Tudor Financial September 2020 Update Professional Investment Strategies Investing, Planning and Financial Guidance Since 1992 Serving Clients in Over 30 States

From Panic to Mania How Sentiment Drives Short-Term Market Moves Keep Calm and Carry On In preparation for World War II, the Brits created a poster to raise the morale of the British public who were mentally preparing for impending attacks on their cities. The British government created several million copies of a newly developed Keep Calm and Carry On poster which was displayed throughout several cities. Ultimately, we know the British population rallied behind the war cause while enduring an unending barrage of attacks. Their enthusiasm was unwavering during that difficult period of history as they did exactly that: they carried on. And we also know the ultimate outcome of their composure, energy and grit. Big Recovery In volatile investment market years, as in 2020, some find it difficult to stay calm and carry on. It is not helpful, for example this year, when market mavens are out in force preaching tragedy and tribulation to investors as they did in March - the period that we perceived as one of the great buying opportunities of the last eleven years. Many investors missed out on extraordinary gains while our clients stayed the course. It is interesting to note that the 54% market rise from March 23, 2020 lows to September 4th of this year is nearly identical over the same number of days as the recovery that began March 9, 2009 after the 2007-2009 Great Recession. (BTN Research)

However... The ebbs and flows of investment tides quickly change. Sentiment evolved dramatically this year from March panic to recent massive speculation in a select few tech securities. This phenomenon is somewhat reminiscent of the late 1990's/early 2000's tech frenzy. This year, a few tech securities have done all the work to drive the major indices to recovery. The largest five recently comprised 23% of the valuation of the S&P 500 index. The other 495 stocks in the index comprised the rest, most showing negative returns year-to-date. (businessinsider.com)

And This Past Week... Investors piling into a few stocks (in the current environment, tech stocks) nearly always sends them to unreasonable, unsustainable valuations. It should be clear that parabolic rises are not sustainable. Extreme rises often result in quick meltdowns that blow off excessive valuations, and that occurred in the recent week: the quickest NASDAQ/tech stock correction in market history - a mere three days. (foxbusiness.com) The highest flyers have been hit hardest in the latest tech correction. What Have We Done? In the current environment, we are largely staying the course - healthy allocations to large and domestic securities. We have raised some cash. Prior to tech meltdown, we lightened up on the most expensive securities targeting the tech/growth sector. It proved helpful to raise cash from overpriced securities prior to recent declines. Investors should always be mindful of overpriced/underpriced securities over market cycles to take advantage of emotion-driven panics and manias.

What Elections Mean to Markets Elections may not impact markets the way most think. While many think one or the other party might be better for markets, the following data throw a lot of pre-conceived ideas out the window. Market returns historically over the two-year presidential election/inaugural years net to similar returns no matter who arrives in office. This is based on presidential elections since 1928. Does this tell us what will happen with the upcoming election? No! Historical averages are not science for forecasting what will happen in every election year - and COVID has made this an unusual year. But market history does rhyme.

Re-Electing Presidential Incumbents Markets have historically done better when democrats have been in office and are re-elected.

We advise against taking investment actions due to perceived election outcomes. Markets are commerce/capitalism driven - people continue to eat, pay mortgages, drive cars, vacation, regardless of elections. The underlying companies supporting these consumer needs/desires continue to operate regardless of politics.

84% The portion of his net worth that Warren Buffett has accumulated since he turned age 65. Source: fortune.com

$3,011 The maximum social security benefit payable to a worker retiring at full retirement age in 2020 $1,503 The average social security benefit paid in January 2020 Source:Treasury Department

“The gratification of wealth is not found in mere possession or in lavish expenditure, but in its wise application." -Miguel Cervantes

Dow Industrial Index March 23, 2020 - 18,214 (2020 low) September 2020 - 27,940(1) 54% Recovery

Enjoy the week... Grant S. Donaldson, MS, CPA

(1) yahoofinance.com, S&P500 historical data, Barrons, Morningstar.com, Vanguard benchmark returns

Past performance is not indicative of future results.  Nothing in this communication should be construed to contain a solicitation to buy or an offer to sell any security.  Some information contained in this communication has been provided by sources other than Tudor Financial, Inc., the accuracy of which is the responsibility of the provider.  Advisors affiliated with Tudor Financial are Registered Reps. of Westminster Financial Securities, Inc.,40 North Main Street, Suite 2400, Dayton, Ohio 45423, member FINRA/SIPC. If you would like a copy of our Schedule ADV Brochure, a written disclosure statement outlining our background and business practices, please contact our office.