1. Investment Perspective
2016 WAMic Directors Seminar
Reference Material
John Thayer - CFA
Sara Walker - CFA
Mark Hilgendorf - CFA
Steve Pipp - CFA

2. Weakest expansion in post-wwii era
Possible Headwinds
Declining corporate profits / profit margins
Declining business confidence
Tightening lending standards
Deteriorating foreign backdrop
Source: Cornerstone Macro

3. Us Treasuries attractive to global investors
Source: Bloomberg

4. 318 S&P 500 stocks have higher yield than 10-year us treasury
Source: Cornerstone Macro

5. What’s driving p/e Ratios
What’s driving p/e Ratios ? as multiples have expanded over the past couple years earnings growth has declined
Source: Cornerstone Macro

6. Bonds are expensive AA Muni Bond P/E 65.8x US Treasury Note P/E 62.9x
P/E Ratio
Corporate Bond P/E 37.7x
Stock P/E 16.8x

7. September 2016 fomc “dot plot” all but 3 members want to raise rates this year – will they?
Source: Cornerstone Macro, Bloomberg

8. Credit spreads continue to tighten
Source: Barclays

9. Custom portfolio management
After listening to your needs and objectives, and establishing the parameters of your IPS, our portfolio managers follow a process designed to leverage the investment management strengths of our organization. The team provides continuous investment monitoring and analysis based on your defined needs.
Strategic Asset Allocation
Tactical Asset Allocation
Investment Selection Process
Analyst Research, Opinions and Recommendations
Fundamental Analysis
Time Horizon
Risk Tolerance
Expectations
Taxes
Liquidity
Income Needs
Client Service
Tax Planning
Client Education
Industry Oversight

10. Investment philosophy
Portfolios should be built to meet expectations in all types of markets and changing economic climates using a three-phase investment process that is grounded in fundamental, prudent investment principles.
Phase 1:
Strategic Asset Allocation
Phase 2:
Tactical Asset Allocation
Phase 3: Investment Selection Process
Aligns your time frame, risk tolerance and investment objectives with suitability of core asset classes
Designed to increase the probability of achieving your long- term goals at an appropriate level of risk
Active management delivers additional value by taking advantage of opportunities as market conditions develop
Involves over- or under- weighting asset classes and sectors based on:
Changes in capital markets
Valuation concerns
A point in the economic cycle
Achieve competitive returns within your risk profile
Focus on selecting high- quality investments with strong risk/reward characteristics
Analysis of cumulative risk resulting from individual investment decisions

11. Selection process focused on qualitative characteristics
Long-tenured, seasoned managers that have experience in multiple economic climates
A distinct investment methodology that has been consistently applied during the entire tenure of the manager
Active management that does not simply mimic a benchmark
Fund family that provides the structure and resources for management to thrive
A disciplined, repeatable investment process that produces superior long term, risk adjusted results
Maintain focus on long-term expectations

12. Mutual funds - Investment Manager selection process
Our search process focuses on selecting world class managers in every asset class (best of class)
Eliminate all potential conflicts of interests and utilize institutional share classes
Analyze funds over entire market cycle
Recognize that every manager will appear to be failing at some point in time
To outperform the benchmarks over time, a manger must occasionally be willing to be out of step with those benchmarks

13. S&p 500 top members Are you getting paid to hold corporate bonds?
October 2016
December 2007
Dividend Yield
Yield on 10-Year Debt
Yield on 10- Year Debt
AT&T
4.91%
3.17%
3.42%
5.53%
Procter & Gamble
3.02%
2.17%
1.85%
5.23%
General Electric
3.12%
2.81%
3.10%
5.05%
Johnson & Johnson
2.69%
2.16%
2.43%
5.49%
JP Morgan
2.83%
3.01%
3.30%
6.02%
Apple
2.02%
2.49% 0%
N/A
Microsoft
2.70%
2.44%
1.15%
Exxon Mobil
3.44%
2.51%
1.46%
Chevron
4.17%
2.59%
2.42%
Source: Bloomberg
* - Combination of Class A and C shares

14. S&p 500 top members dividends have historically grown over time
2016 Dividend per Share
2007 Dividend per Share
10-Year Annualized Growth of Dividend
AT&T
$1.92
$1.42
3.7%
Procter & Gamble
$2.68
$1.40
8.0%
General Electric
$0.92
$1.24
-1.0%
Johnson & Johnson
$3.20
$1.66
7.9%
JP Morgan
$1.52
3.5%
Apple
$2.28 $0
N/A
Microsoft
$1.56
$0.44
14.6%
Exxon Mobil
$3.00
8.9%
Chevron
$4.28
$2.32
7.5%
Source: Bloomberg
* - Combination of Class A and C shares

15. ELECTION IMPACT
Source: Cornerstone Macro