2. “The time has come for folklore to be replaced with reality.
Research Emphasizes the Importance of Market Movement on the Variance of Portfolio Returns.
“The time has come for folklore to be replaced with reality.
Asset allocation is very important, but nowhere near 90 percent of the variation in returns is caused by the specific allocation mix … most time-series variation comes from general market movement…”
Roger Ibbotson
Financial Analysts Journal, March/April 2010, Volume 66. “The Equal Importance of Asset Allocation and Active Management.”
©2010 CFA Institute
Market
Movement
80%
Active
Management
10%
Asset
Allocation
Financial Analysts Journal, March/April 2010, Volume “The Equal Importance of Asset Allocation and Active Management.”
©2010 CFA Institute

3. Secular Market Movement
Secular bull markets are often characterized by a general increase in stock prices, relatively short lived declines, lower levels of volatility and a generally favorable investment environment.
Secular bear markets are often characterized by a general challenging environment, and may include: significant market moves (both up and down), and flat to negative returns over extended periods of time.
History shows that the market typically moves in cycles. In the
past 117 years through 2013, there have been four bull markets
and four bear markets. Investment strategies that work in bull
markets may not be effective in flat or bear markets.
Guggenheim Investments is not affiliated with The Pacific Financial Group, Inc. and does not endorse, sponsor or promote The Pacific Financial Group, Inc. 2

4. The Impact of Volatility on Investor Returns
Sources: Dalibar, Inc. Quantitative Analysis of Investor Behavior, 2016 Advisor Edition. Past performance is no guarantee of future results. It is not possible to directly invest in an index. Gold is represented by the change in the spot price of hold in USD per ounce. Stocks are represented by the S&P 500 Index, and unmanaged index that consists of the common stocks of 500 large capitalization companies within various industrial sectors, most of which are listed on the New York Stock Exchange. Bonds are represented by the Barclays US Aggregate Bond Index, an unmanaged market-weighted indexed that consists of investment-grade corporate bonds (rated BBB or better), mortgage and US treasury and government agency issues with at least 1 year of maturity. Inflation is represented by the Consumer Price Index. Average Equity Investor, Average Asset Allocation Investor and Average Fixed Income Investor is represented by Dalbar’s average asset allocation investor return, which utilizes the net of aggregate mutual fund sales, 12/31/2019 to match Dalibar’s most recent analysis. 3

5. The Impact of Volatility on Investor Behavior
In investing, what is comfortable is rarely profitable.”
-Robert Anott, Chairman, Founder of Research Affiliates
Morningstar Direct and Research Affiliates are not affiliated with The Pacific Financial Group, Inc. and do not endorse, sponsor or promote The Pacific Financial Group, Inc. 4

6. S&P 500 Index Year-by-Year Total Returns from 1926-2018
Determining how much downside we can tolerate – Helps us determine our “fair share” of the upside.
More than 20%
-20% to -12%
-12% to -8%
-8% TO 0
0 to 8%
8% to 12%
12% to 20%
-24.90
-43.34
-35.03
-26.47
-22.10
-38.49
1973
-14.69
1929
1932
1940
1941
1946
1957
1962
1966
1969
2000
2001
-8.42
-8.19
-9.78
-11.59
-8.07
-10.78
-8.73
-10.06
-8.50
-9.10
-11.89
1934
1939
1953
1977
1981
1990
2018
-1.44
-0.41
-0.99
-7.16
-4.92
-3.10
-4.75
1947
1948
1956
1960
1970
1978
1984
1987
1992
1994
2005
2007
2011
2015
5.71
5.50
6.56
0.47
4.01
6.57
6.27
5.25
7.62
1.32
4.91
5.49
2.10
1.38
1926
1959
1968
1993
2004
2016
11.62
11.96
11.06
10.08
10.88
1944
1949
1952
1964
1965
1971
1972
1979
1986
1988
2006
2010
2012
2014
19.75
18.79
18.37
16.48
12.45
14.30
18.99
18.61
18.67
16.61
15.80
15.06
16.00
13.68
1927
1928
1933
1935
1936
1938
1942
1943
1945
1950
1951
1954
1955
1958
1961
1963
1967
1975
1976
1980
1982
1983
1985
1989
1991
1995
1996
1997
1998
1999
2003
2009
2013
2017
37.49
43.61
53.99
47.67
33.92
31.12
20.34
25.90
36.44
31.71
24.02
52.62
31.56
43.36
26.89
22.80
23.98
37.23
23.93
32.50
21.55
22.56
31.73
31.69
30.47
37.58
22.96
33.36
28.58
21.04
28.68
26.46
32.31
21.83
Source: Morningstar DirectSM
Standard and Poor’s data beginning 1/1/71 through 12/31/12. The S&P 500 Index is comprised of 500 widely held common stocks varying in composition and is not available for direct investment. Past performance does not guarantee future results. Performance is calculated assuming reinvestment of all dividends and capital gains on a daily basis.

