COMMENTARY 2016 November 23, 2016 I want to wish you all a safe and joyous Thanksgiving. I hope you take the time to reflect on all that is good in this world. And, take time to thank those around you who support and believe in you. I am thankful for all you. The year has been interesting and we still have over one month to go. We might very well get that Santa Claus rally that I mentioned previously. The stock indexes seem to keep climbing, whether on fundamentals or false hope. I don’t know which. In my concern about the presidential election, I must say, I was most worried about equity positions rather than bonds. However, post-election equity positions have been strong with bonds being quite weak. In addition, there have been a great number of changes in sector performance. What was old is now new, and vice-versa. Whether this trend continues through year end, it is hard to say. But, I feel good about client cash holdings and look to allocate those positions into the market starting in 2017. I heard today that it is possible this market would have gone up no matter who won, the market just needed to get over the election. I think this might be partially true. However, there is no doubt that economic differences will dawn with the new president and Congress. As we count our blessings this Thanksgiving, we must be mindful that the stock market has been very strong for the past seven years. While not the longest positive trend in history, it is getting a bit dated, no matter the change in the Oval office. So, we must still be vigilant that a market decline is on the horizon. The date of that event is unknown, so we must move accordingly. Nimble portfolios and alternative investments offer good ballast during such times. Look for more insights in coming months. Best wishes, November 9, 2016 Happy Hump Day! Or, should I say, Happy Trump Day! The people have spoken and we have a new president. Move on. For those that voted for Trump, we have a short four years; and for those that didn’t, we have a short four years, before we go through this again. Let’s all make the best of it. But, more importantly, let’s make the most of your future by planning today. There are still many issues and challenges that face the world. We still need to talk about making your investment portfolio tax efficient. I just don’t see a way how the Federal government can cover our obligations and entitlement without raising taxes to those with even modest assets. To me, this means wealth re-distribution through varies means testing programs and formulas. We still need to talk about growing your investment net worth. The ugly head of inflation is starting to rise, most especially on goods and services people use the most. Keeping your money in cash just isn’t an option any more. We need to be pro-active and mindful that purchasing power loss can be just as devastating as loss of principal. We still need to talk about your health and how we can cover the expenses now and later. Most especially later, when you will need some form of assisted care--in your home or in a senior care apartment. I’m sure you have heard about the costs of such care. Besides, those costs weren’t going to go down, no matter who got into office. We still need to talk about how to remain invested in a stock market that continues to confound and push above fair value. The experience of yesterday and today suggests that this market really has no idea which direction to take—good news or bad. And, lastly we need to talk about those things that keep you up at night. The world is a great and glorious place, it is a shame to not be able to enjoy it, when you are frozen by fear, caution or insomnia! Talking is one of the best ways to clear the air, the heart and the mind. Best wishes, Robert November 4, 2016 Happy Friday! If the polls are correct, about 50% of the United States population will be unhappy with the outcome of the presidential election. As you might have read, for some, the threat of civil disobedience is their answer for resolution. Hopefully, we can all agree that this in fact is the wrong solution for any problem. Come November 9th, the change in Presidency will begin just like it has done for over 200 years. If you are dis-enchanted then I say get involved through governance—city, county, state or federal. Be a change agent, not a secret agent, working behind enemy lines. I agree that things will change, some good and some bad; but for the most part this great nation will continue to move forward with far greater threats from abroad than from within. Bills will come due, paychecks will be received, ballet lessons will continue and football will enter the playoff stretch. Your life will move on with other issues to consider. I submit the two biggest threats that you and your family should consider are longevity and health. These factors can truly impact your freedom way more than Hilary or Donald or anything else you might hear from the media. If you don’t believe me, go visit a local senior assisted facility or Veteran’s home. Talk to the residents and get a taste of what it is like to live without mobility or independence, to live not knowing whether you have enough money for food, shelter or medicine or to live wondering how not to be a burden to your family. Now think about who has a greater role in your future—You or the next President. I know it is you, and suggest that if you haven’t put YOU at the top of the list, you’ve wasted time already. If you need a little help putting your priorities straight or developing a plan give me a call. This is what 25 plus