1. Passive Money Management By Dylan Guss Finance Club 4 10 11

2. Why bother? The Intelligent Asset Allocator by William J. Bernstein With minimal effort, you can take advantage of the market in the long run Risk and return Standard Deviation  A measure of fluctuation

3. Standard Deviation Standard Deviations (of annual returns) (6)  Domestic stocks (conservative), 10%- 14%  Domestic stocks (aggressive), 15%-25%  Emerging market stocks, 25%-35% Ex. A fund with an expected return of 15% and a Standard Deviation of 35% (8)  So, there is a statistically expected loss of 20% or worse every 6 years, a loss worse than 55% every 44 years, and a loss of 90% or worse every 740 years

4. Diversification By diversifying, you can lower the SD of your portfolio (or increase it) By country/region Sectors  ex. Financials, Commodities Asset Classes  ex. Small Cap (Value & Growth), Large Cap (Value & Growth), Corporate Bonds

5. Why passive management? Passive versus active management performance A portfolio of 25% U.S. Large cap, 25% U.S. Small cap, 25% Foreign stocks, 25% Bonds (short term) beat 75% of all actively managed funds in a 20 year period (roughly 1975-1995) (Preface ix) Little effort for a large, positive impact on your finances in the long run

6. Who are the major players? Charles Schwab Fidelity Vanguard E*Trade Scottrade

7. How to pick? Account minimums  Sometimes minimum is waived if you deposit consistently Costs  ex. Inactivity fee Products and features  ex. Bonds, Financial planning Reputation Accessibility of information online

8. Where to start? What is an index?  ex. S&P 500 An index fund? Why trade your own broker's funds?  Lower costs

9. ETFs....Why are they popular? Low expense ratios Passive and active varieties Trade like stocks Very particular exposure  Usually indexed Tax friendly