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Introduction

January 1, 2019


In October of 2008, Tree Fort Financial, a Registered Investment Advisor, went to cash before the big collapse and provided a report entitled “The money isn’t there.” The report concluded:

(With respect to the 2008 bailout) the money to fund $1.4tn (trillion) dollars won’t be there, much less $9tn to $16tn dollars. If the money isn’t there and the government still wants its stimulus, the government has no choice except to print currency.

And as predicted the money really wasn’t there. According to Business Insider, “the Federal Reserve (the Fed) built up a store of roughly $4.5tn in Treasurys and other assets, like mortgage-backed securities, on its balance sheet” as of June 2017.

The BOC Portfolio was introduced 1/1/2017. BOC portfolio proprietary market risk analysis identifies changing markets, for example exiting the market and going to cash. This report measures BOC Market Exit Strategy results from inception.

Chart C

BOC Market Exit Strategy

Detail

The BOC Market Exit Strategy for a period commences with a stock market exit date and ends with a stock market reentry date. The strategy seeks to re-enter at a profit. Reentry profit means an amount equal to the benchmark exit price, minus the benchmark reentry price.

Three benefits are sought: excess returns, reduced risk, and smoother returns.

The first benefit sought is excess returns over benchmark during the period. Excess returns over benchmark measure advisor performance.

The second benefit sought is reduced risk. We define risk as losing large sums of money. Reduced risk during the period occurs by being in cash. Reduced risk is defined as a maximum down value of the benchmark during the period.

The third benefit sought is smoother returns during the period. Correlation of 1.0 means that a portfolio is 100% correlated to a benchmark. The correlation of cash to a stock benchmark is always very low. With very low correlation all returns during the period are smoother returns than benchmark returns.

Model portfolio volatility may be materially different from benchmark volatility. Results portrayed are before taxes. Historical returns are not necessarily indicative of future returns. Risk of loss may occur. Individual results may vary.

Chart A – Tree Fort Financial Year To Date Returns through 12/31/2018

Chart A

Chart B – Tree Fort Financial Hypothetical Compounded Annual Return

Since Inception 2003 through 12/31/2017

Chart B

How Does Tree Fort Financial Get Excess Returns?

Tree Fort Financial believes in transparency. Compound annual returns are used unless specifically stated otherwise. Tree Fort Financial measures its performance against established benchmarks based on risk tolerance. Returns over benchmark are excess returns. Excess returns measure advisor performance. As long as excess returns are greater than advisor fees, the advisor pays for its services. The chart shows a tradition since inception of Tree Fort Financial paying for its services by a margin of excess returns.

Tree Fort Financial continuously makes active recommendations based on present circumstances. Limitations include that present circumstances may not reflect future outcomes. In spite of best efforts, adverse outcomes may occur. The past is not necessarily indicative of the future.

Tree Fort Financial uses a proprietary market momentum program combined with fundamental analysis to find opportunities, and seeks to avoid currency devaluation. We invest in benchmark-like funds if our proprietary program does not indicate other funds with a potential for excess returns. Tree Fort Financial believes there may be less risk actively investing in the growing tip of worldwide securities markets than passively investing in under performing asset allocations; in down markets it seeks to preserve capital and in up markets it seeks to recommend investments in whole classes of underpriced securities with accelerating demand and rising value preferably at the start of their investment life cycles.

Tree Fort Financial fiduciary advice began when Jeff Liautaud opened Tree Fort Financial in 2003. Operating as an independent fiduciary, your Registered Investment Advisor offers independent fee-based financial advice, and retains no commissions or compensation from third parties.

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*Hypothetical means all advisor recommendations taken as given without restriction, reinvestment of dividends and earnings, before advisor fees and before transaction fees. The benchmark for a hypothetical average client (investment weighted) is Dow Jones US Total Market Index fund including dividends. The hypothetical average client risk tolerance multiplier is determined by multiplying investment dollars per risk tolerance divided by total investment dollars times that risk tolerance multiplier, and adding all such investment weighted risk tolerance multipliers. Three year average annual return is equal to % return (3rd year back + 2nd year back + 1st year back)/3. Five year and “Since 2003” inception is similar. Weighted average returns are based on clients with the advisor at 12/31 which is the end of the year. Individual results may vary.