years in the financial services industry has trained me to do. Take advantage before it is too late. For you or for me! Best wishes. November 1, 2016 Obama Care - Un-Intended Consequences If you mention the Affordable Care Act to friends and family, you will get a wide variety of responses—some good and some bad. It is well-known that more people are covered with health insurance than ever before, but for many working Americans, health care premiums have gone up. In fact, the Obama administration confirmed that the average health premium cost will increase by 25% for 2017. An un-intended consequence of said increase has been reduced spending on dining out—to the tune of almost 47%. While this does not portend well for the restaurant industry, I submit that it will have a dramatic impact on overall healthcare costs by reducing the incidence of obesity and diabetes in America. The question remains whether reduced healthcare spending will be able to offset the reduced employment wages and revenue from the restaurant industry. Hopefully, you are practicing this behavior in your own life. Better health, better longevity, and lower overall costs. A true win-win for you and your family. October 14, 2016 Happy Friday! Well, a mixed day on Wall Street after a few banks reported good quarter numbers. I don't think Wells Fargo was in that group and for good reason. A sad story for a bank that has really been unscathed over the past decade. They dodged the great recession, only to be brought down by cross-selling. Now there is nothing wrong with suggestive selling, but I don't think any of the business text books suggest or advocate for the blatant disregard for ethics. For good reason, any licensed securities broker caught opening false accounts and credit cards, would have their license evoked and criminal charges filed. The election is top of mind for most of us, whether due to true interest or entertainment, but I thought a new survey was worth sharing. In their 2015 Risks and Processes of Retirement Survey, the Society of Actuaries’ reported among other things: "To reduce costs in retirement, 90% of retirees are spending less on purchases, 70% are dining out less frequently, 56% are traveling less, 44% are cutting back on gifts and charitable giving, 17% moved to less expensive housing, and 11% refinanced their mortgage." "Twenty percent of pre-retirees and 30% of retirees said that if an emergency were to arise, they could spend up to $25,000 without jeopardizing their retirement security." But wait, that means that 80% and 70%, respectively, could not spend that much without some financial impact. In fact, the dollar amount was anything above $1000. "Half of both pre-retirees and retirees have not consulted with a financial adviser. Only 15% of pre-retirees and 20% of retirees consult with an adviser at least once a year." Thankfully, I know most of you reach out and have that consultation, but for our country, that means a lot of people are just kind of winging it or hoping from some kind of help. I encourage you to read the full article at www.planadviser.com, it really is quite interesting, and quite frankly, it underscores some of the voter friction that we hear and see in the media. Young and old, Democrat or Republican, many citizens feel that there is just a little something not right going on in our country. However, we can't predict solutions or directions, but we sure can develop oru financial independence and insulate ourselves as much as we can from the unknown that lies ahead. If you need help or have questions, give me a call. Have a great weekend. September 6, 2016 Happy September! We are two months away from the U.S. Presidential election and complacency remains an issue for the candidates and global equities. August was the most muted in recent years given low trading volume and price range. In fact, to show the range bound trend, CreditSight reported the smallest difference (14.6%) between the best performing asset sector and the worst performing asset sector over the past 20 years. In 1999, the difference was 92.4% and even 2009; when the world was seemingly about to end, the difference was 67.2%. So what does this mean for you? Well, it means that it has become increasingly harder to generate alpha or returns by picking winners. Moreover, it reflects the weakness of late in asset allocation models, which supposedly allow for a smoothing of the risk-return trajectory. However, as I have mentioned before, the current market euphoria is based on the U.S. equity markets and the low interest rate by the Federal Reserve. There will be a time for that reversion to the mean. But, when that happens is anyone’s guess! The range bound market makes it even more paramount to constrain fees, which at some level might be why the Department of Labor (DOL) is focusing on fees charged in retirement accounts. While I agree keeping fees low is a good thing, I am not a big fan of how the DOL is going about it. In fact, many investors will find that their current financial advisor won’t be able to handle their accounts come April 2017. One major broker dealer has set a minimum of $100,000 on retirement accounts that can be held at the firm. I submit, who will help those under $100K, which account for most of the investors in the U.S. Will this just be another case of the haves and have not’s? I have always keep a lid on fees and thankful for our recent move into the Vanguard platform. I can offer competitive fees with excellent customer service and support on accounts of all sizes. However, in keeping with the times, I will be offering more fixed fee services to help individuals needing financial advice but not wanting someone to push and pull the switches. I have written about complacency in recent weeks and Chairperson Yellen commented about complacency in her speech at the Jackson Hole summit. One must not become complacent in the face of adversity and challenge. The battle field for your survival isn’t just the current Presidential election, it is almost everything you do from here on. I am ready to help you take up the gauntlet as we do battle together for your future and your legacy. If you have questions or need guidance, give me a call today! 