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16Aug
How Resonate Provides Value
Economy
Richness of LifeIn case you have not read the first blog in this short series, I invite you to do so.

Since completing it, I have given thought to which of the many client stories I wanted to share with you.

The first story is that of a recent widow who was referred to us.  When I met with Alice, (not her real name, of course), I found her to be very clear and communicative in spite of the recent and sudden passing of her husband.

The stories she told me about her experiences in the financial services world both angered and saddened me.  Assumptions were made that, of course, she would not be able to “handle her own affairs nor make thoughtful decisions” primarily because she was a woman.  On several occasions, male advisors from different companies assured her that “they knew what was best” and even provided “solutions” without bothering to understand the client and her life.

In contrast, I discovered, that when given the opportunity, this woman was quite amazing in how quickly she was adjusting to new life and found her thought process to be remarkably clear.

This included her clarity of thought that the “solutions” provided probably benefited the advisor more than they would benefit her.  Upon discussion and review of the various recommendations, I supported her thinking.

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04Aug
Client Fees & Value
Economy
It seems that everywhere we turn today, the media is emphasizing advisory and product fees.

Common questions are:

“Are you paying too much?”

“Do you know what you are paying for?”

I consider this type question to be one-dimensional and shortsighted.  For example, if one wants to “stay on the numbers’ side”, then where is the question:

 “Are you receiving value for your fees?”

The interesting thing that happens when we insert the word “value” is that we add the possibility for an intangible answer in addition to the one-dimensional tangible answer.

Here are two recent examples of how we have added both tangible and intangible value for our clients:

Example One:

Clients recently came in for their conversation with us, which includes portfolio review. They brought a folder with them and asked: “Will you please look over these estimates for us to pre-pay our funerals?”

This led to a conference call with the clients and the director of the funeral home.  At the end of the conversation in which I asked many questions, the clients said, “Thank you so much.  We understand this now, and are very pleased with the decisions we have made.  Mostly, we feel wonderful that we have taken this burden off of our family.”

Tangible Results: the clients ended up saving $1100 from the original quote.

Resonate Time: 90 minutes

Resonate Fee for this work: $0 

 

Intangible Value Received by the Client: Relief; peace of mind.

Intangible Value Received by Resonate: Knowing we did the “right thing” for aging clients.

 

Another Example…

A client called recently and said: “I’m not sure if these new legal documents prepared by an attorney match our objectives discussed with you.”

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05Jul
Bull Market – Is It Time to Get Out of Stocks?
Economy

The U.S. and International equities markets have just given us yet another great quarter end.

How much longer can this continue?

In spite of the fact that this Bull Market is getting to be very long, it’s important to remember that Bull Markets don’t end just because of time.

One of the indicators that a Bull Market is about to end is that the country is entering into a recession.

What are the signs of a recession?

Sam Stovall, chief investment strategist at investment research firm CFRA, looks at four indicators:

  1. Every recession since 1960 has been preceded by a year-over-year decline in housing starts, says Stovall.  The dips have ranged from a 10% decline to a drop of 37%, and they have averaged 25%.  The most recent report on housing starts showed a decline of less than 3%. “So we’re on yellow alert, not red,” says Stovall.
  2. Consumer sentiment is another signpost. Before a recession kicks in, you’ll typically see an average decline of 9% in the University of Michigan’s monthly sentiment index compared with the previous year, says Stovall.  Current reading: up 2.4%.
  3. A drop over a six-month period in the Conference Board’s Index of Leading Economic Indicators means trouble, too, with declines of 3%, on average, registering ahead of an economic downturn. Latest six-month change: up 3%.
  4.  Finally, when yields on 10-year bonds dip below the yields on one-year notes – known as an inverted yield curve – look out, says Stovall. Ominously, long-term rates recently have been under pressure while the Federal Reserve pushes short-term rates higher. “We’re getting a flatter yield curve, but nowhere near an inversion,” says Stovall.  His conclusion: No recession is in sight.

Sometimes people exit a Bull Market too early.

(Source: Kiplinger “When Will the Bull Market End?” by Anne Kates Smith, Senior Editor, June 26, 2017)

Your Resonate advisory team is cautious and continues to follow these important indicators.

