Commentary 2017 COMMENTARY 2017December 22, 2017 Happy Holidays!While there are just a few more days left in the year, for the most part, the equity and bond markets are done. The next couple of days we will see year-end distributions into accounts, but I don't see any major move in the indices.Asset-allocation accounts have done very well this year and our move out of cash into the market mid-year has proven well-timed. Cash is a drag on performance, but handy when there is market uncertainty and turmoil. However, the market firmed mid-year and volatility remained non-existent.I foresee continued market strength through the middle of 2018. There is not much on the horizon that might upset the apple-cart, except for a true black swan event like a nuclear launch out of North Korea or some true collusion by the Trump administration with Russia.There will be posturing in the equity space as people, pension plans, institutions, companies and local governments figure out how the new tax bill will impact their revenue stream. The fat lady (excuse me- the overly large person) has not sung, so the final bill may change form and shape in the end. This may elicit some turmoil and perhaps even a much-needed 10% pull-back, which some say is a buy signal. I am not necessarily in that camp, but having cash on hand may come in handy.The low-cost and well-diversified aspect of asset allocation models is welcomed during all market cycles and I try to make it even better by keeping my costs down. However, we must be mindful that there is still risk in the system and caution warranted. With that said, I still like asset-allocation models, but I am also a big believer in using active, alternative investments in modest amounts as they offer non-correlated investment returns. Admittedly, alternative investments are not for everyone and you must be able to meet income and net worth guidelines and willing to be patient as they go through their cycle. But, like most anything in life, patience is a virtue and this is certainly true for alternative investing. When looking at the market strength since Mach 2009, by all measures, we have surpassed reasonable expectations. A return to complacency seems evident by investor and analyst comments across the spectrum. While we all look for some pull-back, there just doesn't see to be anything in sight that may be the spark for a real sell-off. However, that doesn't diminish the necessity to be mindful of risk. Boom and bust cycles just might be more of the norm, rather than the exception. With a world population focused on the short-term and the selfie, it is no wonder that traditional measures and valuations are neglected, only to be brought into focus after the turmoil and major decline.How one handles such a situation will define success or failure. Good fortune is not a traditional investment strategy. So, I believe it is best to plan before hand rather than afterwards. While not catching all of the investment highs, I believe a well-thought out investment strategy, can offer risk-adjusted returns to help an individual or family meet their long-term goals. With that said, I wish you all a fantastic New Year's Eve celebration.Warmest regards,Robert Hesslink, Jr. December 8, 2017I want to wish you and your family a wonderful holiday season. It seems like only yesterday that we were finishing up the presidential election and preparing for 2017. Time does not stand still.We are doing well here in Portland and thankfully were not impacted by the fires. My kids are doing well in school, and my wife is teaching at the local community college. So, our plan to re-locate has been rewarded, although it took a little longer than planned for all the parts to fall into place. I guess that is just life sometimes.I continue to manage client accounts pertaining to investment and insurance. I am helping many individuals and businesses work through the health insurance challenge. There won’t be much change for 2018, but 2019 and beyond could get interesting. There are some creative ways we can help, just give me a call.I began teaching a class at Portland State University this winter term. It is a health and aging class in their School of Public Health. I really enjoy teaching and working with students, young and old, to achieve their dreams. Thankfully, many of these students seek careers in health professions and senior care. This is good news because the United States desperately needs workers to fill the void. The baby boomer population is reaching its full potential in terms of population density. While they will live longer, for the most part, they suffer more challenges pertaining to chronic disease. Moreover, those in the younger generations are experiencing increased disability challenges as well.What this all means is that there will be increased burdens on community and social services to provide senior care. Moreover, unpaid care is covered by friends and family to the tune of $36 billion and is not projected to decline any time soon. How will you receive and pay for your care during the time of need? My suggestion is to start planning today to make sure you have financial resources (hard dollars and insurance) to cover this expense.Like I said, it is hard to believe that it was one year ago when we voted for a change in Washington, D.C. The election, and its aftermath, have been contested widely across this great land, but there is one thing that is certain—the economy and stock markets continue to be strong. Whether this is due to the incumber President or his predecessor, is hard to say. However, I am not one to complain about good tidings! But, it doesn’t mean that there aren’t risks in the system.One strong factor in this equation is the reduced number of public companies. As reported by Jason M. Thomas in the Wall Street Journal, “there are only 3,671 domestic