ulobal Tactical Asset Allocation:

A histoiical peispective on the cuiient macio

enviionment anu investment uisciplines
Novembei 2u12
Biian B. Singei, CFA, Paitnei
Beau of Bynamic Allocation Stiategies
This mateiial is pioviueu foi geneial infoimation puiposes only anu is not intenueu as investment auvice oi a
iecommenuation to buy oi sell any paiticulai secuiity. Any uiscussion of paiticulai topics is not meant to be
compiehensive anu may be subject to change. Bata shown uoes not iepiesent the peifoimance oi chaiacteiistics of any
William Blaii piouuct oi stiategy. Any investment oi stiategy mentioneu heiein may not be suitable foi eveiy investoi.
Factual infoimation has been taken fiom souices believeu to be ieliable, but its accuiacy, completeness oi inteipietation
cannot be guaianteeu. Past peifoimance is not inuicative of futuie iesults. Infoimation anu opinions expiesseu aie those
of the piesentei anu may not ieflect the opinions of othei investment teams within William Blaii & Company, L.L.C.'s
Investment Nanagement uivision. Infoimation is cuiient as of the uate appeaiing in this mateiial only anu subject to
change without notice.
2 2
"#$% &
'()*) +, %*-.)/
0-11)* 1*,2 3456)/7
Investment Analysis Fiamewoik
! #$%&'()$* $'+,-'. /0$)120 34 5'%$6 )# '78'$,'-9'

"#$% 8
9+):;-1< =6:+42):;45
3456)/
"#$% >
'(< +, %*-.)/ 0-11)*
1*,2 3456)/7
S S
1u
1uu
1uuu
1uuuu
1uuuuu
19uu 192u 194u 196u 198u 2uuu 2u2u
uieat
Noueiation
uieat
Inflation
uieat
Bepiession
?)45
@0%
9:A54;-,:
?)45
"B% CDD
+1u%
!"#$
7
The Nouein Eia
Past peifoimance is not inuicative of futuie iesults.
?)54;-E) @*,F;( ,1 "B% CDD G-:A54;-,: 4+H6/;)+I
4 4
Asset Class Funuamental value & Piice Bisciepancies
J)< ,6;K6; ,1 -:E)/;2):; K*,.)//L Expecteu ietuin (8-yeai hoiizon, annualizeu)
As of 9Su2u12.
Souice: WilliamBlaii, Investment Expectations.
S&P, NSCI, Baiclays Capital, Bank of Ameiica Neiiill Lynch, }P Noigan, 6 month LIB0R.
Expecteu ietuin infoimation is intenueu to illustiate potential expectations foi vaiious capital maikets anu shoulu not be consiueieu iepiesentation of past oi expecteu futuie ietuins foi any
WilliamBlaii investment stiategy oi piouuct. Expecteu ietuins aie pioviueu aie foi infoimational puiposes only anu not intenueu to be ieflective of iesults a peison shoulu expect to achieve.
Actual iesults will vaiy anu may be highei oi lowei than the values inuicateu. Biffeiences between expecteu anu actual iesults may be exaggeiateu in volatile maiket enviionments. Theie is no
guaiantee that expecteu ietuin inuicateu will equal the actual ietuin foi any capital maiket. The expecteu ietuin of an asset ieflects the aveiage piobability uistiibution of possible ietuins anu is
baseu on the conveigence of piice to value (ovei an 8-yeai peiiou foi equities anu S-yeai peiiou foi bonus) plus income acciuing to an investoi.
S S
Bisciplines to Fiame New Woilu 0iuei
@),K,5-;-.45
M:45</-/
N4.*,).,:,2-./
@42) #(),*<O
";*4;)P-. 0).-/-,:
#(),*<
6 6
'(4; @42) #(),*< %*)+-.;/ 1,* ;() =6;6*)
%*)QR,5+ '4*
G8SDD T U8SCDI
Nulti-playei
Playeis evolve
Incomplete infoimation
Nistakes moie piobable, less costly
V:/;4W5)
R,5+ '4*
GU8SCD T 8SXD/I
2 Playeis: 0.S. & 0.S.S.R.
Nutually Assuieu Bestiuction (NAB)
Nistakes impiobable, with huge cost
";4W5)
%,/;QR,5+ '4*
G8SSD/ T %*)/):;I
Nulti-playei
Playeis evolve
Incomplete infoimation
Nistakes moie piobable, less costly
V:/;4W5)
New Woilu Powei 0iuei
7 7
Supeiioiity Requiies Risk-Taking
R,:E):;-,:45
Y)(4E-,*
V:.,:E):;-,:45
Y)(4E-,*
Favoiable 0utcomes Aveiage iesults that
may covei fees
Above aveiage iesults
0nfavoiable 0utcomes Aveiage iesults that
uon't covei fees
Below aveiage iesults
Be unconventional!
8
Nulti-Asset Appioaches
:
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M.;-E)
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!==)9%/,)- </5='
M//); Y4/)+ ?-/Z Y4/)+
0<:42-. ?-/Z
R4K-;45
M55,.4;-,:
@5,W45 #4.;-.45
M//);
M55,.4;-,:
?-/Z %4*-;< ,*
[?-/Z Y454:.)+\
[R54//-.\ ";4;-.
Y454:.)+
9 9
Conclusions
=6:+42):;45 4:45</-/ -/ :).)//4*<] W6; :, 5,:P)* /61A-.-):; 1,* /6K)*-,* K)*1,*24:.)
"6K)*-,*-;< *)^6-*)/ W)-:P 6:.,:E):;-,:45
M..)K; *4:+,2:)// B 2-/;4Z)/
0<:42-. ?-/Z R4K-;45 M55,.4;-,:L
R(455):P)/ ,1 ;() 16;6*)
ueopolitics will involve many leaueiship "games" with mistakes likely
Insolvency, bloateu cential bank balance sheets anu weak leaueis => high & volatile inflation
ueopolitical anu economic instability => tuibulent asset & cuiiency maikets
Constitutional, pailiamentaiy & uiiect uemociacies will be testeu => leaueiship foiesight iewaiueu
0,)/ ,E)*F()52-:P ;6*W65):.) 4:+ 6:.)*;4-:;< K*).56+) *)/,6*.) 455,.4;-,:7
Peihaps theie is nothing new unuei the sun => a woilu like the fiist half of 19uus
Theie is a uiffeience between investing in !"#$%&'() anu )"*(+(',&) => equities aie attiactively piiceu
Connecteuness & integiation of untappeu populations anu economies affoius potential
With fiee exchange, maikets aie haiu to suppiess
"None of this is meant to be easy. Anyone who thinks it's easy is stupiu."
- Chailie Nungei