NICK MURRAY MASTER CLASS

“Excellence After The Apocalypse”

 Perspective: Making your intellectual peace

with what happened, 1998 - 2003

 Closure: Making emotional peace with your

clients and yourself
Six Great Behavioral Lessons You Never Have
to Learn Again

 Opportunism
 THE GREATEST CAREER
OPPORTUNITY
 All great, once-in-a-generation, 50% markdown bear
markets are the making of the next generation of truly
great advisors.

 Value and price are always and everywhere inversely

related. A once-in-a-generation price decline is
therefore, ipso facto, always a once-in-a-generation value
rally.

 Value is always and everywhere inversely related to

public optimism. The fewer people who want to buy
what you are selling, the more correct you know you are.
 THE GREATEST CAREER
OPPORTUNITY
 You may, if you choose, continue to obsess about how
upset your clients are. This will paralyze you.
Alternatively, you may choose to obsess about how upset
everyone else’s clients - and a whole generation of do-it-
yourselfers - are. This will energize you for the next 2
years, minimum.

 Assume you have 2 years, maximum. Cyclically,

structurally and demographically (in terms of the
greatest societal planning/advice needs of our era), this
is the greatest opportunity the quality financial advisor
has ever had, or ever will have.
 FIVE SUPERBEARS
Of the Last 100 Years

PEAK TROUGH
INDEX DATE CLOSE DATE CLOSE DROP

DJIA 1/19/06 103 11/15/07 53 48.5%

DJIA 11/3/19 120 8/24/21 64 46.6%

S&P 9/7/29 32
6/1/32 4 86.2%

S&P 1/11/73 120

10/3/74 62 48.2%
S&P 3/24/00 1527
10/9/02 777 49.1%
 TIME/RATES OF RETURN TO
BREAK EVEN

PEAK TROUGH CAGR

INDEX DATE CLOSE DATE CLOSE DROP YEARS BACK TROUGH
TO PEAK TO PEAK

DJIA 1/19/06 103 11/15/07 53 48.5% 8.9 7.8%

DJIA 11/3/19 120 8/24/21 64 46.6% 3.4 20.5%

S & P 9/7/29 32 6/1/32 4 86.2% 22.3 9.3%

S & P 1/11/73 120 10/3/74 62 48.2% 5.8 12.0%

S & P 3/24/00 1527 10/9/02 777 49.1% --- ---

 TIME/RATES OF RETURN TO
BREAK EVEN

TIME TO BREAK EVEN CAGR*

5 Years 13.9%
7 Years 9.7%
10 Years 6.7%
*Does not include dividends
 PERSPECTIVE
14
12.1

12
10.2

10
Small-Cap Stocks
8
5.9 5.5 Large-Cap Stocks
Corporate Bonds
6
Government Bonds
4

0
 PERSPECTIVE
The Healing Power of Time
January 1926 - December 2002
97.60%
100.00% 86.10% 90.40%

75.00%
3-Year

50.00% 5-Year

10-Year
25.00%

0.00%
765 of 889 782 of 865 786 of 805
Periods Periods Periods
 PERSPECTIVE
The Moral of the Story

 The more perspective you have, the

better everything looks. And the
less…..the worse!
 The longer your perspective, the more
optimistic you are likely to be.
 PERSPECTIVE
A Final Thought…..

MR. & MRS. “P”

$191,000 $457,800
October, 1992 May, 2003
Investors Dividend Fund
 PERSPECTIVE
A Final Thought…..

MR. & MRS. “P”

$191,000 $630,497
October, 1992 June, 2005
Investors Dividend Fund
SWEET ARE THE USES OF
ADVERSITY

“Cancer was the

making of me.”
- Lance Armstrong
 CLOSURE
The 2 Ways We Can Come Out of This Thing
VICTIM
 Loss (accounts, money, time, goodwill)
 Lack
 Limitation
 Obsession with current clients
 Lives in reaction

OPPORTUNIST
 Learning Experience
 Investment in lessons we never have to learn again
 Liberation from stock market mania
 Obsession with future clients
 Lives in action
 CLOSURE
The 6 Great Behavioral Lessons
1. Never bet the ranch.
2. New technology always works.
New technology investments never work.
3. There is no such thing as a “new era”.
4. Never again be just a portfolio manager. Be a
financial planner.
5. Never again let yourself get beaten up into letting
a client do the wrong thing, under the explicit or
implicit threat of losing the account.
6. Never again compete on the basis of return.
 CLOSURE
A Final Thought…..
We are on a never-ending crusade of faith versus fear
and TRUST is the only medium through which faith
is exchanged.

The formula that ensures that wealth moves faster than

inflation; Planning
Asset Allocation
Leave it There (“Goof Proof” it)

Always give the PLAN enough money, give it enough time

and never, ever lose faith in me or my judgement.
 OPPORTUNISM
General Principles
1. Assume you cannot close the gap between where you are and the top of this
profession on the strength of your current account book.

2. If that’s true, then much or most of your efforts over this two-year window must
be focused on prospecting.

3. It does not matter who you prospect.

4. What to prospect with; love, needs, hopes, dreams, fears, goals and plans. What
not to prospect with: products, portfolios, performance, pricing and a current
economic/market outlook.

5. You can only help people who want to be helped, now, by you. You do not have
a lot of time to coddle, cultivate or “drip” prospects during this two-year
window. Time is not on your side.
 OPPORTUNISM
The 3 Great Demographic Financial Needs

 THE BABY BOOMERS’ RETIREMENT INCOME

The central financial planning crisis of our time

 THE PASSING OF THE WORLD WAR II GENERATION, 2008

- 2013
The last chance the boomers’ parents have for
gift/estate planning

 THE BABY BOOM, PHASE THREE

The education funding crisis of the baby boomers’
grandchildren
 OPPORTUNISM
The Baby Boomers’ Retirement Income

 THE IMPLICATION OF AGE 55

 THE BABY BOOMERS’ GREAT FINANCIAL

LOST WEEKEND (1998 -2003)

 THE EMPTY PROMISE OF DO-IT

YOURSELF (THE “FOUL” FIEND)
 OPPORTUNISM
The 3 Defining Issues About “Income”
1. The only sane test of an investment’s long-term income-producing
capability is not yield, but long-term total return.

2. A fixed-income investment strategy in a tripling-cost world is a

formula for running out of money in retirement.

3. Do you want to try to recover 6%/year for the rest of your life
from an asset class whose total return has been 6%? Or would
you rather think it safer to try to recover 6%/year for the rest of
your life from an asset class whose total return has been 10% -
12%?
 OPPORTUNISM
Our Aging Population and Long Term Care

IN THE UNITED STATES:

 1 out of 2 people aged 85 or over have
Alzheimer’s
 Cost of a nursing home is $55,000 (U.S.$)/year

IN CANADA:
 1 out of 3 people aged 85 or over have
Alzheimer’s
 Cost of a nursing home is $37,000 (CDN.$)/year