Portfolio Recap July 2015 FormulaFolios

Month end and YTD performance of our tactical models and the Recession Probability Index

Portfolio recap July 2015 FormulaFolios Chief Investment Strategist Jason Wenk reviews model performance and portfolio composition including recent trading activity. In this portfolio recap, we cover the prior month and YTD performance, touch on current asset allocation of our tactical models, as well as the most up to date economic analysis of our proprietary economic […]

“DaVinci Wealth Radio – 5 Retirement Myths”
by Darren Vilardo

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DaVinci Wealth Radio

5 Retirement Myths

Original air date August 15, 2015

5 Retirement Myths—a synopsis of the book by Patrick Kelly, “The Five Retirement Myths”


  1. Buy and Hold Always Wins.
    1. Analysis of flaws in this strategy.
  2. You have to take big risks to make big returns,
    1. Why this is almost 180 degrees the opposite. Losses have far more impact than gains.
    2. Traditionally a choice between safety, and low rates from a bank CD or big risks in order to get market like returns. Binary- Not the case now.
  3. Average returns tell the whole story.
    1. Mathematical examples of the flaws in this myth. “on Average”
  4. You can effectively manage your own portfolio.
    1. Emotion!
    2. Fear and Greed
  5. If something was that good, everyone would be doing it.
    1. No, lots of good things exist. High Mileage cars, safer cars, K-Cup machines… there are lots of great things in the world, but folks are set in “their” way. Dogma, tradition, beliefs, history, admit they were wrong! Ouch!


How DaVinci Wealth can help protect assets in 2 ways,

Limit upside and eliminate the downside completely with annuities (FIA)

All the upside of the market with limited downside using AssetLock.



“DaVinci Wealth Radio – Markets are Choppy”
by Darren Vilardo

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DaVinci Wealth Radio

Markets are Choppy

Original air date August 8, 2015

Markets are choppy; this is when the most common mistakes happen

  1. 2014 Dalbar study on mutual funds
    1. Equity fund investor underperformed the S & P 500 by 8.19% 13.69% versus 5.50%. Average fixed income fund investor underperformed the Barclays aggregate index by 4.81% — 5.97 to 1.16.
    2. Over 20 years, the average equity fund investor earned 5.19 versus the market at 9.85% –4.66% less annually!


Why is this? 1. Rear View Mirror investing- only 8 of the top 100 funds on average remain in the top the next year, top 10 funds in 2009, in 2013, only 1 was still in the top 10, in fact their average rank was 4802!! Easier for advisor to sell funds with high ranking and top ranking last year! See this all the time, You can tell which funds were HOT during a certain time, I see them in portfolios.

  1. Loss Aversion
  2. Narrow Framing
  3. Anchoring
  4. Mental accounting
  5. Lack of Diversification
  6. Herding
  7. Regret
  8. Media Response
  9. Optimism

Investor Psychology Cycle- Buy High and Sell Low- Repeat I see this again and again!


What can you do to break free from this cycle.

IAR w/ RIA firm- FormulaFolios

Methodology- Starts with Stress Test, Knowing which funds are hurting you! Not just Morningstar rating!



“DaVinci Wealth Radio – Is an Annuity Right For You?”
by Darren Vilardo

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DaVinci Wealth Radio

Is an annuity right for you?

Original air date August 1, 2015

One of the most common questions I get, one of the primary reasons people come to my office is to get information on these products, to learn more, because they heard about them- not sure what they are.

I hate to keep dwelling on them, but they are powerful, and there are a lot of misconceptions, misinformation. OPINIONS.

You cant simply spout wrong information then call it opinion. It’s Just Wrong! In my opinion the sky is green, nope doesn’t work, its just wrong, I look stupid!

A lot of folks say the same types of things about annuities…

Annuities have Incredibly High Fees- Yes, inside a VA.

In fact FIA’s with uncapped indexing strategy, crediting between 4 and 6% annually over time, NO DOWNSIDE ROSK, and ZERO in fees! Add a guaranteed lifetime income rider, which will pay you and your spouse as long as one of you is alive, for only .95%.

Less than the costs of most mutual funds, and less than your money manager whoe track record is spotty and who cant guarantee your principal!~ We call these Facts!