listings today, down from 7,322 in 1996.” His point is that this stock market is not the stock market of 20 years ago. And, I might say that it is good and bad thing. The good thing is a greater transparency for financial stewardship, gender pay equality, social and sustainable governance and efficiency.The bad thing is that there are fewer places to invest savings, investments and retirement plan dollars. Meaning we all tend to buy the same thing, which is being exacerbated by the move to passive index and exchange traded fund (ETF) investing. Now I am a big believer in using ETF’s in portfolios, but I also believe that a client portfolio should include those ideas that are not mainstream. My view is to stay away from the herd, and move in a different direction with purpose and thought.I believe the day of completely following a set and forget is outdated and dangerous. There are moments in time when holding is a good thing, but times when it is best to re-allocate positions. Moreover, there is no guarantee that a well-diversified portfolio will provide better risk management, but prior historical experience suggest that it offers some benefit.If we haven’t talked about your portfolio recently, give me a call. And, if you don’t think your portfolio meets your risk tolerance and objectives, then we definitely need to talk.My colleague Brad Lewis and I have established a business succession plan to handle the “what-ifs” of life. The next step is to find junior partners to guide our clients, their children and their grandchildren into the next century.Best wishes for a wonderful holiday and fabulous New Year!October 6, 2017TIS THE SEASONWelcome to the last quarter of 2017. It has been quite an interesting year and I suspect there is more to come. The markets gained early in the year, cooled off a bit and then seem to be gaining momentum again. I wouldn’t be surprised if we continue to reach all-time highs by January 1.However, I do think we may then see some softness and profit taking early next year. However, it really is a guess because predicting market turns is almost impossible. Good markets don’t end with just any old normal event, I mean just look at what the markets have experienced so far, this year—earthquakes in Mexico, catastrophic hurricanes in the Gulf, Russian meddling in U.S. elections, the Las Vegas shooting and the potential for “Rocket Man” to unleash fire and fury on the United States. (An apology here to Elton John for the use of “Rocket Man,” what a great song).No, this market shrugs off these events with aplomb and contempt. “Bring it on, it says!”Gutsy, yes, but as an investor one still must be mindful of risk and volatility. There is complacency all around, but don’t let it sink in and impact your good fortune. Make sure you have good diversification and some cash!So, let’s give a giant “who-rah” for the 4 seasons:Spring Summer Football and Healthcare Open EnrollmentWhich is a sneaky way for me to remind you that I help individuals looking for guidance on individual/family/company plans, along with Medicare Advantage plans. For the time being, I can only educate, but come October 15, we can make some real decisions about your 2018 health care coverage.Need some help, give me a call or drop me an email. Please.September 24, 2017I am very proud to support the student athletes at La Salle Catholic College Preparatory High School in Milwaukie, OR. It is one way we give back to our community. Look for our advertisement in the Clackamas Review every Thursday through December 2017.July 21, 2017 Complacency, Risk and "The Fan"Happy Friday!Summer is the time for complacency; with travel, the heat and relatives. But, it shouldn’t be a part of your wealth creation or management plan. Active engagement and to some extent active management is still valuable in today’s risky world. Don’t think that auto-pilot is a substitute for advice or even robo-advice! There are unintended consequences spread throughout the world that need to be recognized. Low interest rates, unfunded pension plans, low-volatility, central bank malaise, protectionism and political uncertainty are risks that need to be considered. Don’t be fooled, recent market declines are nothing compared to what is to come. Meanwhile, the fan waits patiently!What is the risk in your portfolio? Have we talked lately about changes in your circumstances? What scares you most about the future? Is my portfolio consistent with my risk tolerance? Is my portfolio consistent with my financial circumstances?These are questions that fall under "active engagement." Is my portfolio diversified? Do I need to re-balance assets? Am I over-weight in one particular area? Do I have both employer and investment risk combined?These are questions that fall under "active management."Can I tolerate a 10%, 25% or 50$ decline in my investment wealth?This falls under the "fan waits patiently."How will you respond should your investments decline?Give these a thought and let's talk to make sure we have a plan that fits YOU!On more cheerful news, enjoy the weekend! : )July 12, 2017MY TWO BEST INVESTMENT IDEAS - yep, these are my sure thing, guaranteed to perform ideas, that will help you grow your wealth. What are they? A good diet and physical activity. Wow, bet you didn't see that coming! Were you expecting stock picks? I think these two ideas are critical for any successful investment plan. In fact, you might want to cover that monthly gym membership before you invest. Or, just buy a pair of cross-training shoes and get moving, while you work towards a better diet. I believe there is no better way to reduce your health care costs in the future. But, remember, living better means living longer and that eventually requires money. So, eventually, you will need to figure out your 401K plan. Need help, give me a call. Yours in good health