Barb’s BitDoes Money Buy Happiness? New Answers to An Age-Old Question!

As I begin to think about this quarter’s column, the U.S. and International equity markets have recently turned negative. While I believe most investors realize that total returns were achieved with so little volatility in 2017 was unique, it can be disconcerting when volatility returns to the equity markets.

Therefore, I thought it might be interesting to revisit the age- old question, “Does money buy happiness”?

I found an interesting article called “Money Buys Hap-piness When Spending Fits Our Personality” by Sandra Matz et al. and first published in Volume 27, Issue 5, 2016 of Psychological Science.

While decades of previous research typically suggested a weak relationship between money and happiness, more recent findings suggest that money can, indeed, increase happiness if it is spent “the right way.”

As I looked further into the meaning of “the right way”, I found that this includes the definition of “increasing one’s well-being and/or the well-being of others”.

One thought on the topic of well-being comes from Tom Rath who suggests “Money can increase our short-term happiness by giving us more control over how we spend our time.”

When offering their definition of well-being, the Centers for Disease Control includes “What people think and feel

about their lives, such as the quality of their relationships, their positive emotions and resilience, the realization of their potential and overall satisfaction with life.”

Following on that theme, in the book, The Joyless Econ-omy by Tibor Scitovsky, it is suggested that “most of the important pleasures in life cannot be bought. What really brings the satisfaction in life are relationships, purpose, meaning and connection to nature.”

Returning to the article by Ms. Matz… She goes on to say that, for most people, spending the money “the right way “involves creating experiences” - often for people we love.

Back to the US and international markets… Basically, they’re going to do whatever they’re going to do. None of us can control the day-to-day volatility nor the long-term outcome for our portfolios. What each one of us can con-trol is our reaction to this.

What we can also control is our decision to claim well-being as a permanent state of life. Creating experiences with and for others does not necessarily have to involve any money at all. I recently spoke with a client who told me about the pure joy he and his grandson shared by building an airplane out of saved moving boxes. How many of us have watched a child or grandchild be thor-oughly entertained through the imaginative use of a card-board box? And as we shared in that creative experience, we were in a state of well-being.

Can money buy happiness? Yes, it can if our spending decisions are aligned with our values and life purpose. Let’s always remember that something as simple as shar-ing time and imagination with a cardboard box can provide happiness and sense of well-being.

Perhaps it’s not so much about the money after all…

2nd Quarter 2018

Large cap growth stocks and small cap stocks have been on two different tracks in 2017. Despite nearly identical returns over the last 5 years of 15.94% and 15.72% annualized, large cap growth stocks are up 13.6% in 2017 compared to -0.30% for small caps.

As we have discussed in previous commentaries, U.S. stocks entered 2017 with relatively high valuations. The TOPS® Portfolio Management Team monitors valuations monthly; we then rank those valuations looking at the monthly values over the last 20 years. Coming into 2017, large cap growth stocks

In his June 30 letter, Knight Kiplinger shares his expectations for the second half of 2017 as well as 2018. He believes Gross Domestic Product (GDP) growth will continue to be lukewarm, wrapping up the year with 2.1% growth. Consumer spending will continue to power the economy, while the unemployment rate remains low and the majority of families

have their finances in good shape. With rising home and stock prices will come higher spending and more credit card usage. Automobile, retail, and restaurants are among the industries that will take a hit, as Kiplinger expects a decline in car sales and a slowing demand for brick-and-mortar stores. High-tech and health care organizations will struggle to find enough workers, predicts Kiplinger. Don’t expect to see a rise in government spending as legislators experience weak growth in tax collections.

Low oil prices could threaten the growth of drilling activity. Exports, manufacturing (not including automotive and energy sectors) and home building will be “bright spots” for the economy. Kiplinger’s “wild card” is the direction of interest rates. While the Fed wants to continue to increase short-term rates this year and next, yields on long-term bonds recently declined. Bond investors believe that inflation will remain low. There is no cause for concern unless yields continue to sink further.(1)

For a global outlook, Europe’s economy is projected to have positive GDP growth momentum going into 2018. The past six quarters of GDP growth have been the strongest since the Great Recession for countries that use the euro.

(1)Source: Kiplinger, Knight. “The Kiplinger Letter.” The Kiplinger Washington

Editors. 30 June 2017.

Barb’s Bit

Economic Update ranked in the 75th percentile and small cap stocks were in the 92nd percentile.