If anyone would like to have your current portfolio reviewed or has any questions, we’d welcome a conversation with you.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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03Jul
What We’re Thinking About the Rest of the Year – Part 3 of 3
Economy
VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index.  This shows the market’s expectation of 30-day volatility as conveyed by S&P 500 stock index options prices. (www.cboe.com/products/vix=index-volatility/vix-options  and…/vix-index)

As the chart below depicts, the volatility index is currently very low.

Yet, compared to earnings, sales, and other corporate performance measures, stock prices are very high.

The current S&P 500 price-earnings ratio is 25.70 –  above the five-year average P/E of 15 and the 10-year average P/E of 14. (Source: www.multpl.com/  6/2/17)

Based on the chart above, consumers are shaking this off and focused on other factors.

Your Resonate team thinks this could be an example of what is called “home country bias”.  It means that investors’ natural tendency is to be most comfortable with investments in their home country,

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30Jun
What We’re Thinking About the Rest of the Year – Part 2 of 3
Economy
In January, Kiplinger had predicted that the S&P 500 could yield a 6% return in 2017.  In just the first four months of the year, it exceeded that prediction by delivering 7.2%.

Kiplinger’s is now foreseeing a 9% to 11% return for the year—including a 2% dividend yield.  The considerable gains during the first half of the year may foreshadow subpar results for the second half of the year.

According to Burt White, chief investment officer of LPL Financial Research, investors should think beyond a portfolio of U.S. stocks and bonds.  Investors could score big in this market by venturing overseas.  Your Resonate team agrees with this and have been increasing our international exposure in investment models since third quarter of 2016.  Before making international investments, please have a conversation with us regarding risks and strategies that would be suitable for you.

It appears that investors can benefit from this rare, synchronized, economic expansion across the globe.  For the first time, all three major global regions (the U.S., Europe, and Asia) are all growing at the same time.[i]  The International Monetary Fund forecasts world economic growth at 3.5% in 2017, the highest growth rate in five years and up from 3.1% in 2016.[ii]   With consumer confidence at a decade high, consumer spending makes up for about 70% of the U.S. economy.[iii]

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27Jun
What We’re Thinking About the Rest of the Year – Part 1 of 3
Economy
Many of you are asking how much longer the bull market can last.

While no one can answer the question, I thought that the information in this three-part blog might be of interest.

 The Current Bull Market

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09May
Why Might I Want to Invest in Emerging Markets – 2 of 2
Economy

(Nothing I write is to be construed as a recommendation to buy or sell.  This blog is intended for informational use only.  I give full credit to Krishna Momani, Chief Investment Officer of the Oppenheimer Funds, for the information in this blog).

If you missed Part One of this blog, may I encourage you to read it before Part Two?

As you will see in the following chart, growth rates in many of the largest emerging market economies have stabilized and are now trending higher, commodity prices have bottomed, and currencies have steadied, bringing inflationary pressures under control.

Next, as you will see in the following chart, China is successfully transitioning from a manufacturing economy to a service-oriented economy.

The cyclical emerging market economic backdrop combined with still-relatively cheap valuations suggest that emerging market equities are poised to outperform the developed world over the next market cycle.

If you have questions or interest in learning more, I’d love to share a conversation with you!

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

Source of charts: OppenheimerFunds, “The Case for Emerging Markets”, Krishna Memani, CIO
Disclosure:  These views represent the opinions of OppenheimerFunds, Inc. and are not intended as advice or to predict or depict the performance of any investment.  These views are as of the close of business on March 31, 2017, and are subject to change based on subsequent developments.  Equities are subject to market risk and volatility; they may gain or lose value.  Fixed-income investing entails credit and interest rate risks. Bonds are exposed to credit and interest rate risk.  When interest rates rise, bond prices generally fall, and a fund’s share prices can fall.  Investments in securities of growth companies may be especially volatile. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes and geopolitical risks.  Emerging and developing markets may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues.  The mention of specific countries, regions, or sectors does not constitute a recommendation by any particular fund or by OppenheimerFunds, Inc.
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01May
Why Might I Want to Invest in Emerging Markets – 1 of 2
Economy

While there is certainly not a “one-size fits all” answer to this question, I wanted to include some interesting information on emerging markets.

This is a two-part blog.  My goal in writing it is to blend some history of emerging markets with current trends, which I hope you find interesting.

(Please note that nothing in this blog is intended as a recommendation to buy or sell anything.  It is meant to be purely informational.)

