Download Cole E. Backstrom, CFP - Novation Credit Union

Cole E. Backstrom, CFP®
Financial Advisor
Cetera Advisor Networks
Located at Novation Credit Union
500 Imperial Avenue
Oakdale, MN 55128
651.735.9934 or 651.739.8080 | Fax: 651.739.0648
Securities and advisory services offered through Cetera Advisor Networks LLC, Member FINRA/SIPC.
Cetera Advisor Networks and Novation Credit Union are not affiliated companies.
NOT NCUA INSURED
NO CREDIT UNION GUARANTEE
MAY LOSE VALUE
NOT INSURED BY FEDERAL GOVERNMENT AGENCY
NOT A DEPOSIT
About the Speaker
Cole E. Backstrom, CFP®
Financial Advisor with Novation’s
in-house Investment Center Team
from Cetera Advisor Networks
Not FDIC Insured • May Lose Value • No Bank Guarantee
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Month XX, 201X (Arial 12pt.)
There Have Always Been Reasons Not to Invest
World Events
European
Crisis
Black Monday
Fall of Dow Jones
Industrial Average
Black Tuesday
Crash of New
York Stock
Exchange
10/19/87
Korean
Conflict
1950–53
10/29/29
Vietnam War
(U.S. Engagement)
1964–73
10/24/29
1962
Cuban
Missile
Crisis
Subprime
Lending
Crisis
2007
10/27/97
Iran
Hostage
Crisis
World War II
9/11/01
2009–
2011
1991
1979–81
1939–45
Black Thursday
Plunge of New York
Stock Exchange
Operation
Desert
Storm
Attacks on
the World
Trade Center
and Pentagon
1988
2008
Bloody Monday
Fall of Dow Jones
Industrial Average
Savings &
Loan
Crisis
Global
Credit
Meltdown
2003–2010
Operation
Iraqi
Freedom
4
Step Back and Take a Long-Term View
Growth of $10,000
European
Crisis
December 31, 1928–December 31, 2014
Bloody Monday
Fall of DJIA
$100,000,000
$10,000,000
$1,000,000
Black Thursday Plunge of New
York Stock Exchange
Cuban
Missile
Crisis
Black Tuesday Crash of New
York Stock Exchange
World War II
$10,000
Korean
Conflict
1928
1941
1953
Vietnam War U.S.
Engagement
1966
S&P 500 Index
$24,124,067
Iran Hostage Crisis
Black Monday Fall
of DJIA
$100,000
$1,000
Operation Desert Storm
Submarine
Lending
Crisis
Attacks on World Trade
Center and Pentagon
1978
1991
Global
Credit
Meltdown
Operation
Iraqi
Freedom
2003
2014
This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund.
Source: © 2015 Morningstar. Indexes are unmanaged, and one cannot invest directly in an index. All rights reserved. The information contained herein: (1) is proprietary to Morningstar
and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible
for any damages or losses arising from any use of this information.
Past performance does not guarantee future results.
5
6
“Bull markets are born on pessimism,
grow on skepticism, mature on
optimism and die on euphoria.”
— Sir John Templeton
Templeton Funds Founder
and Former Chairman
7
5 Reasons to Be an Equity Investor
in the Decade Ahead
5 Reasons to Be an Equity Investor
in the Decade Ahead
1.
History Favors a Return to the Mean
2.
The World Is Getting Smaller (and More Prosperous)
3.
Innovation Will Surprise Us...Again
4.
Quality Companies Are Not Short-Sighted
5.