Example couple in my office: Not married, widow and her new gentleman friend

She is a widow- retired on Social Security- has some assets from life insurance, sale of family home, and small retirement account.

Her concerns are- will I be OK, can I make it, will my assets be enough to sustain me, through the next 30 or 35 years? Cant take risk, cant lose! Needs stable income, reliable income stream.


He is a retiree, who has a pension that will pay all his living expenses, and he has assets in the market.


They feel differently about risk, about income needs, She is a classic case study for an annuity, he probably doesn’t need one, except for perhaps his RMD’s.


“DaVinci Wealth Radio -3 Worlds of Money”
by Darren Vilardo

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3 Worlds of Money
July 25, 2015

DaVinci Wealth Radio –  3 Worlds of Money

Original airdate July 25, 2015KQNA 1130 am and 99.9 fm in Northern Arizona

Three worlds of money

  1. Safety and guarantees…( Green bucket) Banks- Cd’s, Govt Bonds, Fixed annuities. Principal is guaranteed, interest ins guaranteed, term is guaranteed, penalties for early withdrawal. Potential interest over next 12 months – 1-2%
  2. Risk and Growth…( red bucket) Mutual funds, brokerage world, stocks, bonds, options, reit’s, Variable annuities. Principal is not guaranteed, interest and earnings are not guaranteed, term is generally open ended, you need time to be effective- but how much time? Potential interest/earnings over next 12 months -40 to +40% unknown
  3. Hybrid world- (blue bucket) in between guarantees and growth, best of both if you will. Banks, ELCD’s, Fixed indexed annuities. Principal protection, links to an external market index, penalties for early withdrawal, not invested directly in market. Potential interest over next 12 months, 0 to 7% – perhaps more if you are talking about IUL’s.
  4. Are you investing as though you are still working, too much in the red bucket?
  5. Not protecting yourself against significant market decline? Using tools from green and blue buckets, or ASSETLOCK for Red bucket.
  6. Not guaranteeing basic income needs?
  7. Bob and Shirley—retired in 2007, with 1,000,000- needing 50,000 annually for income. Were told they needed to stay invested (fee based advisor) end of 2008, came to me with 500,000 and still needing 50,000 in income. Ouch!
  8. Expand on Fixed Index annuity idea, for guaranteed income, risk avoidance, potential for bond-like growth with no interest rate risk, ability to add lifetime income rider. Powerful investment tool. Go back and stitch the FIA into the primary narrative.Darren

“DaVinci Wealth Radio – Is your Bond Portfolio Safe – Original airdate July 18, 2015”
by Darren Vilardo

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DaVinci Wealth Radio – Original airdate July 18, 2015 “Is your Bond Portfolio Safe?”

KQNA 1130 am and 99.9 fm in Northern Arizona

Is Your Bond Portfolio “Safe” -Where to hide when rates rise

  1. Could this be you… You lost money in 2000-2002 or 2008, and your advisor said – let’s reduce your exposure to stocks and give you more bonds, as a safe alternative. Perhaps you opted for a more conservative portfolio at retirement—less stocks, more bonds- again with the idea that the bonds are “safe”
  2. Remember the 16,17, 18% mortgage rates, CD’s paying 10, 11, 12% or more –early `1980’s and we have been in a declining rate environment ever since, and given the inverse relationship of prices to rates, thus we have been in a bull market for bonds for the last 30 years. With interest rates at just about ZERO-That has reversed – and as rates begin to rise, bond values will fall- how much?
  3. Duration; A measure of a bond’s or bond portfolio sensitivity to interest rate changes—Not sure, call us, we can find out, we can stress test your portfolio
  4. Local competitor advertising bonds, 7% coupon on a 30 year bond, 7% YTM, duration about 12.52, meaning, a 1 percent increase in interest rates will result in an approximate 12.52% loss in value. OUCH!
  5. A bond proxy with no principal risk. FIA – not for income, but for a return similar to a bond over time, with no interest rate risk. Gains are locked in and never at risk
  6. Variety of indexes based on various asset classes- global stocks and bonds, US stocks, dividend stocks and bonds, value stocks and bonds,
  7. Different carriers offer different crediting mechanisms.
  8. Interesting and creative way to offer return in a low return environment and eliminate principal risk inherent in a bond portfolio in a rising interest rate environment.