Krishna Momani, the Chief Investment Officer of the Oppenheimer Funds, writes:

“In the first 13 years of this century, emerging market equities outperformed U.S. equities by over 7% per year.  That’s almost 200% of cumulative outperformance.”

“The following three years were not as kind to emerging market investors.  Emerging market assets suffered from a series of macro headwinds including weaker global growth, sharp declines in emerging market exports, a collapse in commodity prices, falling currencies, rising inflation, and capital flight as U.S. monetary policy conditions normalized.”

Emerging Markets Had Been Underperforming Since 2013

Prior to 2017, emerging market equities experienced a prolonged period of underperformance relative to developed market equities.  A confluence of factors weighed on emerging market performance including weaker global demand for exports, a slowdown in Chinese growth, the end of the multi-year commodity and credit-driven boom, and tighter U.S. monetary policy.

In particular, the onset of monetary normalization in the United States, beginning in earnest with the tapering of U.S. Federal Reserve (Fed) asset purchases in 2013 and continuing with the first Fed interest rate hike in December 2015, resulted in a massive flight of capital out of the emerging markets and into U.S. dollar-denominated assets.

The tide now appears to be turning.  The cyclical case for emerging market equities is supported by the following:

  1. Economic growth is improving (in some instances, such as in Russia and Brazil, off of
    recession lows) and exceeding expectations.
  1. Inflation has fallen rapidly. Real interest rates are now positive in emerging markets,
    suggesting that this time modest U.S. interest rate hikes will not result in significant capital
    In addition, policymakers are better positioned to support economic growth.
  1. Emerging market equities are trading at attractive valuations compared to developed
    market equities.
  1. The U.S. dollar is unlikely to be a headwind for U.S.-domiciled international investors.
    Many of the emerging market currencies are already trading at steep discounts.
  1. The likelihood that a series of Fed rate hikes will derail the nascent emerging markets economic recovery is small.

While “they may be down,” Momani encourages us to not count emerging markets as “out”.  I’ll discuss the reasons for this in Part Two.

If you would like to talk about anything in this blog, I’d love to share a conversation with you.

 

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

 

 

Source of charts: OppenheimerFunds, “The Case for Emerging Markets”, Krishna Memani, CIO

Disclosure:  These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment.  These views are as of the close of business on March 31, 2017, and are subject to change based on subsequent developments.

Equities are subject to market risk and volatility; they may gain or lose value.  Fixed-income investing entails credit and interest rate risks.  Bonds are exposed to credit and interest rate risk.  When interest rates rise, bond prices generally fall, and a fund’s share prices can fall.  Investments in securities of growth companies may be especially volatile.  Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes and geopolitical risks.  Emerging and developing markets may be especially volatile.  Eurozone investments may be subject to volatility and liquidity issues.  The mention of specific countries, regions, or sectors does not constitute a recommendation by any particular fund or by OppenheimerFunds, Inc.

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21Apr
What Is Reflation and How Does It Impact Me?
Economy
Reflation is a fiscal or monetary policy which is designed to expand a country’s output and curb the effects of deflation.  We are currently experiencing reflation policies in the United States which include a move to reduce taxes in an attempt to stimulate the economy.

(The balance of this blog is meant to be informational only.  Nothing is to be taken as a recommendation to buy or sell any particular investment positions.)

As the following chart indicates, the 10-year government bond yields are beginning to recover from a period of decline, which has lasted from 1983 until recently.

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14Apr
What Makes Women Breadwinners Different?
Investing
Part Three of a Three-Part series

If you have not read the first blog in this three-part series, “An Overdue Apology to Women”, dated April 7, you might find it helpful because it is applicable to this blog as well.

The first piece focused on how women clients are often discounted in the relationship with the financial advisor.  It resulted in my apologizing on behalf of the industry to anyone who has experienced this type of discriminatory treatment.

The second part in this series centered on how single women are often victims of “product-pushers” as opposed to professional advisors who are also fiduciaries.  See previous blog titled: “Are You Ready for Disturbing Survey Results about Single Women and Financial Advisors?”

This third part in the Women’s Series shares some important information on women breadwinners.

Who qualifies as a woman breadwinner?  Anyone who earns at least one-half of the household income and is also involved in the financial decisions.

Often, these professional women hold positions in middle management through executive positions.

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