Equities Help Protect Purchasing Power
9
History Favors a Return to the Mean
History Favors a Return to the Mean
Most Years Have Been Positive
Calendar Year Returns for the S&P 500 Index, 1926–2014
Total Return Ranges
50% to 60%
1933 1954
40% to 50%
1928 1935 1958
30% to 40%
1927 1936 1938 1945 1950 1955 1975 1980 1985 1989 1991 1995 1997 2013
20% to 30%
1942 1943 1951 1961 1963 1967 1976 1982 1983 1996 1998 1999 2003 2009
10% to 20%
1926 1944 1949 1952 1959 1964 1965 1968 1971 1972 1979 1986 1988 1993 2004 2006 2010 2012 2014
0% to 10%
1947 1948 1956 1960 1970 1978 1984 1987 1992 1994 2005 2007 2011
-10% to 0%
1929 1932 1934 1939 1940 1946 1953 1962 1969 1977 1981 1990 2000
-20% to -10% 1941 1957 1966 1973 2001
-30% to -20% 1930 1974 2002
-40% to -30% 1937 2008
73%
POSITIVE
YEARS
65
27%
NEGATIVE
YEARS
24
-50% to -40% 1931
This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund.
Source: © 2015 Morningstar. Indexes are unmanaged, and one cannot invest directly in an index.
Past performance does not guarantee future results.
11
History Favors a Return to the Mean
The Same Goes for Decades
10-Year Rolling Returns for the S&P 500 Index
Total Return Ranges
1935
2010
2011
2012
2013
2014
1936
1937
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1938
1939
2008
2009
This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund.
95%
POSITIVE
10-YEAR RETURNS
76
5%
NEGATIVE
10-YEAR RETURNS
4
Source: © 2015 Morningstar. Indexes are unmanaged, and one cannot invest directly in an index.
Past performance does not guarantee future results.
12
History Favors a Return to the Mean
The Six Worst 10-Year Rolling Periods
What Happened Next?
S&P 500 Index—Worst 10-Year Returns and Subsequent 10-Year Returns
This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund.
Source: © 2014 Morningstar. Indexes are unmanaged and one cannot invest directly in an index. For the 10-year periods ended 2010, 2011, 2012, 2013 and 2014, the S&P 500 Index
returned 1.41%, 2.92%, 7.10% , 7.42% and 7.67% respectively.
Past performance does not guarantee future results.
13
The World Is Getting Smaller
(and More Prosperous)
The World Is Getting Smaller and More Prosperous
This Helps U.S. Companies Too
Percentage of Revenues Generated Overseas
56%
85%
64%
64%
55%
60%
58%
99%
Sources: Data is as of company’s latest financial statements: December 31, 2013 (3M Co., AVON Products, Inc., Chevron Corp. and The Coca Cola Company), April 30, 2013
(H.J. Heinz Company), May 31, 2014 (Nike, Inc.), September 30, 2014 (Apple Inc. and Qualcomm Inc.). Foreign Revenue is based on Total Revenue – Domestic Revenue. Logos are
trademarks of their respective owners and are used for illustrative purposes and should not be construed as an endorsement or sponsorship of Franklin Templeton Investments.
15
The World Is Getting Smaller and More Prosperous
Is Global Core to Your Everyday Life?
U.S.
Foreign
Godiva Chocolatier
Hershey
Nestle
CITGO
Shell Oil
Valero
Budweiser
Miller Beer
Yuengling
Bridgestone Tires
Dunlop
Michelin
Callaway
Cleveland
TaylorMade
16
The World Is Getting Smaller and More Prosperous
Is Global Core to Your Everyday Life?
U.S.
Foreign
Godiva Chocolatier
Turkey
Hershey
United States
Nestle
Switzerland
X
CITGO
Venezuela
Shell Oil
Britain
X
X
Valero
United States
Budweiser
Belgium
Miller Beer
Britain
Yuengling
United States
Bridgestone Tires
Japan
Dunlop
United States
Michelin
France
Callaway
United States
Cleveland
Japan
TaylorMade
Germany
X
X
X
X
X
X
X
X
X
X
X
X
17
The World Is Getting Smaller and More Prosperous
The Global Opportunity
Potential for Increased Consumption
Solid bars show current consumption of
passenger cars, cell phones and the number
of internet users.
1.4 Billion
Population
Shaded bars show potential based on population.
314 Million
Population
92.7%
79.7% 77.9%
73.2%
72.0%
199 Million
Population
38.3%
124.3%
20.9% 45.0%
1.8%
UNITED STATES
Population
1.2 Billion
BRAZIL
10.1%
INDIA
5.8%
CHINA
Source: © 2013 World Bank (World Development Indicators), ITU (International Telecommunication Union). As of 2012, most recent data
available (2005–2012). Internet users are defined as having access to the world wide network.