and wealth.July 7, 2017JOBS GROW, BUT WAGES DON'T - A new article in Barron's magazine does a great job outlining the improvement in job growth at the expense of weak wage inflation. There are so many metrics that we see in the economy that don't seem inline with the past. Is wage growth stuck in the low 2 range like 10-year treasury yields? Does it even matter? I submit that indeed it does, we just don't know it yet! Don't be complacent, make sure you have an all-weather investment portfolio. Need some help, drop me a line.June 29, 2017WHAT A PAIN? We've all experienced pain of some sort or another, but new research suggests that older individuals with moderate to severe pain experience faster memory loss. Leading to struggles paying bills and taking medications, albeit with a slight chance for dementia. So, stay healthy and pain free for a retirement with better outcomes..June 22, 2017HEALTHY LIFESTYLE - LOWER DRUG COSTS - While not the definitive slam dunk, new research outlines the benefits for reducing those chronic disease conditions that increase overall health care costs. By being more active in one's choice, you can really improve your health and wealth. Less money spent on healthcare means MORE money spent on fun, family or community! Pass it along....June 7, 2017A VERY NARROW PATH INDEEDIn 1973, Burton Malkiel published his sentinel work, "A Random Walk Down Wallstreet," and proclaimed that "an investor who buys and holds a broadly based index fund, does better in the long run." This concept has gained momentum of late, driving many investors to incorporate passive investing into their portfolios. There isn't anything wrong with the concept and I employee it with my client portfolios, but I still believe there is value for having active management as well. In particular, I caution that while passive index investing has lower costs and diversification, it does present danger during times of narrow markets. Currently, the year to date gain of the SP500 is pulled ahead by 5 companies, who account for 33% of the gain. Moreover, when looking at consumer sector gains, seventy percent is accountable to just four companies. It isn't a wonder then, that we take one step forward and two steps back. During such times, my advice is to shoot for the average, while the variation moves back and forth across the line. Eventually, we all end up in the same place with a lot less worry. And, using solid companies that pay the shareholder a dividend isn't a bad thing either. By the way, if you haven't read Dr. Malkiel's book, I highly recommend it. He was early to the game about keeping expenses low and investing for the long term.April 26, 2017Goodbye Spring, Hello Summer!Now that we are all done with taxes, it is time to think about other important events that have a direct impact on your well-being and livelihood.There are quite a few of concern, but I will focus on what I think are the top five in this post.First, the market continues to send mixed messages in terms of strength and weakness. The market has had a great run since the bottom of March 2009, although some pundits say the real market low was in 2011 and others suggest 2013. Whatever the data point, those that remained in the market and continued to invest, or even those that made slight changes, have seen a very robust rebound in their investment net worth. I am close to allocating cash back into the market, but I also believe that re-balancing of assets is important. If we haven’t talked recently about your investment strategy, give me a call—sooner rather than later!Second, global events are consuming the front page of most newspapers and media outlets. While this may reflect the ease of coverage compared to years past, I believe that we are entering a period of extreme volatility. Strong markets are driven by company and personal earnings, but uncertainty leads to fear and contraction. Will there be an event that elicits fear, instead of greed? It is hard to say, but caution should drive one’s investment strategy. Cash is good, but earning zero on cash is not!Third, aging and technology will continue to shape the employment landscape. There is a global shift going on and most people don’t know it. That shift is the aging-out of many professionals from physicians to airline pilots to financial advisors. And, recently there were reports that school districts are having trouble finding bus drivers, because qualified drivers are few and far between. While this appears to be an opportunity for employment, it is not because most of these positions require skill and experience. Not something you can easily replace!The impact of technology on un- or under-employment will be most felt by your children and grandchildren. While the media highlights “artificial intelligence” and “robots,” sadly many jobs will be lost due to simple automation. There will be large swaths of individuals losing high-paying jobs from which there is no return. The recent loss of middle class jobs will pale in comparison to what we can expect in the future when we start to push upward on the economic ladder of income.Fourth, the call for pension plan reorganization and re-adjustment will increase for both state and federal programs. The number of states with underfunded plans is large with most updating their current growth assumptions downward. This means that even more money will be required to meet future obligations. And, while the state plans are under-funded in the billions, the shortfall for Social Security is in the trillions—11 trillion to be exact. However, the one entitlement plan that seems to be unfazed and out of reach is that shared by our elected officials. Not only does their plan have lower fees, they also have a very generous match feature supported by you—the U.S. taxpayers.Lastly, healthcare—a constant theme that runs through our