1. MARKET CORRECTIONS UNDERSTANDING [ADVISOR NAME]
Hi there my name is [Advisor Name] and I’m an investment adviser with [Firm Name]. Today I’m here to provide some context to market downturns as well as hopefully provide some financial education about the history of market corrections in general. We know that markets correct, the key is how we as investors ride out the uncertainty and react to the news. Our goal today with this presentation is to provide some easy to understand financial education that can help you make smarter decisions with your money and keep you calm when times seem scary. You should have received a handout prior to this webinar; this webinar is designed to support what you have received as well as provide you with additional insights.
Thank you again for watching. I appreciate the opportunity to be with you today and share this powerful presentation we call “understanding market corrections”
[ADVISOR NAME]

2. The information and opinions contained herein are for general information only. It shall not constitute an offer to sell or solicit any offer to buy a security or investment. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. This information and these opinions are subject to change without notice. Any type of investing involves risk, including the loss of principal, and there are no guarantees. AE Wealth Management, LLC and Sterling Capital Management, LLC do not assume liability for any loss which may result from the reliance by any person upon any such information or opinions.
Read slide AW

3. WHAT IS A MARKET CORRECTION?
You mean technically?
Pull back = 5% - 9%
Correction = 10% - 19%
Bear Market = 20% or more
So what is a market correction. You mean technically? I chuckle a little as I say that because most of us feel a market that goes down a few percentage in a day is correction, but technically its not. Technically a market decline of 5 to 9% is a pullback. To be a “correction” it’s a market pulling back from its high 10 to 19%. And for a market to called the dreaded “Bear Market” it’s a pullback from a recent high of 20%. How often does this happen? Good question lets go take a look.

4. LET’S PUT IT INTO CONTEXT…
Looking at history:
125 market corrections from 1900 – 2017
THAT’S APPROXIMATELY ONE CORRECTION PER YEAR!
32 bear markets (aka: a drop of 20% or more)
THAT’S ONE APPROXIMATELY EVERY 3.5 YEARS!
To put market corrections into context these are surprisingly normal. Much like the seasons changing temperature on a regular basis the markets move up and down regularly. In fact from 1900 to 2017 there have been 125 market corrections. That’s one per year! That have been 32 Bear Markets with a drop of 20% or more. That’s one every 3.5 years.

5. And you can also see the red section where the markets have gone down and been Bear Markets. Trust me no one enjoyed them, including you if you lived through them. The most recent bear market was 2007 to Chances are you remember that well. And then we had a huge recovery.
Source: data used to create chart taken from Morningstar Direct as of 12/31/16. Returns based on the S&P 500 Index.

6. WHAT TRIGGERS A
MARKET CORRECTION?

7. WHAT TRIGGERS A MARKET CORRECTION?
Profit selling
Corporate earnings
Technical analysis
Fear
Black Swan event
That’s great [Advisor Name], but why does the market go down? The answer is it depends. It could be profit selling, corporate earnings (typically missed), technical analysis (where people start to think the market looks expensive), fear (you name it - there’s always something) and Black Swan Events (like 9-11, that come out of no where). It happens. Regularly. It’s normal.

8. WHAT DOES A MARKET CORRECTION MEAN TO MY INVESTMENTS?
It’s normal
The first goal is to keep calm
Don’t panic
Remember: buy low, sell high IS NOT buy high, sell low
Remember: long term means years, not days
And always…this too shall pass
So what does this mean to me? Well it depends on how you react to it. Our first recommendation is to stay calm. Call us to discuss your concerns. We can go through what you own and why you own it. Review this presentation and read the handouts that came with it. Don’t panic. And don’t try to time the market by selling now so you can buy later. It most likely won’t work. Remember that investing is a long term strategy and then finally this too shall pass! It always does. Just consider the last bear market. It wasn’t that long ago?

