Welcome John R Ruocco Asset Management Associates South

Welcome John R Ruocco Asset Management Associates South Windsor, CT

Welcome to my world!

Situation • Attorney – Trust Account – Client

Variable Annuity • • Steep redemption fee (commission) M&E of over 2% per year 1% advisory fee – deducted from account Automatic trading system – multiple trades monthly • . 75% advisory fee billed in addition to above. • Market in uptrend – account losing money (years)

Common Element Among Clients • We share a general distrust of the investment industry.

Evolution • • • A shares B shares C shares Fee based “boilerplate plans” sell the abc’s Wrap and managed accounts (many use etfs) • Very little has changed!

History • Crash of October 1987 • Meltdown of Japan – Highest Mstar Rating in 1990 - high exposure to Japan • Junk Bond Meltdown – Milken - DBL • Savings and loan scandal • Real Estate Partnership Meltdown early 90’s – Colonial Realty ( S&L Crisis) • Oil – T. Boone Pickens – – Tech – Dotcom Bust (ditto – morningstar) 9 -11 Financial Meltdown of 2008, MM Freeze Bernie Madoff and Mini Crash May of 2010

Investment Background • General Sales Background – Learned rapidly, sales driven business. – Fee structure seemed very high – Investment advice - secondary

My objective • Simple – straight forward way for average person to invest a clients money. • --- and get paid a reasonable fee to do it.

Learned from History – 80’s Nobody Knows Anything!

Early Years (1980’s) • Created portfolios using “No Load” funds for individual clients. – High liquidity – Low fees – Good performance – Good diversification ( minimal trading) – Fees about 1% or less – Way ahead of the crowd Note: Fidelity was the first to create multiple “sector funds”.

ETF’s • Natural Transition Extension for: – Sector Exposure – Liquidity – Transparency – Easy to isolate risk (offset / balance risk) – Easy to create portfolios for clients combining funds and ETF’s

I- Shares and others • Opens the door to many markets and sectors. • Bonds • Country specific, regional, Int’l

ETF - Ideal for Client Profile • Business owners, professionals with 200 k to 2 million or so in investable assets. Growing. • Small pensions, SEP’s, DB plans, IRA’s Trust accounts.

Common Sense • People lose tons of money because they deviate from common sense • They look for high returns – viaticals

Stick With Basics • Mainstream Investments • Highly Liquid • Transparent: Easy to understand • Solid Management (Reputable Management) • As close to Vanilla as possible

Avoid Losses • • What is the Risk? How can we lose money? How much can we lose? Can we offset the loss with something else?

ETF Advantages • • Transparent Low cost of holding – low transaction fee via discount broker. Very easy to purchase Easy to isolate risk – Since Set of Homogeneous stocks • Very Liquid • • Controls via stop and limits etc Ideal as building blocks for a portfolio

Favorites • Select sector “SPYDERS” • Bond ETF’s – Junk, Treasury – long/short duration • International – Broad – and country specific, Emerging Markets – Metals: Gold, silver, Commodities oil – Usually use large more liquid etfs…. with mainstream underlying securities.

Use ETF’s as Tools • • • Build portfolios Easily adjust them Penetrate many markets Shorts, bonds, futures, commodities Low cost, highly liquid portoflios.