F006: A127-2017-1231-d

Tree Fort Financial Hypothetical Compounded Annual Investment Returns
By Risk Tolerance

Chart E

Hypothetical compound returns before taxes, before advisor fees and before transaction fees are provided for each model portfolio category.

Returns over benchmark are excess returns. Excess returns measure advisor performance. The more above average returns generated, the less likely that single incidences of returns below average will drag down the average. Look for compound cumulative excess returns over benchmark over a long period of time.

A benchmark is based on the Dow Jones US Total Market Index fund including dividends (symbol IYY) adjusted for risk tolerance. The benchmark is based on the US total stock market for consistency over time, and because the US total stock market is where the greatest wealth in the world is concentrated. It is commonly accepted that the US total stock market has given off a 10.5% compound annual return over a very long period of time. Benchmarks are, for example, conservative (IYY x .57) or 6%, moderate (IYY x .71) or 7.5%, moderate aggressive (IYY x .86) or 9%, and aggressive and BOCX (IYY x1.00) or 10.5%.

BOCI has a benchmark based on the Vanguard Total World Stock fund including dividends (symbol VT). BOC portfolio (BOCI and BOCX) began in 2017 so earlier results are not available.

For more information, contact Jacki Liautaud, 6436 N. Oketo, Chicago, IL 60631, 312-666-7587 or jacki@treefortfinancial.com.

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Model portfolio volatility may be materially different from benchmark volatility. Results portrayed are before taxes. Historical returns are not necessarily indicative of future returns. Risk of loss may occur. Individual results may vary from hypothetical compound returns for reasons including but not limited to the following. Not all clients choose Tree Fort Financial model portfolio recommendations. Not all clients execute promptly. Not all trades are executed concurrently with model portfolio recommendations. Not all clients fit into model portfolio risk tolerance categories. Not all clients rebalance when model portfolios rebalance. Some weighted average compound returns may rely on estimates of contributions.

About Tree Fort Financial, Inc.

Tree Fort Financial uses sweep technology to find opportunities worldwide, and seeks to avoid underlying currency devaluation. Unintended consequences of global change may provide opportunity. Adding an element of conservatism in a portfolio is as important as considering upside potential.

Tree Fort Financial believes there may be less risk actively investing in the growing tip of world-wide securities markets than passively investing in under performing asset allocations; in rising markets it seeks to recommend investments in whole classes of under priced securities with accelerating demand and rising value preferably at the start of their investment life cycles; in falling markets it seeks to preserve capital.

Tree Fort Financial, Inc. (“TFF”) is a Registered Investment Advisor. This content is provided by TFF for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Certain information contained herein is derived from sources that TFF believes to be reliable; however, TFF does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages. TFF is registered in Illinois and located at 6436 N Oketo, Chicago IL 60631 or 312-666-7587. Registration does not imply any level of skill or training. TFF may only transact business in those states in which it is notice filed or qualifies for a corresponding exemption from such requirements. For information about TFF’s registration status and business operations, please contact TFF for its most recent form ADV disclosure document, or visit the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov.

The BOC Portfolio

The BOC Portfolio was created by Business Owners Charter, Inc. a proprietary algorithm investment research firm. The BOC Portfolio is exclusively offered by Tree Fort Financial, Inc., a Registered Investment Advisor and fee only advisory firm and fiduciary to its family office financial planning clients.

Since 2017 the BOC Portfolio is offered by TFF in two fee structures: BOCX with shared investment research fees pro rate based on all shared research assets under management; and BOCI with a performance fee structure under regulations only for “qualified” or institutional investors.

Identical portfolio content exists for both BOCX and BOCI. The BOC Portfolio is created using a quant process of two strategies.

First, a List Strategy uses big data to identify an initial ETF List using a proprietary market momentum algorithm. Second, the Manager reduces the ETF List into the BOC Portfolio using a Filter Strategy. The Filter Strategy is qualitative, searching for fundamental value and momentum. The BOC Portfolio may be substantially different from the initial ETF List.

For more details visit www.treefortfinancial.com/boc.