, up from 15 percent in 2007.

State Rankings: AlabamaRanked #1 as senior manager of 22 issues with a par amount of $651 million; 29.7 percent market share in 2008 compared to 4.8 percent in 2007.

Bank Qualified and Small Issues:Ranked #1 as underwriter of 198 issues with a par amount of $1.2 billion.Ranked #1 as underwriter of 147 issues with a par amount of $922 million.Ranked #1 as underwriter of 271 issues with a par amount of $1.6 billion.

*Thomson Reuters, one of the leading municipal bond information services in the country



Financial Planning Process1. Set Goals & Objectiveso Future, feelings, and family

dynamicso Taxes, inflation, and risk

2. Take Inventory of Existing Assets

o Investmentso Benefitso Social Security

3. Develop & Follow A Retirement Plan

o Investment Policy Statemento Monitoringo Communication

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Our firm’s entrepreneurial culture promotes innovation and dedication to serving every financial need of our clients.

Morgan Keegan & Company• Founded in 1969 in Memphis, Tennessee• Full service investment banking and securities brokerage

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the United States and corporate and institutional clients throughout the US and abroad

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We believe the most rewarding investment experience comes from focusing on the investor rather than the market. Investors, unlike markets, have goals. We can position your investments relative to your goals, while taking into account the inevitable market fluctuations which will occur along the way. This approach has been shown to increase your likelihood of success.

Our Management Program

Investor-Centeredvs. Market-Centered

Reason vs. Emotion

Long-term Process vs. Short-term Event

Relational vs. Transactional

Our Professional Discipline

Investments based on client’s clearly defined goals,consistent with their values, understood within their total life-plan

Responsive to changes in goals or life events, rather than reactive to market events

Investing and Investment decisions understood withinthe context of a life and a life time rather than a single day or event

Investment decisions based on comprehensive knowledge of the

client and their interests, achieved through ongoing consultation

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As Morgan Keegan financial advisors, we have the resources, personnel, and backing of one of the nations largest full service investment firms. It is our responsibility to create, grow, protect, preserve, or utilize your wealth regardless of the prevailing investing environment. We can also help you plan for the distribution of your wealth in a tax-advantaged way both during your life and beyond. This is done by building a plan specific to your family’s dynamics, hopes, and dreams.

Our Commitment to You

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• Gerald “Jerry” PadawerManaging DirectorMorgan Keegan

314-889-4207866-671-8366Fax: 314-725-1482

8182 Maryland AveSte 400St Louis, MO 63105

The Padawer Bratton Financial Group

• Michael Bratton, CFP®Vice PresidentMorgan Keegan

314-889-4207866-671-8366Fax: 314-725-1482

8182 Maryland AveSte 400St Louis, MO 63105

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Disclaimer: The information and opinions expressed are intended for general information only. Morgan Keegan & Company, Inc. does not assume liability for any loss, which may result from the reliance of any person upon any such information or opinions. Such information and opinions are subject to change without prior notice. The general information is not intended as an offer or solicitation with respect to the purchase or sale of any security or offering, nor is it deemed individual or personalized advice.

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