world. People are living better and longer, which means they often just delay the inevitable impact of healthcare in their life and on their finances. But, when they do, boy does it cost some money. The battle regarding healthcare reform rages on, with no end in sight. Single payer, multi payer, socialized medicine, concierge medicine are all terms that are suggested as solutions to this mess. And, for the most part, we aren’t even talking about the cost of care later in life. What are your plans for assisted or dementia care?I don’t wish to paint such a bleak picture, but I feel it is important to consider the future as we develop investment and insurance strategies for the future. For many seniors, these issues will only be felt through the lens of their children and grandchildren. The days of worrying about employment have passed, global events run together from one decade to another, and health is just a daily battle. However, there is still much that should be considered:Growth – Do you still have growth assets in your portfolio? Is the allocation appropriate for your risk tolerance and your future income needs?Income – Do you depend upon income for monthly bills? With low interest rates, the ability to generate meaningful interest income has been difficult during the economic expansion. How can you get higher income given low yielding bonds?Health – Individuals enrolled in Medicare are perhaps better off than those within the individual or family plan marketplace. However, medications will be an issue and for some the challenge will only increase as health declines, necessitating more prescriptions. The key is to work on becoming less dependent on medications now and in the future.Housing – The comfort and safety of living with a roof over one’s head is invaluable. The one worry for most individuals later in life is the loss of housing independence. Naturally, the best answer is to stay in your home if you can. However, there may come the time when the use of outside housing programs may be necessary to protect you. From simple bathing or toileting assistance to medical management, the ability to finance independent living to dementia care becomes a real challenge. There are many ways to finance such an arrangement, but a strategy and plan need to be in place. Need ideas—give me a call today!No one really knows what to expect in the future, but developing a plan helps should and if such events occur. Having a plan usually provides better outcomes than trying to make a quick decision as time runs out. If you need help, work with your family and the many professionals focused on helping you.Give me a call to discuss your concerns or challenges. I am always interested in hearing from you!March 24, 2017HEALTHCARE REFORM - A NO SHOW - It probably doesn't surprise to many people that the current path to healthcare reform hit a stumbling block. Even the most naïve individual knows that healthcare is complex. However, you can control your destiny by improving your health through good nutrition and exercise, which will ultimately, I believe, improve your future wealth. Reducing office visits, outpatient procedures and prescriptions will help you manage when it really matters.March 14, 2017SAVING FOR HEALTH – A great article in Reuters about the lack of actual saving in Health Savings Accounts. It appears that people are putting money in, but they are almost immediately taking it out, eliminating one of the prime benefits of HSA’s—tax free growth on investment return. The one caveat is that such gains must be used for “qualified” health care expenses. In my opinion, it is wise to consider other options for your “what-if” bucket, such as Roth IRA’s and taxable accounts. I have learned over my career that access and liquidity, often trumps the future. Life happens, make it work for you!March 12, 2017HEALTH AND WEALTH - I started writing about health and wealth in 1995. However, my first experience looking at the impact of health on individuals and medical costs was during my undergraduate studies. Let's just say that it has taken about 40 years for the relevance of good health on wealth to hit the mainstream.March 8, 2017WOMEN’S DAY - As we celebrate and acknowledge International Women's Day, it is important to realize that women face signification challenges when it comes to retirement, likewise their families face these challenges as well. I thought it would be a good time to listen to a podcast I did last year about the “Retirement Challenges that Women” face. Go to SoundCloud to listen, learn and share. www.soundcloud.com/robert-hesslinkJanuary 6, 2017Welcome to 2017. I hope you had a wonderful holiday break.It seems like just yesterday when I wrote about 2015 and my views for 2016. Time does move fast. And, it seems to go faster and faster every year.Any thoughts on forward market conditions, must include a review of past performance. While I believe, I was spot on about the concern for the Presidential election, I was wrong about the Trump election and the Trump-bump in the markets. Luckily, I am not alone in this camp.I was concerned about energy prices and for the most part was correct by stating that oil would range between $40 and $50 per barrel. It stayed in this range for pretty much all the year, except towards the end. It has been a blessing for those of us who require gasoline in their cars and natural gas for heating our homes. The impact on banks and those in the energy industry did not quite achieve critical mass as had been predicted by some. Thankfully, the energy markets settled down and banks got a little room to breathe. I think energy markets will continue to improve through 2017. The renewable energy space should help in many ways, but I am still not a big believer in them as an investment. They rely too much on tax credits and not sustainable revenue.I