Presented by: David Cox, CFA, CMT, FCSI, FMA, BMath Portfolio Manager October 26th, 2011 Cutten Club, Guelph, ON How To Stop Losing Money: In Bear Markets

2 Who Am I?  Holder of the Chartered Financial Analyst (CFA) designation  Holder of the Chartered Market Technician (CMT) designation  Bachelor of Mathematics – University of Waterloo  Conduct all of my own research (proprietary blend of fundamental + technical)  My family recently relocated to Guelph from B.C.

3 Bear Market: Traits  Bear Market: defined as a stock market that has declined >20% from its recent highs  80% of stocks typically follow broad market  Lasts longer and falls more than most investors expect  Rallies take place quickly and with little notice  Leading stocks often fall 70-80% after peaking

4 Typical Investor Behaviour  Unwillingness to admit that stocks/real estate/assets have peaked in value  Rationalize the ability to ignore market peaks since the focus is on the “long-term”  Question “long-term” objectives after assets show persistent decline and/or significant loss of value  Willingness to sell much too late in an established bear market

5 Understand the Trend  Are Moving Averages Rising?  Is Price > Key Moving Averages  UPTREND = Bottom Left to Top Right  AAPL - Apple  DOWNTREND = Top Left to Bottom Right  RIM – Research In Motion

6 S&P 500: In Pictures

7 Uptrend: In Pictures

8 Downtrend: In Pictures

9 What NOT To Do  Buy & Hold  Allow all your profits to disappear  Be tolerant of losing positions/funds/stocks  Make decisions based on the news/BNN/your neighbour  Be(come) attached to your favourite stock

10 Successful Investor  Takes PROFITS and REDUCES RISK as markets peak and/or lose momentum and/or are trending down  MANAGES LOSSES to avoid significant dollar loss from individual bad idea  Has a game plan in place BEFORE adverse conditions arrive  INCREASES risk when the market is RISING  Uses a DISCIPLINED process for investment decision-making  Able to keep emotions away from decision-making

11 A Few Rules  Cap losses on any one idea/position in your portfolio (i.e., never lose more than 8-10%)  Do not put all of your money in one market sector/industry (i.e., mining, financials, energy)  If the market is trending down -> SELL RISKY POSITIONS  Accept that dividends cannot be relied upon to offset potential price loss in a bear market  Hope is NOT an investment strategy  PRICE is more important than NEWS

12 Current Environment  Global stock BEAR market  Yields at EXTREMELY low levels  Little compensation for bond investors  Are bonds really “safe”?  Volatility is HIGH yet below ‘08/ ‘09 levels

13 Volatility: In Pictures

14 What Do I Do?  Manage the financial affairs for a select group of business owners and corporate executives  Provide comprehensive wealth planning  Offer discretionary money management  Provide access to institutional quality tools and risk management  Conduct all of my own, independent research  Access to short-term and intermediate-term opportunities

15 Questions & Answers

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