951-533-1563 August 23, 2016 Happy Tuesday. Gold Medals and Glitter The Olympic Games have ended with many thrilling moments and some not great moments. I suspect many of the participating athletes are not truly compensated for all their effort and energy to achieve gold. There are always some people that don’t realize how fortunate they are and squander away good fortune and fame. However, with the games over, we must all realize that attention must now be directed at more pressing matters. Foremost will be the upcoming U.S. presidential election and supporting elections for the Senate and House. While the president is important, as we have experienced over the past few years, without a co-operative legislature not much can get done. I agree with some that this election may be the most important election in recent times. And, perhaps the most important ever for my generation. But, like in past elections, the theater subsides and the government gets back to business. Bills will be paid, jobs will be lost and created, and stuff will be made and bought. Rarely do the promises and rhetoric from an election get put into place as law or regulation. However, while the election might be critical, I believe the most important event in the past century relates to central bank policy; namely, zero to negative interest rates. The event in question of course will be the global decision to raise interest rates. I believe it is quite accepted that these low rates are pushing investors into investments that are perhaps beyond their risk comfort zone. But, with bank C.D.’s paying nothing and government bonds not much better, there really is a limited choice leading to a very crowded equity market. We all know that investor behavior can drive a market higher and lower. In fact, such behavior explains why most investors underperform market indexes. The tendency to sell and buy at the wrong time seems hard-wired in most individuals. However, I believe the behavior offering the most danger today is complacency. As defined by Webster: “a feeling of being satisfied with how things are and not wanting to try to make them better.” In my discussions with clients and individuals throughout the United States, I get a sense that people are uneasy with their circumstances, but complacent in terms of action because what should be added to that definition is the phrase “not wanting to make things worse.” People are frozen in their actions in terms of preparation for the future. They believe that just by not doing will make things alright. But, we all know, that isn’t the case. For the most part I can understand why people are frozen and complacent, but there is a point when action is needed because the world continues to spin and evolve. There is an underlying current beneath the surface that will impact us all. Whether it is inflation, economic turmoil, territorial conflict, sudden illness or death; there is an event that needs to be considered and accounted for. In summary, the world stage is bright lights and glitter, but off stage is where the real truth lies. Planning for the future is not just about investing in large cap mutual funds or emerging market bonds. It is about considering death, divorce, loss of a job, long term medical expenses and so many more moments. Don’t let the bright lights and glitter blind you from the reality of life. What is your plan for the future? Is it written down and have you conveyed it to your spouse, your children and your trusted professionals? If you need help, give me a call, I am here to serve you. August 9, 2016 It seemed like just yesterday, well actually this past February, when the world thought the financial system was going to implode. At the time there were concerns about China’s economy slowing down, low energy prices and a few other things (Brexit, U.S. election). My how things have changed since then! Markets continue to climb that wall of worry or lack of worry more likely. In the midst of a zero bound return on almost any safe investment, investors are stretching out on the risk curve to find yield or income. I have said before that this market will go until one day it won’t look like such a great idea, ala February. I am defensive in portfolios and happy to be there. For a number of my younger clients, we are still buying shares monthly in the hope to dollar cost average through this choppy, sideways market. For these portfolios, when we look back in 5 or 10 years, they might look like a real bargain. I firmly believe that during these times we need to look at all aspects of family planning and net worth preservation. The use of life insurance for protection and asset transfer can be of great value during these times. Likewise, an asset class that is under-appreciated and under-funded is long term health care planning. Why not allocate some investment gains or cash to such an account? It isn’t that you won’t use it, but more likely how much of it you use! And, one more