Not your traditional DISCLAIMER and PERFORMANCE DISCLOSURE

 

This disclaimer/disclosure is going to be in line with industry standards and legally accurate but with a twist of added common sense.   We want you to understand how most disclaimers and disclosures are filled with “legalese jargon” and part of our commitment is to reduce that jargon so any individual investor, regardless of experience,  can truly understand the risks he or she is taking with hiring us to manage his or her hard-earned assets.  Fully transparent reporting is what you deserve and what we at Lily strive to deliver.  We have gone above and beyond industry standards to make sure (with spot-on accuracy) our numbers have integrity.  

 

You will actually learn something about our transparency, our integrity and the Wall Street Bogus Statistics (WSBS) that others use in their performance reporting.  Legalese jargon first and then some additional comments so that everything resonates with your gut from a common-sense approach. Our goal is to shed some light on an industry filled with grey area and make it a little more black and white for you.   Wouldn’t it be awesome if we could deliver clarity and have fun at the same time?

 

Here comes the legalese.   Past performance is not indicative of future returns and the value of investments and the income-driven from them can go up, down or sideways.  Future returns are not guaranteed and a loss of principal may occur.  The risks associated with hiring Lily Wealth Management include but are not limited to general market risk, credit risk, interest rate risk,  or the risk of a strategy or portfolio not performing as expected.  The risk of comparing and benchmarking against a common index that is not consistent or a true representation of a strategy or portfolio’s true asset allocation also exists.

 

Hypothetical back-testing also has many inherent limitations.  Some of which but not all, are described herein.  One of which is that they are generally prepared with the benefit of hindsight.  In addition, hypothetical trading does not include financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading.   There can be no assurance that the strategies or portfolios that are currently in effect, will indeed continue to stay in effect with the same constituents and will remain the same in the future.  There can also be no guarantee that the application of a current strategy or portfolio in the future will produce similar results because the relevant market and economic conditions that prevailed during the hypothetical performance period will not necessarily recur.

 

Here comes the truth regarding our integrity and transparency commitments.  All performance reporting represent total return (dividends and interest reinvested) for our strategies, portfolios AND the buy and hold indices we are compared to.   We will not use total return numbers for our strategies or portfolios and then stack the numbers by using the benchmark raw results which do not include the same reinvestment of dividends and interest that the index would have earned.   We will maintain consistency in this measurement.

 

We will only report our performance numbers of our strategies and portfolios NET after our maximum fee of 1.5% while we will use GROSS fees of any buy and hold index or mutual fund that we compare our tactical risk management strategies and portfolio’s against.   The bottom line is NET,NET what would you earn in your pocket and how much would you keep of what you really earned when the markets tank.  This is where the rubber meets the road! 

 

We will never compare an apple to a pomegranate.  We have painstakingly created blended indices to be used against our more diversified portfolios. If we have three strategies inside of one portfolio we will compare a combination of the asset classes that are represented inside of our portfolios the majority of the time.  Please realize this is additional work on our part, but well worth it.  Many have told us this is a waste of our time because individual investors do not pay attention to these finer details.  Nor do they appreciate the extra leg work when they realize what we are attempting to do.   With the goal of comparing and apple to an apple, please take a look at a detailed comparison of what our core portfolios will currently be compared against with these current blended indices:

 

     A) Lily Dynamic Income Portfolio-5%CASH,25%AGG,40%SPHIX,4%MSCIWIexUS,26%SPXT

 

     B) Lily Dynamic Balanced Portfolio-5%CASH,18%AGG,40%SPHIX,7%MSCIWIexUS,30%SPXT

 

     C) Lily Dynamic Growth Portfolio-5% CASH,11%AGG,30%SPHIX,11%MSCIWIexUS,43%SPXT

 

     D) Lily Dynamic Growth Plus Portfolio-5% CASH,11%AGG,8%MSCIWI exUS,76%SPXT

 

     E) Lily Dynamic Global Growth Momentum-20% AGG,38% MSCIWI exUS, 42%SPXT

 

     F) Lily Dynamic Global Balanced Momentum-30% AGG,32% MSCIWI exUS, 38% SPXT

 

     G) Lily Dynamic Global Conservative Momentum-71% AGG, 11% MSCIWI exUS, 18%SPXT

 

     H) Lily Endowment Strategy-5% CASH,

 

     I) Lily Dynamic Christian Strategy-5% CASH,

 

What about GIP’s compliant performance numbers and what is hypothetical and what isn’t?   The value in creating GIP’s compliant numbers is that it puts integrity into our numbers in multiple ways.   GIP’s numbers are time-weighted returns so they are more accurate.   What does this mean?  When you deposit $100,000 into a $200,000 account, it matters if you make that deposit in January or in December.   GIP’s reporting calculates what the $100,000 would have earned if you did make that deposit in January vs December.   The deposit has more of an effect on earnings if done early in the year vs the last month of the year.   Time-weighted returns are more accurate for this reason and we both appreciate and desire the accuracy.

 

GIP’s also forces us to use an average of all of the custodians we run a strategy or portfolio at.   So if the TD Ameritrade mutual fund and ETF selection is different then Jefferson National, the returns might actually be higher at TD Ameritrade based on the fund selection.  We cannot cherry-pick the highest numbers from the custodian that performed the best that year.   We must take an average from all of the custodians where we trade that strategy.  Now you realize why we severed our relationship with Fidelity and TCA in 2016 and 2017.  We did this to simplify your lives and ours and to help implement a GIP’s compliant track record.  

 

GIP’s is also very deliberate regarding hypothetical numbers.   One of our strategies has a 15-year track record that is audited and GIP’s compliant while another has a 25-year live track record and has audited numbers for part of that quarter of a century.   However, when we blend those two strategies together inside of one of our Lily Portfolio’s, it now needs to be stated as a hypothetical track record because the strategies were not combined prior to now.   This is part of our GIP’s buildout process so please feel comfortable in asking for more details regarding the audited track records if that is what will give you peace of mind.

 

Our Momentum Strategies are back-tested but they are quantifiable and the risk management process is measurable.  In fact, the Harvard MBA who created this risk management strategy has 215 years of measured statistics to support his process.  It is NOT an algorithm program or a computer-generated back-tested portfolio that was data mined and managed with discretion.   It does have solid research and full measurement of the process from a quantifiable perspective.   We hope you have found this disclosure clear, concise and valuable.  

Our resources are compiled using the following SOURCES (alphabetically):

 

Barron’s, BBC, Big Charts, Bloomberg, Center for Systems Science and Engineering (CSSE), Centers for Disease Control and Prevention, CMEGroup, CNBC, Eurostat, Fact Set, FCA: Financial Conduct Authority (“UK’s Watchdog”), Financial Post, Guggenheim Partners, Marketwatch, Markit, Meb Fabor, National Bureau of Economic Research, Ned Davis Research, PensionPartners, Reuters, Ritholtz, Robert Shiller via Yale University, Statistics Canada, Steele Systems, Stock Charts, Stocks and News, Stooq, Wall Street Journal, Want China Times, W E Sherman, Yahoo Finance, The Yale U, Yale University, Yardeni Research, Zerohedge, 361 Capital.
 

(805) 994-9557

 

©2021 - Lily Wealth Mangement

All rights reserved.

Advisory services offered through Prosperity Financial Group, Inc. Lily Wealth Management is a DBA of Prosperity Financial Group, Inc. Prosperity Financial Group, Inc. is a Registered Investment Adviser. This website is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Prosperity Financial Group, Inc. and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Prosperity Financial Group, Inc. unless a client service agreement is in place. Additional disclaimers here: lilywealthmanagement.com/disclaimers