7. Matching Your Personal Risk Budget to Your Portfolio
Multi Mandate Portfolio
Market Movement
Market Movement Diversifiers
Tactical Market Movement

8. Mandate 1: Market Movement
Strategies strategically allocated to capture stock and bond market movement.
They will:
Fully Engage in markets, seeking pure and full participation
Effectively manage longevity and inflation risks through consistent exposure
Be implemented with index funds, ETFs, and equity and/or bond
separate accounts

9. Mandate 2: Tactical Market Movement
Strategies designed to tactically adjust asset class weightings to increase/decrease their exposure to market movement.
They will:
Utilize flexibility to actively adjust portfolios to changing global market conditions
Adjust risk in portfolios while opportunistically allocating to attractive asset classes
Be implemented with ETFs and active mutual funds

10. Mandate 3: Market Movement Diversifiers
Strategies designed to provide a source of risk and return that is independent of overall stock and bond market movements.
They will:
Provide sources of risk and return that may have low correlation to other strategies in a portfolio
Identify nontraditional risk and return opportunities with little dependence on market direction
Disengage from general market movements and introduce new sources of risk and return

11. Disclosures:
Market Movement Solutions® and the Personal Risk Budget define the allocation level of a portfolio that can be dedicated to market movement and are not a specific investment product. Investors should review the risks associated with investing in any manager strategy before investing. The information provided herein is the opinion of The Pacific Financial Group (“TPFG”), a registered investment advisor. All information is believed to be accurate but has not been independently verified and TPFG makes no warranties as to the accuracy of the information or any representations made or implied. The information should not be construed or interpreted as an offer or solicitation to purchase or sell a financial instrument or service. The information is for informational purposes only and should not be relied on or deemed the provision of tax, legal, accounting or investment advice. The information herein is intended to be used for educational purposes only and does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities. Past performance is no guarantee of future results. All investments contain risks to include the total loss of invested principal. Diversification does not protect against the risk of loss. Investors should review all offering documents and disclosures and should consult their tax, legal or financial professional before investing. Investors that employ one or more of the strategies should first obtain and read the disclosure brochure, prospectus and offering documents of all investments, strategists and managers to fully understand the risks of investing. Investors should discuss these risks with their financial advisor to determine which strategies, investments products, asset allocations and/or investment managers are appropriate for the investor. Index Descriptions The indices are presented as broad-based measures of the equity and fixed income markets. The indices returns reflect no deduction of fees, expenses, transaction costs or taxes that actual client accounts are subject to. The indices returns have been taken from published sources believed to be reliable. Investors cannot invest directly in an index. Investing in any security involves a risk of loss. Market Movement – The MSCI World Index, which is a capitalization weighted index that monitors the performance of global stocks, is shown to demonstrate the behavior of global stock market movement. Tactical Market Movement – the exhibit shows the Morningstar US Tactical Allocation category average of approximately 390 funds relative to the MSCI World Index, which is a capitalization weighted index that monitors the performance of global stocks. Market Movement Diversifiers – the exhibit shows the Morningstar US Multi-Alternative category average of approximately 522 funds relative to the MSCI World Index, which is a capitalization weighted index that monitors the performance of global stocks. The Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged stick market index based on the market capitalizations of the 500 large companies that trade on the New York Stock Exchange (“NYSE”). Mandate Descriptions Mandate 1: Market Movement. The role of this strategy in a portfolio is to capture movement in equity and fixed income markets as defined by the investment policy established with the investor. Strategists in this passive strategy remain fully invested following the target allocations. Diversification alone may not protect against loss in one or more declining market segments. Portfolio weightings may result in an allocation to a market segment that is not in favor during a particular market cycle. Losses in one market segment may exceed gains, if any, in other market segments. Investors should also consider the risks associated with the investment products and/or managers that are recommended by your financial advisor in implementing this strategy. Mandate 2: Tactical Market Movement. The role of this strategy in a portfolio is to adjust risk in the portfolio, while still opportunistically allocating toward asset classes, which can provide reasonable returns for the amount of risk taken. Strategists employ active management. Strategists will adjust portfolio weightings and allocations based on their research and judgment. Active or tactical strategies have the risk that the underlying manager decisions or timing of decisions could adversely affect the portfolio. Investors should also consider the risks associated with the investment products and/or managers that are recommended by your financial advisor in implementing this strategy. Mandate 3: Market Movement Diversifiers. The role of this strategy in a portfolio is to add investments that de-link from general market movement and may provide a diversifying component within the overall portfolio independent of the Market Movement. Strategists in this strategy employ additional asset classes and investment types, such as alternative investments. Alternative investments may have increased volatility and concentrated positions. Investors should also consider the risks associated with the investment products and/or managers that are recommended by your financial advisor in implementing this strategy.
CID.TPFG.259