thing, given the strong U.S. dollar and current exchange rates, one possible use of idle cash is travel abroad, especially to the United Kingdom. If you haven’t been to London or even Paris, now might be a good time to follow that dream. There are some great deals floating around and with a vigilant eye, the likelihood of a tragedy seems remote. What a great memory to share with a loved one, child or friend. If you do go, please consider travel health insurance. For a very low cost, it can help cover gaps found in domestic policies. Go to my GeoBlue link and learn more. https://www.geobluetravelinsurance.com/products/single-trip/voyager-5-overview.cfm Cheers. July 5, 2016 Well, another July 4th has come and gone, which means time to review the past six months and look to the future. Today seems to be a risk-off day as investors begin to think about the Brexit with a little more perspective. While it sounds good, I liken it to, say, California, deciding to leave the United States because they have the 5th largest economy in the world and can stand on their own. Theoretically possible, but not without turmoil. So I wouldn’t be surprised if the big Brexit turns out to be more of an adjustment for EU policy allowing for the United Kingdom to maintain their status quo. Likewise, remember in mid-February, when it seemed that oil and stock prices were heading to zero? Was that time to buy on the dip or sell? Given current market conditions, it was definitely a time to buy, but with the caveat of how long will it hold! There might just be another opportunity around the corner. I mentioned early on about several factors to consider for portfolio management, Brexit was one of them along with the Olympics, housing and the U.S. Presidential election. This market seems to move on its own with little input from the fundamentals of economic theory. Sadly, I believe it will chug along until the day that little engine decides it just can’t get up that hill. I would say that day will come sooner rather than later, but it is really hard to say now. There are many forces in play propping up the system, stocks, bonds and the consumer. While cash is good, it is not much fun to see others gain when equities or bonds are the “go-to-place” for yield and appreciation. In the near term, we need to ride this train being mindful that we might have some deep valleys. Some of the valleys might get pretty low but nothing out of normal. However, over the longer term I fear that there is something in play of a greater magnitude over the next 5 to 10 years. In the meantime, we need to stay vigilant about global events, up to date on current cash and income use and diversified as much as reasonably possible. Whatever lies ahead, it is a given that many things we use daily will cost more and how we pay for them challenging. As always, it is best for us to stay current and up to date on your needs and wishes. This is no time to sit back and watch the world go by. There needs to be a plan and it needs to be monitored frequently. Best wishes for the remainder of July. June 3, 2016 Happy Friday. After a nice week of support, the markets are challenged today by the low jobs report. The saying "follow the money" is accurate because without jobs, there will be no money to follow. We saw this impact last week with automobile sales figures, although housing numbers continue to climb. In fact, housing might be entering that fuzzy logic zone of unsustainable growth. There is wage improvement, but I don't think enough to really move the needle on personal consumption or savings. From the people and businesses, I speak with, it seems that the economy has taken a brief moment or two to reflect. It is hard to say what underlying challenge is most pressing, but there are aplenty. Banks are being impacted because the notion of higher Fed rates is no longer a given. Banks benefit with higher rates because they can earn more on the money they aren't lending. Hard to believe they are not making money when one looks at the interest rate charged on credit cards. Insanely rude, comes to mind. Trending sideways still defines this market. It has been a roller-coaster since last summer with none of the major indices being able to hit new highs and trading volume reflecting low interest. In this scenario, a couple of high-flying names can move an index up or down with very low correlation to the economy. I remain steadfast in my strategy to have a higher cash balance than normal but I do think post-election might be a good time for re-entry. Early in the year I was thinking early 2017, but that might be too late. It is important to have a well-diversified mix of asset classes with varying degrees of liquidity. If we haven't chatted in a while, give me a call. Other than that, enjoy the summer but don't expect a lot from the stock market, unless of course, there is some major event to drive the media frenzy. June 1, 2016 RUNNIN AWAY – Yes, you’ve heard it from friends, family and celebrities. They say, “If Trump or Hilary wins I am moving to where ever. I just won’t be able to live here.” Being a little smarter, you think “really, that makes no sense at all.” And, you are correct. There is no place to run in this world that offers all that America has to offer. Yes, we have issues but America and the world will move forward, no matter if it is Trump or Hilary. So enjoy your summer and plan for some excitement over the Fall and into 2017. But, the world won’t end, no matter the Presidential outcome. May 17, 2016 A WORLD AWAY – There are so many issues in the world that are out of