9. LET’S TAKE A LOOK AT THIS BULL MARKET
THE PAST EIGHT YEARS!
The bottom of the market was February 9th Most people were fearful that the economy would NEVER recover. The news screamed negative and people were fearful that this time “it was different”, this time the markets would stay down forever, just “like Japan” became the growing worrying.
And then guess what happened? It passed. The market went on a bull market streak that many did not expect or see coming. In 2009 an investor with $100,000 invested in the S&P 500 would have seen their money grow to $358,764. Remarkable rally to say the least. Are there lessons to remember based on these last few charts? Most definitely. The first lesson is that long term the stock markets work. This chart is the good news, still this has been a truly hated bull market. Many investors have been worried the whole time “when would the next correction come”.
Maybe you’re worried.
258.76%
Source: Morningstar Direct
Market Value

10. SINCE THE ELECTION
On a cumulative basis, the S&P 500 is +27.9% from 11/09/16 – 12/31/17 (beginning the day after the election
Beginning on Inauguration Day (Jan. 20, 2017) through 12/31/17, the S&P 500 returned %
While many people expected the markets to decline significantly if Trump were elected, the markets once again proved you can’t “time the market”.
The exact opposite of what was expected happened. The markets in 2017 had an unbelievable year with some of the lowest volatility in recorded history.
The DJIA hit 71 new highs in  

11. OK….I GET IT BUT I’M STILL WORRIED
I get it…we’ve been up for seven years and it seems like now is the time to be worried (and you can insert any reason you want)

12. IF YOU ARE…YOU’RE NORMAL
“Wow, am I smart.”
“How could I have been so wrong?”
“Temporary set back. I’m a long term investor”
Optimism
Excitement
Thrill
Euphoria
Hope
Relief
Anxiety
Denial
Fear
Desperation
Panic
Capitulation
Despondency
Depression
Again worrying is normal. If you’re worried here’s a chart that explains that worry. They literally have a term now for this called the Investor Psychology Cycle. Let’s look at this together.
Source: Thomas Reuters
A visual emotional depiction of a hypothetical investment in the S&P 500 Index

13. BEAR MARKETS HAPPEN AND
THEN THEY RECOVER
Source: S&P
Investor psychology has a lot to do with markets movement up and down. But remember bear markets happen and then they recover. This great chart came from the Wall Street Journal
Source:

14. THE BEAR ULTIMATELY RETREATS
Bear markets end. The bear ultimately goes back in his cave.

15. BEAR MARKETS RECOVER FAST
BEAR MARKET BOUNCE
Peak
Trough
Duration (months)
S&P 500® Decline
S&P 500® Gain
(12 mos. later)
2/2/1953
9/14/1953 7
-14%
38%
7/15/1957
10/22/1957 3
-21%
31%
12/12/1961
6/26/1962 6
-28%
33%
2/9/1966
10/7/1966 8
-22%
11/29/1968
5/26/1970 18
-36%
44%
1/11/1973
10/3/1974 21
-48%
6/30/1975
9/16/1975
28%
12/31/1976
3/6/1978 15
-19%
13%
9/11/1978
11/14/1978 2
12%
2/13/1980
3/27/1980 1
-17%
37%
11/28/1980
8/12/1982
-27%
58%
10/10/1983
7/24/1984 9
30%
8/25/1987
12/4/1987 4
-34%
21%
7/16/1990
10/11/1990
-20%
29%
7/17/1990
8/31/1998
3/24/2000
10/9/2002 31
-49%
34%
10/9/2007
3/6/2009 17
-57%
77%
4/29/2011
10/3/2011 5
-18.64%
35%
MEDIAN
9.72
-26.75%
34.9%
Again, because repetition can help. Look closely at this chart back to 1946 most years the market goes up and when it goes down it recovers.
Source: Envestnet | PMC, Standard & Poor’s

16. OK GREAT, BUT… I still want to consider moving cash
Can I wait this out…
And buy when the markets go up?
We know you hear this a lot but please don’t act out of haste. Trying to sell high and buy low usually leads to selling low and buying high.

