1. Going against the Grain The Harvesting Strategy Strategy by Timothy D. D’Angelo Investment Consultant

2. The Static Asset Allocation Strategy What you hear about from the media What you hear about from the media The holding of stocks and bonds that match your risk tolerance The holding of stocks and bonds that match your risk tolerance The need to regularly rebalance your holdings back to your original risk tolerance The need to regularly rebalance your holdings back to your original risk tolerance

3. The Harvesting Strategy How farmers manage their homesteads Plant - Tend - Harvest - Plan - Plant Plant - Tend - Harvest - Plan - Plant In the spring they plant their crops In the spring they plant their crops As the seasons move forward they tend to their crops As the seasons move forward they tend to their crops As fall gets closer they start to harvest portions As fall gets closer they start to harvest portions In the winter they plan on what crops to plant In the winter they plan on what crops to plant Where do they feel their best opportunities are going forward Where do they feel their best opportunities are going forward That’s where they plant That’s where they plant

4. Static Asset Allocation vs. Harvesting Strategy When put side by side how do they differ? The Debate : When you rebalance - do you in fact “Sell High to Buy Low”?

5. Static Asset Allocation value of funds 1 st of year

6. Static Asset Allocation fund values end of year one

7. Static Asset Allocation Rebalance Sell High - Buy Low Static Asset Allocation Rebalance Sell High - Buy Low

8. Static Asset Allocation value of funds 1 st of year

9. Static Asset Allocation fund values end of year one

10. Static Asset Allocation Rebalance “ Sell High - Buy Low” ? “Sell Higher - Buy High” ?

11. Static Asset Allocation value of funds 1 st of year

12. Static Asset Allocation fund values end of year one

13. Static Asset Allocation Rebalance “Sell High - Buy Low” ? “Sell Low - Buy Lower” ?

14. Harvesting Strategy value of funds 1 st of year

15. Harvesting Strategy The safety bucket’s primary focus is stability The safety bucket’s primary focus is stability Its secondary focus is to keep pace with inflation Its secondary focus is to keep pace with inflation We always want to try and maintain our purchasing power We always want to try and maintain our purchasing power All dividends and capital gains will be placed in the safety bucket All dividends and capital gains will be placed in the safety bucket This is why we start and finish with the graphs showing first of and end of year This is why we start and finish with the graphs showing first of and end of year Capital gains are most frequently paid in December Capital gains are most frequently paid in December 50% of all gains at end of year will be harvested 50% of all gains at end of year will be harvested The ‘harvest’ indicator is ‘up 30%’ The ‘harvest’ indicator is ‘up 30%’ The ‘plant’ indicator is ‘down 20%’ The ‘plant’ indicator is ‘down 20%’ Recognizing any ‘harvest’ or ‘plant’ opportunity resets an indicator Recognizing any ‘harvest’ or ‘plant’ opportunity resets an indicator Taking into consideration all of the above will allow us to proceed with the harvesting strategy most proficiently Taking into consideration all of the above will allow us to proceed with the harvesting strategy most proficiently

16. Harvesting Strategy value of funds 1 st of year

17. Harvesting Strategy fund values end of year one

18. Harvesting Strategy Harvest 50% of Gain from Fund A - Sell High Place Gain in Safety Bucket Plant 25% of Safety Bucket to Fund B - Buy Low (down 20%) * What the safety bucket offers us is the ability to redeploy Gain when / if suitable

19. Harvesting Strategy value of funds 1 st of year

20. Harvesting Strategy fund values end of year one

21. Harvesting Strategy Harvest 50% of Gain from Funds A & B - Sell High Place Gain in Safety Bucket * It’s OK for us to increase our safety bucket. This will provide us with opportunity and choice going forward.

22. Harvesting Strategy value of funds 1 st of year

23. Harvesting Strategy value of funds end of year one

24. Harvesting Strategy Fund A down 25% - Fund B down 20% Plant 50% of Safety Bucket - 25% to each Fund * Again we have created the ability to redeploy gain when/if it is suitable. This is never a requirement. It comes down to what is most appropriate at any given time for you to achieve your goals!!

25. Harvesting Strategy How farmers manage their homesteads: Plant - Tend - Harvest - Plan - Plant How prudent investors manage their portfolios : Buy - Monitor - Sell - Evaluate - Buy Harvesting Strategy How farmers manage their homesteads: Plant - Tend - Harvest - Plan - Plant How prudent investors manage their portfolios : Buy - Monitor - Sell - Evaluate - Buy