our control--Brexit, Brazil, China, Syria, not to mention our own presidential election. But, they shouldn’t stop you from moving forward on important financial planning issues: Estate planning—do you have a will or trust? Family protection – do you have life insurance or enough life insurance? Social Security – is all your income reported correctly? Senior Living – how will you pay for long term care expenses? There is more to think about than whether the stock market is up or down! It is never to late, give me a call today. May 10, 2016 GAS, LOW NO MO - With gasoline prices on the rise, why the silence? Is the U.S. consumer immune to the price shock of gas at the pump? Normally, we would hear the rallying cry of conspiracy towards the oil and gas industry. Or, perhaps we are all just tired of hearing the story and relish gas below $3 a gallon. Be forewarned--higher gas prices are coming. Are you prepared? May 4, 2016 THE NEW FINANCIAL ADVICE MODEL – No frills, No fun, No ideas. Gone will be those hot stock tip calls at night and those “I hate annuities” ads. In fact, you just might find that your own advisor doesn’t call to see how things are going. Get ready for an itemized bill, just like from your CPA or attorney. No more meeting for lunch and leisurely chatting about the kids, life or retirement. My advice—get on the phone now and meet with your financial advisor while you can, because soon he or she will be on the clock, and time means money! Oh, and get ready to become more responsible about your retirement planning. Those annoying outbound calls really did serve a purpose--made you think about it. May 1, 2016 Dental Woes - Dental bills don't mean much when you are young and on a group dental plan. But, they can really add up during retirement when you self-pay or have a not-so-good individual plan. Don't let poor dental hygiene today, cause un-necessary dental bills in the future. Spend a few minutes over the weekend and listen to my Wealth and Wellness podcast, Episode 6, a personal story of my recent dental experience. Look for the link on my Client, Tips and Tricks page. April 27, 2016 WHAT’S YOUR NUMBER? $400? $1500? In this honest account of life on the edge, Neal Gabler, shares his personal story about finances in the Atlantic magazine. Using data from the Federal Reserve Board, Mr. Gabler shows just how fragile life is for a good number of Americans. When asked how they would pay for a $400 emergency, 47 percent of the respondents said they would have to borrow, sell something or wouldn’t be able to cover the bill. The story laid out in the Atlantic is worrisome and frightening, because of what it means about today and tomorrow. I encourage you to read it. Be honest, what is your number? If you need help getting your financial house in order, talk to your financial advisor or give me a call today. Time is of the essence! April 25, 2016 ADVICE AND THE DOL – Let’s be frank, not all advice is great. The tips from Uncle Morty haven’t been all that good. But then again, it was his opinion not a solution to your problem. When advice turns to solution there is almost always a markup—fish or chicken, latte or frappe! As long as it is transparent, why not financial solutions? I submit that when solutions become less complex and feature less regulatory nomenclature (good luck with that), then the consumer can be served on the cheap. But, until then, consumers must pay market price, just like with any other professional service. However, wouldn’t it be nice if prices and service were set by the market, not the government? April 20, 2016 Happy Wednesday! My how things have changed since the late January 2016 through early February 2016 sell off. Did you fret or worry? Or, hopefully, you reviewed your portfolio, talked with me or just went about your day, knowing that all was well and that this too shall pass. I know, a bit dramatic, but think back to the media frenzy and worry that you must have heard all around. The markets have rebounded quite impressively since then, but I believe that the steam is slowing coming out of the kettle. Trading volumes are down and the number of stocks hitting new highs are diminishing. And, company earnings are not so great suggesting that corporate revenue or another way, consumer spending, is down. I don't know about you, but I don't hang around with the 1 percent crowd, who I am sure don't worry about their spending habits. But, the good citizens I work with, talk with and engage, don't quite feel so positive. There is still angst in the general populace, whether due to poor wage growth, reduced weekly hours or job loss. Now throw in a US presidential election that will be the most interesting show on the planet, global challenges with oil supply/demand issues, Brazil and China corruption, weakening economy in China and the Zika virus. Well, you get the picture. There is a lot of stuff going on. How this plays out I am not sure, but I do know that these markets can take a turn for the better or worse on a moments notice. So, if we haven't talked about your situation in awhile; or perhaps we've never talked about your retirement plans and challenges. Now might be a good time to get on my calendar. For a good number of you, we've done the right things and we have the right positions. However, it is always good to catch up and review. Enjoy the coming spring weather, which in itself can be quite unpredictable. March 14, 2016 MARCH MADNESS Madness, the act of doing the same thing over and over. Well, that is madness to me, but others find comfort in the repeatable and the