17. WE CALL THIS “INVESTOR DYSLEXIA”
This great chart from Behavior Gap tells the story we always share with our clients. Don’t buy high and sell low. We believe you buy, manage and hold. Why? Because timing the market does not work.
Source:

18. TIMING THE MARKET DOESN‘T WORK
Really, it doesn’t…we’re not just saying this
You have to be RIGHT TWICE
Sell right and buy right
It rarely works
Timing the market does not work. Trust me. I’ve been teaching this and doing this for real life clients now for over twenty years and it just doesn’t work. People who panicked and sold in 2009 completely missed the up turn in the market. They are still waiting to get back in the market or worse they got in now at a high and they are getting ready to sell now with a downturn. Don’t let this be you. Learn from the research. Let’s take a look at this next chart.

19. TIME IN THE MARKET vs. TIMING THE MARKET
12.5%
7.2%
From 1980 through 2015 the S&P 500 returned 12.5%. That’s amazing. What if an investor missed 20 of the best days in the market. They would have earned 7.2%. Missed the top 30 days 5.3%. Missed the top 40 days 3.7%. Missed the top 50 days 2.2%. The point here is you could simply be really unlucky and get out of the market right before it heads back up and miss the bulk of the markets return. The best approach is to invest long term and not try to time the market. I always say its time in the market that matters not timing the market.
3.7%
2.2%
Full Period
Less the 20 Biggest Up Days
Less the 40 Biggest Up Days
Less the 50 Biggest Up Days
Source: Morningstar Direct

20. “IT’S TIME IN THE MARKET, NOT TIMING THE MARKET, THAT WORKS
“IT’S TIME IN THE MARKET, NOT TIMING THE MARKET, THAT WORKS.”--David Bach
It’s always time in the markets that work not timing the market.

21. LONG TERM IN THE MARKETS WORK
Source: Ibbotson Associates, Inc. 2016
And that’s because history is on your side. Over time the markets go higher. And while we can’t promise it, we can sure learn a lot of history.
Past performance does not guarantee future results. This chart is for illustrative and educational purposes only and does not represent the performance of any Sterling Capital product or strategy. Stock investments are not guaranteed, include the possible loss of principal and are more volatile than Treasury bills and government bonds. Government bonds and T-bills are guaranteed by the U.S. government and offer a fixed rate of return an principal value if held to maturity. The securities held will not completely match those in an index. Securities in an index may change from time to time. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses or sales charges associated with mutual fund investing. Standard Deviation is a statistical measurement showing how widely the returns varied over a certain period of time. Source: Ibbotson Associates, Inc.,  
Investment advisory services are available through Sterling Capital Management LLC, a separate subsidiary of BB&T Corporation. Sterling Capital Management LLC manages customized investment portfolios, provides asset allocation analysis and offers other investment-related services to affluent individuals and businesses. Securities and other investments held in investment management or investment advisory accounts at Sterling Capital Management LLC are not deposits or other obligations of BB&T Corporation, Branch Banking and Trust Company or any affiliate, are not guaranteed by Branch Banking and Trust Company or any other bank, are not insured by the FDIC or any other federal government agency, and are subject to investment risk, including possible loss of principal invested.

22. THE LONGER YOU HOLD THE BETTER YOUR CHANCES…
…because holding investments reduces volatility
INVESTMENT HORIZON
3/31/1962 to 6/30/2017
12.15%
10.92%
10.89%
10.88%
10.96%
Source: Morningstar Direct
And remember you have control over how you react. We know that the longer you invest the better your returns can be. This chart shows how the more years you hold an investment the volatility gets reduced. The longer you stay the course the better you can do.

23. THE GOOD NEWS: Most years the markets go up!
Source: Envestnet PMC (PMC)
And again, remember years the markets go up. The up years since 1937 are 77% of the time. That’ basically three out of four years.
UP YEARS | 62 | 77%
DOWN YEARS | 19 | 23%
This information is for illustrative purposes only and not indicative of any investment, and is not intended as an offer orsolicitation for the purchase or sale of any security or other financial instrument. It is based upon information that Envestnet | PMC (PMC) considers to be reliable but we do not warrant its accuracy or completeness. Indexes are provided for context only; individuals cannot purchase or invest directly in an index. Neither PMC nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance does not guarantee future results.