mentioned in early 2016 that wage pressure was not on the horizon, except for that brought upon by government intervention. Those cities and states that increased the minimum wage survived without much fanfare, suggesting that wages can go up without the world ending. It became quite evident by mid-year that the economy was growing enough to make workers confident in their desire to seek better pay and circumstance. This organic increase in wage reflects a strengthening economy although the rate of that rise is still of concern. However, I look to see more wage increases in 2017 without much impact to our economy.Emerging market economies did good at the beginning of 2017, but then declined after the BREXIT vote. Brazil and Peru were the top performers in 2016. Brazil was a surprise after years of poor governance and corruption. In fact, most of the Latin American countries exceeded expectations. Asian markets were a mixed bag, while European markets continued to be troubled by terrorism, immigration and populism.I think that Latin America will continue to surprise on the upside and Europe will recover, but perhaps not until the full impact of Brexit is realized. However, the time to buy is when others want to sell.Housing continues to improve at an almost scary pace. There are some regional areas that have experienced incredible gains. Portland, Oregon to be exact. I worry that the drive for real estate during the low interest rate period and Chinese cash purchases, may be pushing us back into bubble territory. There are some small signs that housing markets are cooling, I just wonder if it is fast enough to counter rising interest rates?I mentioned that inflation would be an issue in 2016 and this came true for some components of our economy. However, collectively this just isn’t a very inflationary environment for concern. Enjoy low prices while you can in food and energy, but realize that soon they will match what we see for health care and professional services.The gap between future obligations and actual pension payment availability continues to increase. We know that the Social Security Trustees indicate there is a problem with funding, and many state retirement plans are saying the same. In fact, a few states have finally decreased their projected rates of return, from 7.5% to 7%, which reduces the appreciation of their asset base. I believe that rates of 4% to 5% are more reflective of what is possible in the future. Yes, you can always push out on the risk curve, but pension obligations are based on reliable numbers, not shoot for the moon numbers.For my clients with such pension plans, I recommend the what-if bucket. Just in case that future $1000 per month, turns into $750 per month. Now some people can live just by reducing their expenses, but for many of us, once we get accustomed to a certain lifestyle, it is very hard to cut back.I think 2017 might turn out to be a transition year in which things are alright but not great. There is the potential for opportunity, but then again there are still challenges with governance, entitlement funding, tax reform and that ever-rising stock market.While the use of passive investing is becoming quite trendy, I still believe that active management can provide good value and opportunity. That is why I like to use a blend of active and passive investing, along with alternative ideas.In closing, the start of any new year brings hope and promise. I think that 2017 offers great promise and hope that we can avoid the roller coaster ride as experienced in 2016. However, I have been in this business long enough to know that one can never predict market direction. An investment strategy that is balanced and focused on objectives, helps advisor and client alike, stay focused for the long term.January 3, 2017Happy 2017!I hope you had a great holiday break and are ready for a new year!Last year proved to be quite interesting and exciting, all at the same time. It required the most steadfast of believe in our system of democracy and economics. Often, there were times, when many felt that the future looked bleak. Whether your own instinct, intuition or belief proved right or wrong, all I can say is that we made it to another year. I suspect the coming year will be full of surprises as well. There are still many challenges ahead, and even a deal-maker like President Trump, can’t always get what he wants. The continued strong market is still a concern in my opinion and will direct my investment strategy for the first quarter or two. While it looks good on a chart, rarely do markets go up--forever.The Department of Labor fiduciary rule seems to have become an issue for the Trump presidency. While I think many of the measures are good (lower fees, transparency), the day to day handling of smaller client accounts is and will be problematic. However, I am steadfast in my desire to help my clients, young or old, small or large (dollar size); achieve their goals and objectives.I know that there are many individuals confused, worried and challenged by these markets and their situation. My request is that should you have friends or family in this predicament, please share my phone, email and website contact information. I love helping people enjoy the American dream.And, don’t forget to keep me current on your address, situation and personal goals. It is imperative that we are on the same page, when it comes to your financial future.Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed, and the accuracy of the information should be independently verified. This material may contain forward looking statements and projections. There are no guarantees that these results will be achieved. It is our goal to help investors by identifying changing market conditions, however, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the economy or the stock market.