Professional Investment Management Financial Guidance Since 1992 - Celebrating 27 Years

Tudor Financial March 2019 Update "Secure the Future"

Jolting Decline, Parabolic Rise: So what happened? The world was ending in December. Or such was the behavior of markets. As we noted in our last communication, equity markets experienced dramatic declines in December - the worst December stock declines in 80 years. (1) Media suggested many catalysts for the 2018 December and fourth quarter declines and these included: Brexit, European economic malaise, political in-fighting, inverted yield curves and recession fears. By late-year December, however, many of these agitators had become old, oft-repeated news made throughout the year. Old news is priced into markets and loses its market-moving powers over time. We have a different take on why declines occurred - and we will share this at our annual client dinner seminar in a few months. Despite prior year challenges, recovery this year has been furiously fast and has behaved similar to the parabolic rise typically experienced after a correction. The January-February recovery confirms our research of market history - we wrote the following in our prior commentary: "As fears subside, markets will bounce. Historically, they have always bounced after a correction - and bounce faster than market timers can fathom" This "bounce" is the experience stay-put investors have had in the last two months. Successful Investors Know: So how can investors get through 2018-type market volatility? Find the strategy that works for you, within your comfort levels, that can also hit your goals. This takes some self-evaluation and investment management skill. How Did Equity Markets Fare in 2018? The very broad Vanguard World Stock Index declined -9.67% in 2018. (1) Where are Equity Markets Now? : In hindsight, panic was not a good strategy in late 2018. As of this writing, markets have recovered all of the December declines and a bit more. From the December 24th 2018 lows, the S&P 500 is up 19%. (1) Historical Average Returns After Corrections: As noted in our last commentary, U.S. stocks have produced 34% average returns during the 12 months following a 10 to 20 percent correction. Even more when dividends are added in. (Source: ibbottson)

37% The percentage of retired Americans reporting they retired earlier than planned as a result of health problems, buyout packages, layoffs, grandchildren, or caring for an aging parent. (Source: Health and Retirement Study)

Great Recession 10 Years Later

It is time to commemorate the ten year anniversary of the bear market of 2007-2009. Exactly ten years ago in March 2009, the market bottomed in the residual dust of the Great Recession. That era saw the Dow decline over 55% in a period of 18 months - from 14,100 to 6,500 - while it hovers around 26,000 today. Since that time we would expect, in this long recovery, to have had ten corrections - about one a year. However, since 2009, markets have only experienced six corrections - with three alone experienced in 2018. We can celebrate the ten years since the Great Recession that have produced higher than average returns with less risk . (Source: BTN Research)

30% vs 10% The percentage of taxpayers that have taken the standard deduction in the past vs those that will do the same in 2018 after the enactment of the Tax Cuts and Jobs Act of 2017 . An estimated 90% of taxpayers will no longer add up their mortgage interest, state and local taxes and charitable contributions to take a higher itemized deduction. (Source: IRS)

Real Estate Tumbling? We noted late last year that residential real estate in selected parts of the country was approaching bubble price levels. Although we have not yet seen big downdrafts in prices, recent statistics support our case. The affordability index has declined significantly in several richly-priced cities and potential buyers are giving up their search due to high prices. Real estate annual price inflation is slowing dramatically and pointing to a slowdown in bubble prices. A strong economy forces real estate prices up; however, household income can only support the high price game to a point. The last one to buy into any bubble loses the game. (Source: marketwatch.com, Home Price Gains Slump to a Fresh Four Year Low)

"Strategy Determines Outcome - Securities are Merely Tools"

The Compelling Case for Quality Stocks Our Legacy Strategies fill a need. They are designed for high net worth clients and focus exclusively on quality stocks. Quality stocks are known for a number of things, but one feature has held true historically: Quality stocks have historically held up better in market declines than the broader market and, therefore, outperform over the long run . (3) Last year, quality stocks were true to form: the MSCI U.S. Quality Index declined a mere 2.43% in 2018, much better than the broader market. (Source: MSCI.com) And despite 2018 volatility, our Legacy Growth and Income strategy eked out an extraordinary positive return for the year. (2) Well-established, long-term investors are well-served by quality in the stock universe.

Your Financial Quote: "The key to financial freedom is a person's skill at converting earned income into investment income." Guy Kiyosaki

Dow Industrial Index December 24, 2018 - 21,712 (2018 low) March 1, 2019 - 26,000 (1)

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

(1) yahoofinance.com, S&P500 historical data, Barron, Morningstar.com, Vanguard benchmark returns (2) Information available upon request (3) Alliance Bernstein: The Paradox of Low Risk Stocks

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.