When looking at expected returns for stocks, higher valua-tions would typically reduce the expected returns of an asset. A higher current price means less opportunity for return simply from rising valuations. We highlighted this concern with small cap stocks coming into 2017 and followed up with a reduction in exposure to small cap stocks early in 2017.

If high valuations coming into the year hindered small cap stocks, many investors may be wondering why large growth stocks have performed so strongly. Performance for large growth stocks has been driven primarily by the FAANG (Facebook, Apple, Amazon, Netflix and Google) stocks. The FAANG stocks now make up over 10% of the market cap of the S&P 500 and nearly 20% of the S&P Large Cap Growth index. With such a high concentration in the indexes, strong recent results of the FAANG stocks has been a big driver of returns for the large growth index

Touch The

3rd Quarter 2017

1 Source: Cohn, D’Vera, and Paul Taylor. “Baby Boomers Approach 65 – Glumly.” Pew Research Center’s Social & Demographic Trends Project. 20 Dec. 2010. 2 Source: LIMRA Retirement Institute 2015 Retirement Income Reference Book 3 Source: Merrill Lynch 4 Source: Frankel, Matthew. “10 Statistics That Prove Baby Boomers Are in Big Trouble When It Comes to Retirement.” The Motley Fool. 28 Feb 2017.5

Contributed by: Tyler DenholmVice President, Investment Management & Research, ValMark Securities, Inc.

2018 U.S. and Global Economic OutlookThe S&P 500 index fell 5.95% in the week ended March 23rd, as concerns surrounding global trade placed negativepressure on stock markets across the globe. While volatility is to be expected over time, we felt it might be helpful forour investors to provide some thoughts on this most recent short-term market decline.

The primary catalyst for this decline seems to be trade tariffs recently announced by President Trump. President Trumpand his top trade advisers have announced plans for roughly $60 billion in global tariffs designed primarily to penalize China for theft of American intellectual property. Equally, they are to be a starting point for potential additionalmeasures in the coming months and years. The first strike was on March 1, when President Trump announced aluminum and steel import tariffs of 10 and 20%. According to some,

the level of these tariffs is quite small, compared to the size and scope of the purported trade issue. In a recent op-ed by Dennis Blair and Keith Alexander they stated,“All together, intellectual-property theft costs America up to $600 billion a year, the greatest transfer of wealth inhistory. China accounts for most of that loss.”

While the idea China (and maybe others) is playing unfair is not a new one, recent actions by top government of-ficials have sent obvious signs to investors they intend to take multiple steps. In September of 2017, U.S. Trade Representative Robert Lighthizer filed an official Section 301 action under America’s Trade Act of 1974 against China. Likewise, U.S. Secretary of Commerce Wilbur Ross has recently said, “The Chinese are protectionists dressed in free market clothing.”

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While many in traditional economics would not generally favor trade tariffs, the current global trade situation is notquite textbook in nature. Many pure economic models assume free trade. China has specifically outlined their goal of becoming a leader in advanced technology in-dustries by 2025. It is hard to outline a legal, free market, path to that goal. Likewise, the rules China has requiring American companies to create joint ventures often create easier paths for theft of intellectual property.

Do actions that occurred during the week of March 19 justify the global value of all equities declining by about 6%? No, they don’t. China has purportedly been cheat-ing for a long time and this is obviously not the first time the U.S. has added tariffs, especially for steel. However, recent actions have put a spotlight on lingering problems with no clear answer or timeline. We believe this uncertainty has been the driver of recent volatility.

Offering Perspective

Our TOPS portfolio management team has access to a significant amount of market and economic data. We focus on using this data in our investment process, for the benefit of our investors. We believe complementing our internal research with respected outside sources can improve overall value.

One specific resource we follow closely is Yardeni Re-search. Dr. Ed Yardeni is one of the leading independent economists in the country, and he provides research to select institutional managers, such as TOPS. In a March 9 briefing, Dr. Yardeni reviewed what he calls “panic at-tacks” in the current bull market. The recent decline over trade concerns may2 qualify as a short-term panic attack.

Like true panic attacks, these attacks can affect the lives of investors, and we often see short-term panic reactions spill over into ancillary market reactions. Yardeni has counted 60 of these panic attacks since the bull market started in 2009.

Two of these panic attacks have occurred in and around February. In early February, the market reacted to con-cerns over wage inflation. These concerns created a significant drag on stocks and bonds through month end. Likewise, just after month end, we saw a second panic attack over concerns about a trade war. The trade war concerns were sparked by the initial announcement that President Trump was supporting tariffs on steel and alu-minum. The recent decline, as an extension, may qualify as the 3rd panic attack of 2018.