18
Innovation Will Surprise Us…Again
Innovation Will Surprise Us…Again
“There is no reason why anyone would
want to have a computer in their home.”
— Ken Olsen
President, Chairman and Founder
Digital Equipment Corp., 1977
20
Innovation Will Surprise Us…Again
A Look Back…What’s Next?
The Beat Goes On
Music Units (Millions)
1,521
1,600
1,400
DIGITAL MUSIC
(2012)
995
CDS
PEAK/1999
1,200
1,000
534
800
530
VINYL RECORDS
PEAK/1977
CASSETTES
PEAK/1990
600
134
400
8-TRACKS
PEAK/1978
200
0
1973
1977
1981
1985
1989
1993
1997
2001
2005
2009
2013
Source: Recording Industry Association of America, as of December, 2013. (Most recent data available.) Digital includes Downloaded Singles, Downloaded Albums, Kiosks and
Downloaded Music Videos. Total vinyl records, cassettes and CDs includes singles and albums.
21
Innovation Will Surprise Us…Again
The World Is Changing
Gene Therapy &
Regenerative Medicine
Nanotechnology
Green Energy
Robotics
Cloud Computing
22
Quality Companies Are Not Short-Sighted
Quality Companies Are Not Short-Sighted
Leaders Can Emerge During Tough Times
All of these companies were founded during recessions
Average Recession Length: 12 MONTHS
Source: Company websites. Recessions as identified by National Bureau of Economic Research (NBER). Logos are trademarks of their respective owners and are used for illustrative
purposes and should not be construed as an endorsement or sponsorship of Franklin Templeton Investments.
24
Quality Companies Are Not Short-Sighted
Dividends Make a Difference!
Dow Jones Industrial Average
Growth of a $10,000 Investment
This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund.
Dividends can be increased, decreased or totally eliminated without notice.
Source: Dow Jones & Company. Total return figures assume reinvestment of dividends. Indexes are unmanaged and one cannot invest directly in an index.
Past performance does not guarantee future results.
25
Quality Companies Are Not Short-Sighted
Dividends and Performance
Average Annual Total Returns of S&P 500 Stocks by Dividend Policy
30-Year Period Ended December 31, 2014
10.73%
7.40%
2.68%
0.40%
Dividend
Strength has
Historically
Tied to
STRONG
PERFORMANCE
-4.63%
Top Decile of
Dividend Payers by
Dividend Yield
Dividend Cutters & Non-Dividend-Paying Dividend Payers with Dividend Growers &
Eliminators
Stocks
No Change
Initiators
Past performance does not guarantee future results.
1. Source: © 2015 Ned Davis Research Group, Inc. Indexes are unmanaged and one cannot invest directly in an index. All stocks were categorized by the following methodology for the
12-month period ended 12/31/14: Top Decile of Dividend Payers by Dividend Yield represents the top 10% of dividend-paying stocks in the S&P 500 (ranked by dividend yield); Dividend
Cutters and Eliminators represents stocks in the S&P 500 that have lowered or eliminated their dividend; Non-Dividend-Paying Stocks represents non-dividend-paying stocks of the
S&P 500; Dividend Payers With No Change represents all dividend-paying stocks of the S&P 500 that maintained their existing dividend rate; and Dividend Growers and Initiators
represents all dividend-paying stocks of the S&P 500 that raised their existing dividend or initiated a new dividend.
26
Quality Companies Are Not Short-Sighted
Dividend Payers Risk/Return
30-Year Period Ended December 31, 2014
Average Annual
Total Return
12%
Dividend-Paying
Stocks
8%
Non-Dividend-Paying
Stocks
4%
0%
12%
16%
20%
24%
28%
Risk
Past performance does not guarantee future results.
