Professional Investment Management
Financial Guidance
Since 1992 - Celebrating 27 Years
Tudor Financial December 2019 Update
Professional Investment Strategies
Advanced Planning/Financial Guidance for 27 Years
Serving Clients Throughout the U.S.
Markets are Flying at High Altitude

Markets are flying at high altitude and there is a reason we know this: our investment strategies that depend on finding good undervalued individual stocks are fishing in a nearly empty pond. Given a natural human fear of heights, one might think that this high altitude suggests markets are setting up for an impending disaster. However, just as planes can fly high for an extended time, so too can markets.

All markets ultimately regress to the mean. We are not predicting short-term market direction, but we know that there have been better times to buy undervalued securities.

Why Markets Are Up This Year
"Sometimes" Politicians Actually Help

Every so often, we trot out market facts that seem to defy logic. Take, for instance, the presidential election cycle phenomenon. This is an odd recurring market performance curiosity that has once again been realized this year.

This strange anomaly has occurred fairly consistently through long history. That is - the market has historically underperformed in the first half of the four year term of the presidential cycle and outperformed in the back half.

So why has this occurred with such regularity? Have you noticed that heavy legislation changes occur in the first half of the presidential cycle - almost always? This is because politicians get the hard things done in the first half of their term and coast in the second half. These legislation changes almost always create some form of wealth redistribution and this risk is a concern to investors that may have something to lose. So, risky legislative years in the first half of the cycle translate into lower returns, while political stalemate and less risky years in the back half of the cycle translate into higher returns.

This year is the third year of the presidential cycle and you can see in the chart below that third and fourth years have been above average - with the highest average returns in the third year: hence well above average returns this year. Does it always work out this way? No! However, over time the averages have held.
Is Your Robo Smarter Than a Fifth Grader?
Automated Computer Investing Hasn't Yet Added Value

You see the ads on TV promoting the merits of automated investing and you wonder if the services have merit. What is interesting is that many investors may not realize that they are already participating in this approach as major investment firms have taken investment decision-making away from their sales representatives.

Investment technology founder Robert Huebscher tapped into data provided by research firm Backend Benchmarking to show that thus far the services offered by robo advisors have not improved on performance over more traditional investment approaches. His study shows that the automated robo services failed to outperform the most basic balanced stock/bond portfolio. As technology improves, we will see over time if the services can offer a more compelling argument for their existence.
(Source: Is Your Robo Smarter Than a Fifth Grader?, Robert Huebscher, Advisor Perspectives)
Amazing Turn
of Events
Decades ago, America was heavily dependent on imported oil - think Arab Oil Embargo back in the 1970's.

Innovation in oil extraction has transformed the U.S. into a net exporter of oil. In September and October of this year, the U.S. exported more oil than it imported. Technological advances now allow t he U.S. to celebrate the prospect of energy independence.
(Source: Energy Information Administration)
Thank You Amazon?
9,271

The number of American retail store closings year-to-date through 11/29/2019. This exceeds the all-time record of 8,139 store closures from 2017. (Source: Coresight Research)
52%
The current state and local government level of funding nationwide for pension liabilities. Governments have only 52 cents on the dollar of what they should have to provide for current and future retirees. After a ten year bull market, this statistic is particularly unnerving.
(Source: Federal Reserve)
How to Keep Up With Inflation?
Our Legacy Strategies invest in high quality stocks exclusively. Many high quality stocks throw off income in the form of a dividend. A relatively benign average inflation rate of 2.13% has surprisingly caused prices to increase nearly 50% since the year 2000. How does one keep up with that? (usinflationcalculator.com)

Consider that bonds generally do not increase their interest payments, and you see the challenge that bond and bank savers have building wealth and income over time.

Good dividend-paying stocks, such as candidates we consider for our Legacy Strategies can grow their dividends at a much faster rate. The current twenty-three holdings in our Legacy Growth and Income Strategy have grown dividends at an 11.82% pace over the last ten years. (2) This far exceeds the rate of inflation. Dividend increases can also help bolster stock values and thus grow investment principal as well, another effective way to dominate inflation.
Dow Industrial Index
December 24, 2018 - 21,712 (2018 low)
December 6, 2019 - 28,012 (1)
"Work for your paycheck today as though you won't have a paycheck tomorrow, because someday that will be true."
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
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.