From Passive Investing to

Active Management, We Fit

Your Investment Philosophy

Adaptive Market Hypothesis reconciles EMH with behavioral economics by applying the principles of evolution to financial markets.

Several implications of AMH are as follows: To the extent that a relation between risk and

reward exists, it is unlikely to be stable over time

There are opportunities for arbitrage. Investment strategies—including

quantitatively, fundamentally and technically based methods—will perform well in certain environments and poorly in others

The primary objective is survival; profit and utility maximization are secondary

The key to survival is innovation: as the risk/reward relation varies, the better way of achieving a consistent level of expected returns is to adapt to changing market conditions.

If you agree with adaptive market hypothesis, active investment strategies such as tactical or dynamic asset allocation are recommended. Strategies can be implemented using either individual securities, passive funds, or active funds.

Naismith Wealth Management | 2626 N Lakeview Avenue #307 |Chicago, Illinois 60614 | 312.757.4547 | www.naismithwealth.com

Adaptive Market Hypothesis Efficient Market Hypothesis

Efficient Market Hypothesis states that asset prices fully reflect all available information.

Several implications of EMH are as follows: It is impossible to "beat the market"

consistently on a risk-adjusted basis Market prices should only react to new

information The only way an investor can possibly obtain

higher returns is by chance or by purchasing riskier investments

Weak-form efficiency allows for some forms of fundamental analysis to still provide excess returns

Semi-strong-form efficiency allows for insider information to provide excess returns

Strong-form efficiency states share prices reflect all information, public and private, and no one can earn excess returns

If you agree with efficient market hypothesis, passive investment strategies such as index replication or strategic asset allocation are recommended. If weak-form efficiency is favored, active mutual funds are recommended.

We have a vast universe of

investment options available. As an independent registered investment advisory, we have the flexibility to

research and utilize best-in-class investment vehicles and managers. To gain

exposure to asset classes, individual securities, passive funds, and active

investment funds are selected using quantitative filters for performance and

price along with qualitative analysis of the people and process.

Note that the information provided is not intended to give any specific advice nor an offer to purchase or sell any securities. It purpose is for informational purposes only. Please remember that past performance may not

be indicative of future results. Information pertaining to Naismith Wealth Management operations, services and fees is set forth in our current disclosure statement, Form ADV Part 2A and 2B. A copy of which is available

at www.naismithwealth.com under Important Disclosure. ©2015 Naismith Wealth Management LLC, All Rights Reserved

Personalized investing is based on more than your age & risk tolerance.

While these factors are fundamental to portfolio construction, a truly custom investment portfolio is only possible after a full understanding of your personal goals, life circumstances, and investment constraints. We then identify an account structure that minimizes taxation and maximizes your estate legacy goals. This can be accomplished through the use of goal specific accounts such as qualified retirement accounts, education investment accounts, trusts, and others.

Account Structure Financial Optimization We view portfolio construction as a global optimization problem.

Our goal is to maximize interest, dividends, and capital gains while minimizing capital losses, short-term capital gains tax, long-term capital gains tax, income tax, estate tax, GST tax, commissions, and professional fees. The four primary performance factors are account structure, asset allocation, security selection, and market outlook.

Capital Gains

L/T Cap Gains Tax

S/T Cap Gains Tax

Capital Losses

Professional Fees

Commissions

Income Tax

Estate Tax

GST Tax

Dividends

Interest

Maximize

Minimize

Certainty Uncertainty