24. MAYBE WE SHOULD SWITCH INVESTMENT STRATEGIES?
Okay that’s all great [Advisor Name], but I just read that investment X is now where I should put my money? What do you think about switching investments? Lets take a look at my next favorite chart. It’s a great example of how to drive yourself crazy.
MAYBE WE SHOULD SWITCH INVESTMENT STRATEGIES?

25. MAYBE WE SHOULD BUY INVESTMENTS…
Annual Returns for Key Indices – – Ranked in order of performance (Best to Worst)
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Large Cap Growth 38.71%
Mid Cap Growth 51.29%
Commodities
31.84%
Small Cap Value 14.02%
25.91%
Small Cap Growth 48.54%
Real
Estate
33.16%
21.36%
35.97%
16.23%
Inter.
Term Bond 5.24%
High
Yield 58.21%
Small Cap Growth 29.09%
9.24%
Mid Cap Value 18.51%
Small Cap Growth 43.30%
31.78%
Large Cap Growth 5.67%
Small Cap Value 31.74%
Large Cap Growth
30.21%
Foreign Stocks 20.00%
Small Cap Growth 43.09%
31.04%
12.35%
Term Bond 10.26%
Small Cap Value 46.03%
Mid Cap Value 23.71%
13.82%
Foreign Stocks 26.34%
Large Cap Growth 11.81%
Short
Term Bond 4.97%
Mid Cap Growth 46.29%
28.60%
Term Bond 7.84%
Small Cap Value 18.05%
Mid Cap Growth 35.74%
Mid Cap Value 14.75%
4.23%
Mid Cap Value
20.00%
Mid Cap Growth
25.27%
Mid Cap Growth 17.86%
Large Cap Growth 33.16%
Small Cap Value 22.83%
Term Bond 8.78%
Term Bond 6.28%
Mid Cap Growth 42.71%
Small Cap Value 22.25%
Foreign Stocks 13.54%
Small Cap Value 23.48%
Mid Cap Growth 11.43%
Yield
-26.16%
Large Cap Growth 37.21%
Mid Cap Growth 26.38%
4.98%
17.59%
Small Cap Value 34.52%
Large Cap Value 13.45%
Term Bond 0.65%
Large Cap Value
17.34%
Foreign Stocks
25.03%
Large Cap Value 15.63%
Foreign Stocks 26.96%
Mid Cap Value 19.18%
Term Bond 8.44%
3.58%
Foreign Stocks 38.59%
Foreign Stocks 20.25%
Mid Cap Value 12.65%
Large Cap Value 22.25%
Foreign Stocks 11.17%
Small Cap Value
-28.92%
Small Cap Growth 34.47%
Mid Cap Value 24.75%
Large Cap Growth 2.64%
Large Cap Value 17.51%
Large Cap Growth 33.48%
Large Cap Growth 13.05%
Term Bond 0.55%
17.13%
Small Cap Growth
22.17%
Term Bond 8.69%
24.35%
Term Bond 11.63%
5.28%
-1.41%
Mid Cap Value 38.07%
Large Cap Value 16.49%
Mid Cap Growth 12.10%
Mid Cap Value 20.22%
Small Cap Growth 7.05%
Diversified Portfolio
-29.97%
Mid Cap Value 34.21%
Small Cap Value 24.50%
Term Bond 1.59%
Foreign Stocks 17.32%
Mid Cap Value 33.46%
Mid Cap Growth 11.90%
-0.20%
11.77%
13.66%
Term Bond 6.98%
Diversified Portfolio 15.56%
Term Bond 8.06%
2.33%
-7.79%
36.18%
Mid Cap Growth 15.48%
Diversified Portfolio 8.47%
Diversified Portfolio 15.32%
Term Bond 6.97%
-35.65%
Foreign Stocks 31.78%
Diversified Portfolio 17.88%
Large Cap Value 0.39%
Yield 15.81%
Large Cap Value 32.53%
Diversified Portfolio 6.84%
-0.81%
11.32%
13.34%
Diversified Portfolio 5.46%
7.35%
Large Cap Value 7.01%
-3.76%
-9.64%
Diversified Portfolio 30.81%
Diversified Portfolio 14.82%
Large Cap
Value
7.05%
Small Cap
Growth
13.35%
Term Bond 6.83%
-36.85%
16.83%
-0.85%
Mid Cap Growth 15.81%
Foreign Stocks 22.78%
Term Bond 5.97%
-1.38%
12.94%
Mid Cap Value 5.08%
Term Bond 3.15%
4.58%
-5.59%
-11.43%
Large Cap Value 30.03%
Small Cap Growth 14.31%
Large Cap Growth 5.26%
11.85%
Diversified Portfolio 3.70%
-38.44%
Diversified Portfolio 28.31%
Large Cap Growth 16.71%
Large Cap Growth 15.26%
Diversified Portfolio 19.52%
Small Cap Growth 5.60%
-3.04%
7.33%
7.84%
1.87%
2.39%
-5.86%
-9.23%
-15.52%
Large Cap Growth 29.75%
11.13%
4.71%
Mid Cap Growth 10.66%
Small Cap Value 20.58%
Large Cap Value 15.51%
-1.65%
Small Cap Growth 14.59%
7.44%
Small Cap Value 4.22%
-3.83%
7.24%
7.50%
Small Cap Growth 1.23%
-0.11%
-11.75%
-19.51%
-15.94%
28.97%
9.15%
Small Cap Growth 4.15%
Large Cap Growth 9.07%
-0.17%
-38.54%
Large Cap Value 19.69%
15.12%
-2.91%
Diversified Portfolio 12.90%
1.86%
2.45%
-4.47%
Large Cap Growth 7.08%
4.18%
-6.45%
Term Bond
-0.82%
-14.17%
-20.15%
-27.41%
23.93%
Large Cap Growth 6.30%
2.74%
Term Bond 4.33%
-1.42%
-39.20%
18.91%
Foreign Stocks 7.75%
-5.50%
Term Bond 4.21%
Term Bond 0.64%
Term Bond 0.77%
-4.78%
Term Bond 2.65%
3.54%
-17.01%
-1.49%
-22.42%
-20.42%
-27.88%
Term Bond 4.10%
Term Bond 4.34%
Term Bond 2.43%
Term Bond 4.25%
-9.78%
-43.38%
Term Bond 5.93%
Term Bond 6.54%
-12.14%
Term Bond 1.26%
-2.02%
-4.90%
-7.47%
Term Bond 1.28%
1.70%
-27.03%
-2.58%