sometimes, mundane. Surely then, we all must suffer from a little bit of madness worrying about the stock market of late. However, I submit that it is how you deal with the madness that sets you apart as a successful long-term investor. Remember the fear of just a few weeks ago. Did you panic? Did you sell? Or, did you think “this too shall pass?” Hopefully, you did not make any rash judgements and reviewed your investment plan and spoke with your investment advisor. If not, I think it is not the market that needs help but your planning process. We are almost one quarter of the way through the year, so I thought it was time to put pen to paper and write my thoughts about the remainder of the year. Needless to say, it has been a bit unsettling in the equity markets although it appears we have come full circle since the beginning of the year. The one bright spot has been bond portfolios of all sorts. They continue to astound even the wisest bond savants--of which I am not! So off we go— Housing is looking better and better although certain areas might be a bit frothy. I know up here in the Portland area, homes get bids and are sold within the week of listing. However, I am not certain this is sustainable and think that regional weakness may present itself later in the year. Rates are still low but it is difficult to qualify and most don’t have enough cash for a down payment. Emerging markets are starting to come out of hibernation around the globe. I have said for the past few years that emerging markets were the place to lay down long term investing with an eye towards the future. Well, the future may be just a little closer as emerging markets are starting to bounce from their lows. How they fare over the next few months and when U.S. equities falter again remains uncertain, but I think they will offer good ballast in the looming choppy seas. China, doing okay but not without problems. I think everyone agrees that China is the 800-pound gorilla in the room. They provide a lot of cheap goods and services that is leading to a lot of consumer-driven growth. I read recently that China has taken the lead in “billionaire” population growth. I just wonder and worry what happens when the 1 Billion ninety-nine percenters realize they are getting the short straw by the 300 Million one percenters. I think there might be a few awkward moments there which will be felt around the world. Energy, well, it is any one’s guess but I think we might have hit bottom and will remain range bound at $40 to $50 per barrel of oil. Enjoy the low gasoline prices while you can, because by next year this time, we might all be complaining about the rising prices at the pump. I wouldn’t sell if you had energy exposure but I sure don’t think I would add or purchase new positions just yet. Inflation on the horizon? Hard to imagine with food and energy prices so wonderfully low, but there is just a hint of inflation showing up in labor and services--think healthcare and multi-family rental costs. They are just two examples of selective price increases. I mean, all that free money printed by global central banks has to do something, besides sit at banks, right? Eventually, there as to be some return to normalcy in currency markets. This is why one needs to have some equity exposure, otherwise, one suffers from purchasing power risk. Just review some of the stories out of countries who’ve not done a very good job keeping inflation in check. Retirement promises, made to be broken. I think we all know that social security entitlements are not necessarily on strong footing. We know this because every year the Trustees of the Social Security and Medicare trust funds report on the current analysis and projections. As of 2015, the Trustees state that everything looks pretty good through 2034, after which they have enough money coming in to cover about three-quarters of that needed to go out. So back of the napkin calculation suggests that Generation Y isn’t going to get what is promised which could become another very awkward conversation. Moreover, it just isn’t the United States that has retirement issues now and in the future. Almost every major developed country has an aging population with a dwindling work force. The end result will be way too many people at the trough to get supper and sustenance. My advice, sacrifice a little of the good life now, so that you won’t have to fight for scraps. Election year blues will surely take its toll. The coming election may be just too close to call, but I believe that the world will wake up later this year and understand the reality of our dysfunctional election process. Sadly, there is no do-over or let’s get a new slate of names on the ballot like one might find in other countries. No, we get what we get, which is mostly pushed by the party machines. And, therefore, good people, I believe markets will take a very dim look at our new President, whom ever that may be, and sell off—perhaps in a really big way! So I suggest that you think about adding cash to your asset mix sooner rather than later. Sure, you won’t get paid anything while you wait, but it sure beats going through the gyrations and emotion of declining markets. How much cash you need depends on your risk tolerance and time until retirement. There are alternatives to just holding cash, but you need to set them in motion right away. Advice wanted, inquire within. Just when you might finally decide to seek counsel from your local financial advisor to help you understand and weather the election storm, the Department of Labor’s fiduciary rule will go into effect. There