arl advisers main presentation
TRANSCRIPT
Dear Fellow Investor:
I have entered the asset management business. My company, ARL Advisers, LLC, is a registered investment
advisory in the State of Kentucky, and I am seeking your business.
With all the options out there, why consider what I have to offer?
First, I like to think that what I do is unique, but not special. I will not be selling you hype or the latest and greatest.
My methodology is driven by my own research and the data, and all investing decisions are objective. Second, my
market edge is the ability to use my computer, and I level the playing field even more by investing in markets not
companies. Third, I put a great emphasis on risk management as it is one of the few aspects of the markets that I can
control.
Please take 15 minutes to review my presentation. Here I outline my approach to the markets, and the types of
portfolios that we customize for our clients. More importantly, you will understand what I have been doing for the
past 10 years of my life, and I hope you will come away with the notion that I am committed to providing you with
the best service possible.
As you review the material, ask yourself these three questions: 1) what was my financial plan for the past 10 years?;
2) how will I navigate the markets in the next 10 years?; 3) what is my plan to capture new opportunities and reduce
risks in the future? I don’t have a crystal ball nor do I need one. However, I do have a plan and a methodology that
should capture the major themes. My emphasis is on a disciplined strategy. In essence, I am offering highly
stylized, institutional quality portfolios but without the churn of excessive trading and without the high fees.
I look forward to talking to you soon, and thank you for your time.
Guy
“See why we are different.”
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Key Points
strategic asset allocation is superior to passive asset allocation
strategic asset allocation produces consistent returns while protecting
against losses
ARL Advisers, LLC is replicating a strategy that is commonly employed
by major hedge funds and endowments
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Key Points
ARL Advisers, LLC uses proprietary models to allocate investment funds
toward asset classes with the highest potential for appreciation and
away from asset classes with greater potential for loss
funds are allocated across a breadth of alternative asset classes – you are
not limited to stocks and bonds
all models are quantitatively derived from fundamental and technical
inputs
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Key Points
emphasis on a disciplined strategy
emphasis on money management
emphasis on risk management
emphasis on investing not trading
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INTRODUCTION
goals
suitability
universe of assets
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my goal
is to make you money!
is to invest for long-term returns while managing risk
is to outperform the broad stock markets over the full market
cycle (peak-to-peak or trough-to-trough) with less risk than
experienced by passive approaches
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suitability
intended for long-term investors following a disciplined saving
and investing program
individual investors
institutional investors
investors seeking growth of income and capital
preservation
tax deferred or taxable accounts
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universe of assets
traditionalUS equity ETF’sBond ETF’sSector ETF’s
non-traditionalForeign developed equity ETF’sForeign emerging market equity ETF’sInternational Bond ETF’sREIT ETF’sCommodity ETF’sDollar/ currency ETF’s
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The Strategy
Asset allocation that is strategic, balanced, and targeted
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the benefits of passive asset allocation are well known*
asset allocation reduces portfolio volatility without sacrificing
returns
ability to profit in any economic environment
*Gibson, Roger C., Asset Allocation: 4th Edition, (2008)
Darst, David H., The Art of Asset Allocation: Principles and Investment Strategies For Any Market, Second Edition, (2008)
Ferri, Richard A., All About Asset Allocation, (2005)
Bernstein, William, The Intelligent Asset Allocator: How To Build Your Portfolio To Maximize Returns and Minimize Risk , (2000)
Swensen, David, Unconventional Success, A Fundamental Approach To Personal Investment, (2005)
Dalio, Ray, “Engineering Targeted Returns and Risk”, (2005)
Merriman-Cohen, Jeff, “The Perfect Portfolio”, (2003)
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then came 2008
when most major assets became highly correlated
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A Better Way!!!
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Step 1: strategic asset allocation
tactical or strategic asset allocation directs funds toward asset
classes with the highest potential for appreciation and away
from asset classes with greater potential for loss
proprietary, quantitative models are utilized to generate buy
and sell signals
models utilize fundamental and technical inputs
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Step 2: risk management
risk management is achieved through a balanced
portfolio that it is constructed from diversified, non-
correlated assets
the diversified, non-correlated assets and money
management strategy will seek to mitigate risk without
decreasing returns
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Step 3: targeted returns
each investor has their own level of acceptable risk and their
own expectations for returns
through the selection of different assets and the use of a
money management strategy, the return/ risk level is targeted
for each investor
level of return correlates with level of risk
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Portfolio Examples
these are hypothetical portfolios based upon historical data
commissions , trading slippage, and taxes are not considered
for back testing purposes, portfolios may use index data
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Conservative Portfolio
Goal: earn return = to long term returns of SP500 with capital
preservation
Assets: SP500, Bonds, Utilities, Gold
Allocation: SP500(25%), Bonds (30%), Gold (20%), Utilities (25%)
Money Management: No rebalancing, go to cash if asset on sell signal
When in cash, money earns interest at commercial paper rate
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Conservative Portfolio
since November, 1991, this strategy had a CAGR of 8.09%
$100,000 becomes $453,208
the maximum drawdown (loss) was 8.34%
the strategy averaged 6 round trip trades per year
the strategy was invested 100% only 25% of the time
the strategy had only 1 or no investment position 33% of the time
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Conservative Portfolio : equity curve v. SP500
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Strategy
SP500
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Drawdown is the peak-to-trough decline (in
percentage terms) of an investment, and it is
measured from the time a retrenchment
begins to when a new high is
reached. Drawdown is a measure of risk.
