If you are like other investors, you expect to see your investments grow over time. However, along this path to long-term growth, there will be turbulent times that could cause you to question your decisions:
Am I invested in the right place?
Is investing for me?
I’m not sure I can handle it if my account drops more.
Should I sell now and wait for things to settle down?
The market always comes back but is it different this time?
These are some of the questions and thoughts that most investors face when the markets become volatile. But, what if you have a way reduce the ups and downs of the stock market and therefore your worry?
By altering the risk and return profile of your investments, you could partially limit losses in exchange for limiting your potential profit. This particular note was made available only to Blue Bell PWM clients and does what we just described. This investment is linked to the S&P500 Index for the next 13 months. During this time, an investor will participate in the gains of the S&P500 Index at a rate of 1.5x up to a maximum return of 12.45%. If the S&P500 loses value, the investment will protect the first 10% of loss and lose 1:1 on losses below 10% of the initial level (if the index falls 20% this investment would lose 10%). The return profile of this investment assumes the credit risk of the issuing bank (JPMorgan) and the investment being held to maturity. This investment will not pay dividends.
The following chart shows the potential payout scenarios of the note versus the S&P500 Index over the next 13 months:
| S&P500 Index | S&P500 Return | Note Return |
| 2,365.65 | 15% | 12.45% |
| 2,262.80 | 10% | 12.45% |
| 2,159.94 | 5% | 7.50% |
| 2,108.52 | 2.5% | 3.75% |
| 2,057.09 | 0% | 0.00% |
| 2,005.66 | -2.5% | 0.00% |
| 1,954.24 | -5% | 0.00% |
| 1,851.38 | -10% | 0.00% |
| 1,748.53 | -15% | -5.00% |
S&P500 initial index value: 2,057.09 on 1.26.2015
10% downside buffer level: 1,851.38
Maximum return amount: 12.45%
We believe this to be a prudent investment for those investors who would like to reduce the stock market’s volatility. If you would like to learn more about this or other investments, please contact us.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Blue Bell Private Wealth Management, LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Blue Bell Private Wealth Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Blue Bell Private Wealth Management, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Blue Bell Private Wealth Management, LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request.