-22.43%
-21.44%
-30.26%
Term Bond 2.81%
Term Bond 1.30%
Term Bond 1.77%
2.07%
-17.55%
-44.32%
Term Bond 3.82%
Term Bond 2.80%
-13.32%
-1.06%
-9.52%
-24.66%
1.00%
0.84%
20 Year Annualized Return  
Mid Cap
8.95%
8.93%
Small Cap Value 8.21%
Diversified
Portfolio
7.27%
7.13%
6.71%
6.38%
Small Cap Growth 5.66%
5.47%
Term Bond 4.80%
Foreign
Stocks
4.08%
3.37%
0.68%
Calculations provided by Sterling Capital management, using information from Morningstar Direct and Thomson Reuters InvestmentView.
DON’T CHASE RETURNS….
This is what we affectionately called the “Investor Skittle Chart”.
First of all, if you look at this chart, this is one of my favorite charts, if you're super into investing and super into looking at asset classes and wanting to know what every different asset class did across the world, you would love this chart.
This shows you small cap stocks, mid cap stocks, large cap stocks, growth, value, real estate, foreign stocks, commodities. I realize not everybody's as into this as I am, but the first thing I would have you do, if you look at this slide and notice, do you see a theme there? If you were just going to look at this based on colors, do you see a theme? You got to go across the top there and it comes with a theme. Do you see any specific color coming up consistently that you'd want to own? What do you see? Everybody see a theme? No, of course you don't see a theme because there isn't one, right? Across the board at the top there the same color is not coming up every time.
Here's what happens in the real world, let's just take grey. Let's say you like GREY, okay. It is 1998, I personally have no idea why you would like grey but you do, and now grey is doing terrible. [Speaker let them laugh there]
It’s the worst color in the world. Everyone is saying they hate grey. Money Magazine hates grey. But you love grey. Then grey has another bad year. Now what? You hate grey. So you sell grey. Get me out of Grey! Then boom what happens?
You sell grey and now grey is going up. Seriously? You think that’s fine it can’t continue. [Then you CLICK the slide to show the progression.] Boom Grey is up to #1 asset class. Seriously?! Arghhhhh.
Now Money Magazine, and CNBC and Jim Crammer they all love GREY. You used to like GREY.
Now you do what? Of course you buy GREY.
And then what happens [click] Grey goes down. Argh seriously? How does this happen.
How does GREY know you bought this. You sell. [Click.]
What again? Its back to number one.
You buy it. It drops…[and you basically at this point click thru and they get the point]
Now I know none of you have ever done this right…laugh. Your friends have.
This is what happens. People chase returns. It's like rear view mirror investing, and often the moment they go to chase what was just hot, then the next year it's not hot. We don't believe in chasing returns. We don't try to buy what we call the hot dot. We actually make a goal to completely diversify our clients' portfolios. What we want is to really have consistency and have a boring diversified portfolio with all these asset classes so we're not trying to guess each year which one's going to be what we call the hot dot. The reason we don't want to choose the hot dot is because it doesn't work!
What works….[you click through and you show the diversification dot.]
See that black dot. That’s a portfolio that is completely diversified not chasing the hot dot.
What do you notice? It’s way up or away down. Right? Its got less volatility.
[Click again.] This borrowing diversified portfolio over the twenty years of this data had an average return of 7.27%.
Again this is an example. And the real lesson here. It’s not the highest return.
[Laugh because someone will raise their hand]. See…he wants Orange. What’s going to happen guys? The guy’s orange, its going where next year.
We don’t chase performance. Boring guys. Boring diversification is what you want. Professionally done.
Past performance does not guarantee future results. This chart is for illustrative and educational purposes only and represents the performance of the key indices. It is not possible to invest in an index. Please see the attached disclosure page for a description of the representatives indices.