1. Source: © 2015 Ned Davis Research Group, Inc. The index is unmanaged, and one cannot invest directly in an index. Indexes represent the dividend-and non-dividend-paying stocks
of the S&P 500 Index Geometric Equal-Weighted Total Return Index, which is calculated using monthly equal-weighted geometric averages of the total returns of all dividend-paying
stocks and non-dividend-paying stocks. Risk is measured by annualized standard deviation.
27
Equities Help Protect Purchasing Power
Equities Help Protect Purchasing Power
Inflation Shrinks Your Buying Power1
U.S. Stamp1,2
Gallon of Milk1,3
New Car1,4
College Tuition1,5
1994
$0.29
$2.89
$17,803
$18,814
2014
$0.49
$3.82
$25,279
$31,231
2034 (E)
$0.77
$5.99
$39,652
$48,987
1. Source: U.S. Bureau of Labor Statistics
2. Source: U.S. Postal Regulatory Commission. U.S. stamp prices are based on the year-end rate for the first ounce of a first-class letter.
3. Source: U.S. Bureau of Labor Statistics. Price per gallon of milk prior to 1995 is based on year-end price per half-gallon. Subsequent years' price per gallon of milk is based on yearend price per gallon.
4. Source: U.S. Department of Commerce. New car historical prices are based on average prices per year, due to seasonality.
5. Source: The College Board. Tuition prices are based on full-time students over a 9-month academic year for private, not-for-profit, 4-year universities. Prices are enrollment-weighted.
29
Equities Help Protect Purchasing Power
After Inflation…
December 31,1977–December 31, 2014
$18
$1 invested was worth:
$16
STOCKS
$16.74
$14
$12
60% STOCKS
40% BONDS
$13.21
BONDS
$8
$6.43
GOLD
$1.93
$6
CASH EQUW.
$1.76
$4
U.S. DOLLAR
$0.26
$10
$2
$0
1977
1982
1987
1991
1996
2000
2005
2010
2014
This chart is for illustrative purposes only and does not reflect the performance of any Franklin Templeton fund.
Source: © 2015 Morningstar. Stocks are represented by S&P 500 Index; Bonds are represented by Ibbotson Associates SBBI Long Term Corporate Index; Cash Equivalents are
represented by the P&R 90-Day U.S. Treasury Index; Gold is represented by the S&P GSCI Gold Spot Index; U.S. Dollar is represented by the growth of the nominal dollar beginning in
1978, taking inflation into account. Inflation is calculated using the CPI. Indexes are unmanaged and one cannot invest directly in an index.
Past performance does not guarantee future results.
30
5 Reasons to Be an Equity Investor
in the Decade Ahead
1.
History Favors a Return to the Mean
2.
The World Is Getting Smaller (and More Prosperous)
3.
Innovation Will Surprise Us...Again
4.
Quality Companies Are Not Short-Sighted
5.
Equities Help Protect Purchasing Power
31
What’s Your Vision of 2020?
The Importance of Working with Your Advisor
•
Keeps emotions out of investing
•
Builds a long-term investment strategy
that is appropriate for your risk tolerance
and goals
•
Ensures you stay on course with regular
reviews and adjustments to your
investment strategy
33
What Are the Risks?
All investments involve risks, including possible loss of principal. Stock prices
fluctuate, sometimes rapidly and dramatically, due to factors affecting individual
companies, particular industries or sectors, or general market conditions.
Investments in fast-growing industries like the technology and telecommunications
sectors (which have historically been volatile) could result in increased price
fluctuation, especially over the short term.
Special risks are associated with foreign investing, including currency fluctuations,
economic instability and political developments.
Investments in developing markets involve heightened risks related to the same
factors, in addition to those associated with these markets’ smaller size and lesser
liquidity.
These and other risk considerations are discussed in a fund prospectus.
34
Franklin Templeton Distributors, Inc.
One Franklin Parkway
San Mateo, California 94403-1906
(800) DIAL BEN®/342-5236
franklintempleton.com
Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and
other information, talk to your financial advisor, call us at (800) DIAL BEN/342-5236 or visit franklintempleton.com. Please carefully read a prospectus before you invest or send money.
© 2015 Franklin Templeton Investments. All rights reserved.
2020 PPT 02/15
Questions/Comments
Thank You!