is great debate about the final ruling but it does appear that how you get advice on retirement accounts will change—will it be for the better is yet to be determined. I am all for saving client money, but for any business there is a minimal cost for doing said business. I am just afraid that the DOL rule might make many transactions untenable for investment professionals. If you don’t have an advisor, I suggest you find someone ASAP—get into their system before the rule goes into effect. If you don’t, you might just find that entry barrier higher than you can reach! In closing, this election year might just be one to remember for a very long time. Moreover, as you go about your day, think about the number of governmental rules and regulations that guide your path, not to mention those by state and local municipalities. The buzz of “Big Data” can be felt on all platforms and all levels, but it may just be the medicine you don’t need. Be forewarned, there is a daily battle between corporations and governments for our assets. I am not certain that either side has our best interests at heart which may eventually limit our hard won “freedom of choice” as the punk rock Devo would say. February 2, 2016 So I filled up my Smart car the other day and the total came to $13.46. When I looked at the receipt I thought the attendant (yes, OR is not self-serve) had not filled the tank. But, then I looked at my gauge and it was full. Wow, I thought “how could gas prices this low be such a bad thing?” I’m sure you have all experienced the feeling of paying low prices for gas and food. When I go grocery shopping, I am amazed at how low food costs are in general and with just a little smart-shopping, you can get even better deals. Now I’m not quite sure how come bread is so expensive but then again, we probably shouldn’t be eating that many carbohydrates anyways. You might read or hear that we are in a deflationary period. In fact, the central bank of the U.S. or the FED, is trying to target the interest rate to stimulate a little price inflation. However, they are not having much luck given the current policy of free money around the world. Our personal health insurance premium went up by about 11%, which is just a little higher than what the Department of Health and Human Services announced for average premium increases on the exchanges between 2015 and 2016. Naturally, there are differences aplenty depending upon your state and the provider network. In fact, a separate report by the Freedom Partners Chamber of Commerce said that average premiums actually went up 14.9% between 2015 and 2016. Minnesota reportedly had the highest rate increase of 47.7% (Yikes) followed by Alaska and Hawaii at 30%. The report also showed that deductibles went up by about 8% in 2015. I believe that healthcare expenses will still be one of your biggest challenges in the future. While we look for a new house here in Portland, we are renting an older home that sits in a very desirable area (top schools, top walkability score, trees, craft beer). Our landlord gave us a nice little notice regarding a 6.5% increase in rent, which I suppose could have been worse. In looking at the average monthly rents for a two-bedroom apartment in Portland, the year over year increase was 14.6%. This trend is showing up in many desirable cities popular by Millenials and the newly retired. It seems many of us want the ease of lifestyle without the headaches of home ownership. How long this lasts remains to be seen. The point to be made is that pricing pressure is different depending upon the product, the service or location. Naturally, one will want inflation to stay low through and during retirement but that isn’t always assured. Moreover, there is a tendency to see rises in service costs on more a consistent basis than consumer goods and consumables. Services are what retired individuals use most on a month or month basis. The end result is that you need to have some type of growth mechanism (equities) in your investment and retirement portfolio. How you achieve that objective can vary depending upon your risk tolerance and time horizon. I will say that moving forward the balance of growth and safety in your portfolio will become quite challenging. Before I venture off into my thoughts for this year, let’s take a little time to recap my musings for 2014 and 2015: China – I did pretty good here. I have been suspect about what the numbers in China mean. I suggested that instead of investing in China one might want to invest in countries around China or import into China. A few of these Asian countries have fared well, while a good number have actually experienced declines, but not nearly as great as China. Sadly, those that have fallen the most experience a lack of good governance and were plagued by corruption. I under estimated the impact of China on the global stock market going into 2016. While it really is a small part of U.S. economic measures, it is increasingly becoming a major player in the world. Housing – I said housing would be mixed in 2015 and believe this was the case although it really was location, location dependent. Housing inventory experienced a banner year after many years of low building growth benefited from continued low interest rates. I am not one to invest in home builders or houses as an investment theme, but I think 2015 could have been a hit or miss in almost any city around the country. I still believe a house is a place to live and raise a family, not a part of your retirement plan. Emerging Markets – I indicated that emerging markets would