April 2021 Commentary
Research-Based Investing and Guidance Since 1992
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Congratulations:
A One Year Anniversary
Market Commentary
Markets celebrated a one year anniversary in the last month with a nearly 81% Dow gain from last year's March 23rd low that ended the swift and massive bear market correction of February/March 2020.(1)

Some may wonder if there are gains from last year's February 2020 all-time high. Still positive. The S&P 500 is showing an 18% gain from last year's high water mark.(1)

Some sectors have done better than others since the 2020 March lows, but that horse race is getting more even in the recent month as some better-performing areas - such as large growth - are sputtering in 2021. In fact, large growth is barely holding onto break-even through quarter-end. This sector includes the tech biggies that many affectionately refer to as the FAANG stocks. It's important to remember that no market sector or asset class consistently outperforms.(1)

One of the spectacles of this year's first quarter included investors that were drawn into massive speculation in story stocks. These folks recently have been whip-sawed as long-shot securities experience double-digit gains and market tumbles on a daily basis. Lately, the action has been more tumbles.

2021 will be an interesting year of economic recovery. Capitalism has once again helped save us from a significant societal challenge. Vaccines were developed in record time and are now allowing the economy to normalize. Let's not underestimate the benefit and power of the world-class companies in which we invest...
In the meantime, the S&P 500 is up mid single digits year-to-date through quarter-end.(1) While not a market forecast, our models suggest markets/valuations are currently pricey.
Hiring Professional Help

Do-it-yourself surgery or a webmd visit may be fine for some, but are unlikely to have a better outcome than a real world medical professional visit.

It turns out the same is true in the financial world. Several studies in recent years show the incremental benefit of good advice.

A 2018 Schwab report showed that investors tapping into advisors are more diversified and better prepared for retirement than do-it-yourselfers. The study was based on 137,000 accounts. Professionally advised 401(k) participants had nearly twice the account values of the non-advised.(3)

Vanguard, the ultimate do-it-yourself venue, in their 2019 Advisors Add Alpha research report, suggests that comprehensive advisors add incremental value equivalent to 3% higher returns annually, creating substantially greater wealth over time.

And finally, Russell Investments in a study (Value of an Advisor) that reviewed the challenging 2020 market environment showed that professional help offered benefits for a very tough year - confirming the same level of better wealth outcomes suggested by the Vanguard study.
1/10 of One Percent
The Annual Benefit from Rebalancing

Automated investing services, known as robo-advisors, suggest their value-add partly comes from portfolio rebalancing (moving excess gains from a portfolio investment allocation to another investment allocation that has underperformed). Several studies have shown that robo's are not yet at the point where they add investment value, and many investors are unaware that their portfolios are actually robo-managed.

Contrast the small benefit of implementing portfolio rebalancing to the studies above showing a much greater return from advanced comprehensive advice.

(Source: Russell Investments, Value of an Advisor)
.8%

Less than one percent. The proportion of wage earners that may be subject to higher taxes in the U.S. next year if tax legislation passes. This is the proportion of U.S. wage earners that had earnings of $400,000 or more in 2020. This group currently has a federal income tax rate of 35%.
(Source: https://dqydj.com/income-percentile-calculator/)
Dividends Can Grow Over Time
Bonds pay a stated rate of interest over their life which can be troublesome when inflation is factored in. Years of inflation shrink unchanged income streams.

Wouldn't it be ideal if an investment security increased its payout over time to provide an ever-increasing level of income like an annual salary raise? That is exactly what our Legacy Strategy security selections do. The current companies held in our Legacy Strategies have grown their dividends by double-digits annually in the last ten years(2) - a growth rate much higher than inflation.

An increasing income stream is one of the most effective ways to sustain purchasing power over a lifetime and into retirement.
“A Bank is a Place That Will Lend You Money if You Can Prove You Don't Need It " - Bob Hope
While this is not a forecast of where markets will go in the near or mid-term, our models currently suggest markets/valuations are pricey.

Dow Industrial Index

March 23, 2020 - 18,214 (2020 low)

March 31, 2021 - 32,981 (1)

81% Gain
Enjoy the week...
Grant S. Donaldson, MS, CPA
(1) yahoofinance.com, S&P500 historical data, Barrons, Morningstar.com, Vanguard benchmark returns
(2) Information available upon request
(3) SDBA Indictors Report - 2018
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.