26. 5 THINGS TO DO DURING A MARKET CORRECTION
Be patient
Don’t overthink it
Fight your instincts
Stay diversified
Work with your financial advisor to reassess your situation
Read slide

27. WE WOULD RATHER YOU LET US WORRY FOR YOU.
IT’S NORMAL TO WORRY…
WE WOULD RATHER YOU LET US WORRY FOR YOU.
Let’s start by talking.
Don’t worry. Let’s talk. Call us that’s what we are here for. This is the exact reason you hired us.

28. CALL US – WE’RE HERE FOR YOU
We’re here to listen. We’re here to help. We’re here to show you opportunities that bear markets create. We’re here to show you how to reduce your risk. We’re here – don’t worry, call us.
Because again this process of financial planning is about your goals and your dreams. If you have worries that you may be off track because of recent event lets take a look. Let’s review your situation. Let’s talk about what if anything is keeping you up at night. Let’s look and see if there is anything new you should be doing. It’s possible there are some great opportunities for you. We can talk to you about how to reduce your risk. And remember we’re here. That’s why you hired us. We’ve seen these markets before, together we can get through them. So give us call. We will be happy to listen and to help you!

29. AND REMEMBER…THIS IS HOW NOT TO DO IT
And remember this chart is not how to deal with a scary market. Okay? Promise. Now go have a great day. I appreciate the opportunity to be with you today and hope this presentation has helped.
Source:

30. THANK YOU!