be soft and that they were better for building long term growth for the future. Many emerging market countries are resource dependent so they are seeing reduced GDP because of lower commodity prices around the world, not just in China. In addition, there has been a tremendous amount of corruption within these markets to make even the most steadfast investor wary. Just look at what is happening in Brazil. At one time this country was poised to step into the upper ranks of developed nation status, but has fallen to the very bottom due to corruption, poor governance and a dependence on Chinese resource demand. I am not giving up on my energy and power investments in Brazil, but I am not certain we will achieve the growth that was anticipated. So besides Brazil, I am starting to re-think my views on emerging market exposure in client portfolios. I am not certain that their many failings are worth the risk of investment. Wages – I have been saying that job growth would improve but that we would still be dogged by low wage growth. There have been initiatives voiced around our country to push up the minimum wage but with very little actual change. A few national brands have embraced the concept, more as a factor of good public relations, as opposed to business practice strategy. Moreover, the demographic of minimum wage workers, while important, is not sizeable enough to really move the needle on full employment wage growth. Wage growth because a company or local government wants it to be higher is not the same as a job applicant moving up the income ladder because of demand. Energy - And, now we come back to our good old friend energy prices. To say that energy prices have plummeted is an understatement. Oil going from $145 a barrel down to $30 barrel was un-thinkable just a few short years ago. Shale fracking in the U.S. was going to change the dialogue at the global energy confabs, but for the good not the bad. In years past, falling gas prices would make the consumer feel good and the talking heads would talk about the boost in the economy for every 1 penny of gas savings to the consumer. Not this time. And, if there was friction between any nation within the energy arena, energy prices would climb. Not this time. Some say that because of shale fracking, some oil deposits may never be removed from the ground. While this might be a good thing, one thing I learned from Fievel is “Never, say never!” Energy prices and companies may very well be at an inflection point. While in the short-term this may be frightening and chaotic, ultimately I think it will shake out the weak and bad players leaving only the strong. One thing I have observed in my life time is that energy seems to be forever in turmoil. So, the recent weakness and instability shall soon pass. The key is to be patient and enjoy the positive impact on your monthly cash flow. Next, week I will post my thoughts about the remainder of 2016 and beyond. January 15, 2016 ENOUGH ALREADY – Yikes, what an ugly day in the stock market universe! I still believe this is not the BIG FLUSH but think that market participants around the world have decided it was time for a good WASH-OUT. By that I mean, out with the old and in with the new. The old being China and energy positions and the new being, well, who knows until we see positions reported in regulatory filings. Remember, in order for one to sell, one must have a buyer on the other side and that is the real story here. The Who? Next week will be better. January 13, 2016 I SMELL A RAT – The market sell off seems a little fishy to me, and while I can’t quite put my finger to it, I smell a rat. First, the oil patch is at 12-year lows, but yet we still keep pumping more oil. To what end? The implosion of Saudi Arabia and more instability in the Middle East. And, yet the FED believes the U.S. economy can tolerate rising interest rates. Is the credit market telling the real story about the global economic malaise? Or, is the silent hand of intervention directing the world towards an end game that only few know? There is much to consider in our world, and I suggest that a major re-think in investment strategy is warranted. This time, really is different! January 8, 2016 WELL, THAT WAS AN UGLY WEEK – Let’s face it, that was not a great way to start the year, but what can you do when markets are pulled by forces that not even Luke Skywalker could overcome. Patience is warranted. January 4, 2016 THE BIG FLUSH – Markets sell off today (marginally) after the news from China doesn’t go well and Iran and Saudi Arabia have a little tiff. After a lackluster 2015, it isn’t too surprising that investors remain a little skittish. However, there are way too many positive economic indicators in the U.S. for this weakness to continue. I do expect continued volatility but this isn’t the Big Flush that will test the lows of 2009. Buying selectively is definitely warranted but be ready to move quickly when necessary. I believe at some point in 2016, cash will be a very important asset class. Need ideas on how to position your portfolio, give me a call and let’s talk. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. 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. Past performance cannot guarantee future results. This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. As individual situations vary, the information presented here should only be relied upon when coordinated with individual professional advice. This presentation may contain forward looking statements and projections. 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