Tudor Financial January 2020 Update Professional Investment Strategies Advanced Planning/Financial Guidance for 28 Years Serving Clients in Over 30 States

Markets Defy 2018 Year-End Consensus 2019 Year-End Review What a year for markets - 2019 Investment utopia. A layup year. No genius required 2018: What a transition. We look back at 2018 as a bear market year (yes, it was a 20% intra-year decline within inches). And 14 out of 15 asset categories we track were negative on the year...and then... 2019: Here we are evolving out of 2019 where every asset category we track was positive. Not only positive, but exceptionally positive. Significant year for stocks - nearly triple the historical annual return. (1)

So Why Were Markets Up Healthy in 2019? Markets never (or seldom) do what the majority expect. There is a reason for this: markets price in all the worry and euphoria relayed through thousands of media sources, through every office conversation. If you have seen it in the media, so has everyone else. News is not private news...the recession worries, middle east missiles, political bickering, the latest interest rate change. Markets digest it faster than you can act. So... What were the worries spooking markets in late 2018? Here are the big ones: Rising interest rates * Tariffs * North Korea * Political wrangling Inverted yield curve * Recession fears What actually occurred in 2019? (and this is a lesson for future capitalists): No recession No higher interest rates (in fact, lower interest rates - defying every economist forecast) No war with North Korea Decent GDP growth - strong economy Lowest unemployment rate in decades Low energy prices (1) In the simplest terms - 2019 conditions totally defied the consensus worries of late 2018. Markets move contrary to consensus expectations. As an investor, you cannot be worried or elated about the very same things other investors are fixating on if you want to be successful. Markets moved higher in 2019 - 2018 was full of false fears

Preparation for Volatility After a period of good performance, investors need a refresher that volatility is a natural ingredient of investing. It is also the number one impediment to staying the course. If you are properly invested in a proactive strategy, there is most often no need to make any investment changes during market volatility or declines. 2019 had below average volatility. Mentally gear up for normal volatility in 2020... At a minimum, this is volatility you can expect over time:  3 Declines of 5% or More Every Year 1 Decline of 10% or More Every Year 1 Decline of 15% or More Every Three Years 1 Decline of 20% or More Every Five Years (3) And yet equity markets have historically produced nearly 10% returns and have never had permanent declines (3) Fourth years of the election cycle have historically been more volatile in the first half of the year. (1) Make a resolution now to commit to your investment strategy .

Good News is Baked In What to Do Now When markets price in lots of good news, there are fewer opportunities for investors. Our current individual stock filters are finding good quality stocks as candidates, but are finding few to none that are undervalued. This is a good gauge that stocks are highly-priced. We are waiting for better valuation for individual security strategies. Keep in mind that we believe that nearly all asset classes currently above-trend...including bonds.

What to do now? If you are taking withdrawals in retirement, do not accelerate withdrawals due to the "wealth effect" - feeling euphoria = increased spending Avoid chasing returns of hot sectors - history tells us that investors have no idea when to exit hot sectors Do keep powder dry for better entry points if you have cash available. We are not advocates of raising cash from existing positions to accomplish this (taxes, missed opportunities if markets continue moving higher) Markets can continue to fly at high altitude and will not decline when you expect - our "what to do" recommendations are not a market direction call 

5-10 Times Salary A rule of thumb for the amount of life insurance you should carry as a breadwinner with dependents (Source: money.cnn.com)

 $20,576 The average annual cost for health insurance coverage for a family plan in 2019 Health care cost per person in 2018: $11,172 Proportion of economy spent on healthcare: 17.7% (Source: Kaiser FF, Centers for Medicare and Medicaid Services )

Find a Strategy With Shock Absorbers

Investing does not have to be all or none. Most are not comfortable with the volatility that comes with owning 100% stocks. Some want to be 100% stocks during good times, but then become panicked during volatile moments and almost always damage long-term outcomes. Our advice: Complete a risk assessment questionnaire. Find out what allocation and strategy is best for you and your money mindset and goals. Questionnaires are not perfect, but decent guides to how you might react to varying investment experiences. Think about completing another assessment when life changes for you. An experienced adviser knows how to interpret these and can connect you with an appropriate strategy. This is how advisers add real value. Finally, ask your adviser how they decide to make allocation changes in their strategy. This can be very instructive to determine if they are implementing strategy or simply creating a shopping cart of unmanaged investment securities.

"If Americans don't save 10% or more of their paycheck in their working years, how can they expect to live 20 to 30 years in retirement without one?"

Dow Industrial Index January 1, 2019 - 23,346 January 1, 2020 - 28,868 (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) https://www.capitalgroup.com/individual/planning/market-fluctuations/past-market-declines.html

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.