Conservative Portfolio: drawdown
-9.00%
-8.00%
-7.00%
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
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Conservative Portfolio
consistent returns
capital preservation
low volatility
periods of high cash
minimal churning
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Broad Market Portfolio
Goal: earn return > SP500 with significantly reduced volatility
Assets: SP500 sector ETF’s, REITs, Foreign Developed, Emerging
Market, Treasury Bonds
Allocation: based upon # of sectors/ assets on buy signal
Money Management: rebalance weekly if new buy signals
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Broad Market Portfolio
since November, 2001, this strategy had a CAGR of 15.27%
$100,000 becomes $430,312
the maximum drawdown (loss) was 10.58%
the strategy averaged <50 round trip trades per year
the strategy had > 75% of its funds invested 56% of the time
the strategy was in 100% cash 26% of the time
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Broad Market Portfolio: equity curve v. SP500
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$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
00 01 02 03 04 05 06 07 08 09 10
-12.00%
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
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Broad Market Portfolio: drawdown
Broad Market Portfolio
broad exposure to domestic markets at the sector level
exposure to emerging markets and developed foreign markets
diversified
bond exposure in times of market duress
superior reward to risk
minimal churning
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Targeted Returns
With multiple assets available and with various money
management schemes, a portfolio can be designed to suit your
needs
Portfolios designed from conservative to aggressive
Portfolios designed to be long and short the markets
Portfolios designed to have high or low cash levels
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On the use of models and back testing to “predict” the
future:
past performance does not ensure future results
there is no assurance that ARL Advisers, LLC will achieve its investment objectives
however….
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you cannot understand the present if you don’t know what worked in the past
key to superior long-term returns is to take investment opportunities when the evidence suggests high return/risk tradeoffs on average, and to avoid situations when the evidence suggests low return/risk tradeoffs on average
back testing puts an emphasis on a disciplined strategy and ensures the conviction to execute the strategy
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ARL Advisers, LLC: the service
$50,000 minimum investment
fees based on assets under management
all funds held by 3rd party custodian
daily access to account via internet
monthly statements
quarterly reports
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Guy M. Lerner, MD
managing partner of ARL Advisers, LLC, a registered investment advisor, State of Kentucky (2010)
registered investment advisor representative (2010)
Series 65 license (2007)
founder TheTechnicalTake blog, 2004 to present
featured columnist with RealMoney.com and TheStreet.com, 2004 to 2006
routinely published in some of the most widely read financial publications
marquee speaker at financial seminars
for 20 years, has practiced as a pediatric anesthesiologist in some of the top universities and hospitals in the country
Bachelor of Arts in Literature, University of Pennsylvania, 1981
Doctor of Medicine, University of Pittsburgh School of Medicine, 1986
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ARL Advisers, LLC
asset allocation that is strategic, balanced, and targeted
portfolio diversification through innovative strategies
independent investment research
discipline and conviction
integrity
leads to…..
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Performance
competitive risk adjusted investment returns
ability to profit in any economic environment
reduced portfolio volatility
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Past performance is not an indication of future performance and there can
be no assurance that ARL Investment Advisers, LLC will meet its
investment objectives. The information contained in this presentation is
neither an offer to sell nor a solicitation of an offer to buy an interest in
ARL Advisers LLC. Any such offer or solicitation can be made only be
means of a confidential private offering memorandum and only in those
jurisdictions where permitted by law.
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THIS DOCUMENT IS INTENDED SOLEY FOR USE BY FINANCIAL ADVISORS AND THEIR CLIENTS OR BONA FIDE PROSPECTS WHO ARE ACCREDITED INVESTORS. THIS DOCUMENT MAY NOT BE REPRODUCED OR DISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON NOR MAY IT BE USED IN PUBLIC SEMINARS, NEWSLETTERS OR ADVERTISEMENTS.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. ALL DATA CONTAINED HEREIN HAS BEEN OBTAINED FROM RELIABLE SOURCES, HOWEVER ARL ADVISERS, LLC CANNOT BE REPONSIBLE FOR ERRORS AND OMISSIONS FROM SUCH SOURCES. THIS DOCUMENT IS NEITHER AN OFFER TO SELL NOR A SOLICITAION OF AN OFFER TO BUY UNITS OF LIMITED PARTNERSHIP INTERESTS IN THE ARL ADVISERS, LLC. AN OFFER OF SUCH INTEREST CAN BE MADE ONLY BY MEANS OF THE CONFIDENTIAL OFFERING MEMORANDUM.YOU AND YOUR FINANCIAL ADVISOR SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN ARL ADVISERS, LLC. YOU SHOULD BE AWARE OF THE RISKS IN THE FINANCIAL MARKETS AND OF INVESTING WITH ARL ADVISERS, LLC
THE CONFIDENTIAL OFFERING MEMORANDA OF THE FUNDS CONTAIN A DESCRIPTION OF THE PRINCIPAL RISK FACTORS, EACH EXPENSE TO BE CHARGED TO THE FUNDS AND A STATEMENT OF THE AMOUNT, AS A PERCENTAGE RETURN AND DOLLAR AMOUNT, NECESSARY TO BREAK-EVEN (THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT).
PROSPECTIVE INVESTORS WILL RECEIVE A DISCLOSURE DOCUMENT WHEN THEY ARE SOLICITED TO INVEST WITH ARL ADVISERS, LLC AND THAT CERTAIN RISK FACTORS BE HIGHLIGHTED. THEREFORE, YOU SHOULD ASK YOUR FINANCIAL ADVISOR OR THE GENERAL PARTNER FOR A COPY OF THE CONFIDENTIAL OFFERING MEMORANDUM AND STUDY IT CAREFULLY TO DETERMINE WHETHER SUCH AN INVSTMENT IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
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email:
phone:
502 552 0018
mailing address:
ARL Advisers, LLC
528 Barberry Lane
Louisville, KY 40206
business hours:
Monday – Friday, 8 a.m. to 5:00 p.m. EST
websites:
www.arladvisers.com
www.thetechnicaltake.com