Obviously, tariffs are nothing new. Further, the longer-term market impact of these specific tariffs is in the potential for a trend of further tariff-related actions, not in the tariffs that have been announced so far. We would ar-gue investors should not be surprised by the announced tariffs, because President Trump has been promising to introduce them for two years.

Looking back over the charts showing the 60 panic at-tacks Yardeni has identified since 2009 is like reflecting upon all the outsized concerns we had as parents when our children were young, which seem smaller now. At the time, they were real, with real emotions, consequences and risks. However, in hindsight, things tend to work out fine. This has been the case so far in this bull market as well.

While we pay attention to the panic attacks and go through the necessary analysis for each one, we try to focus more on the long-term trends in the market and the engines driving growth. According to Yardeni, industry analysts have raised their consensus earnings estimate for 2018 by 1.7% over the nine weeks through Feb. 15, 2018. Likewise, their estimate for earnings has jumped by 7.7%, or $11.05 per share, from $143.85 to $154.90, through February 15, 2018, due to passing the tax act. This equates to a lot of medicine to fight these panic at-tacks.

Source: Valmark TOPS Team

Estate Planning Mistake: Relying Only on a WillOf course, a written will is essential to every estate plan. People often are criticized for not having wills, but a will isn’t enough.

A complete estate plan includes key documents thatmight be needed before your passing, such as a power of attorney and advanced medical directive. These documents empower one or more people to

make decisions and take actions regarding your assets or medical care when you aren’t able to.

Without these documents, many actions are taken only after a court appoints someone to act for you, and it could be someone you wouldn’t have selected. Or doctors take the actions they deem best, even if it’s not what you would have decided.

I’ve often heard people say there’s no rush to execute these documents. They say they’re in fine shape and “aren’t there yet.” What I’ve seen over the years is

2018 U.S. and Global Economic Outlook (Cont.)

(Continues on Page 4)

An Uncommon Answer to a Common QuestionAs I’m sure you know, I am an avid reader and student of our industry. One of the topics I study with great interest is the evolving opinion on how much money people will spend in retirement.

One school of thought suggests that retirees typically need to replace somewhere between 70% and 85% of their employment earnings. The reasons for the reduction include the following:

• Many people either stop or reduce previous savingswhen they retire;

• Retirees may be in a lower income tax bracket;• They no longer pay Social Security and Medicare taxes.• The mortgage on the house may be paid in full;• There may be no car payments.

Another body of research suggests that new retirees in particular may need as much - if not more - income than they had when they were working. Reasons that support this theory include:

• The fact that people sometimes delay expensive travel (or can travel more extensively);

• The possibility that they “finally” buy that luxury automobile;• They begin postponed home improvements;• They may increase the entertainment budget due to

increased free time.

Then, of course, there is the unpredictable expense of health insurance, home healthcare, assisted living skilled care and/or memory support. How much should one have saved to cover these possibilities?

Our experience is that none of our clients fall neatly into any one of the proposed theories. While guidelines are certainly helpful to consider, there is certainly “no one-size-to-fit-all retirement scenarios.”

Rather, we find that it is often a hybrid of these theories that proves to be more realistic.

For example, when clients choose to preplan their retirement with us, we always have the discussion about the unpredictable nature of health insurance and health care. We talk about how much of the potential risk the clients want to self-insure versus how much of this potential risk they would rather reinsure through some type of insurance policy. Next, we also discuss the amount of legacy people want to leave (if any) and how best to fund that special goal.

Then we talk about the difference between our “needs and wants” in retirement. For example, we discuss how many expensive vacations people may want to take… and how often they want to take them. We also plan for how to continue to live a purposeful and meaningful life when our “career/life’s work” has officially ended. We talk about how frequently they want to replace automobiles… and at what price.

While these are just a few of the sample questions we ask, I’m sure that you can see how we come up with vastly dif-ferent answers to the question of “How much will I need in retirement?”

With that said, there is one idea which seems to be univer-sally embraced. Assuming we live healthily for the first 20 years of retirement, people agree that they will choose to spend less money later in retirement than they may choose to spend earlier in retirement. Therefore, rather than simply suggesting that we need to replace a certain percentage of income throughout the expected retirement (which today can last 30 years or more), we find it much more realistic to ask our clients carefully selected questions and then create an-swers that are as unique as each person/couple/family with whom we are planning.So, how much will you need to reach your retirement lifestyle, legacy and financial goals?Let’s talk and find out!

Please join us for this fun client appreciation event which will include live music, prizes and some of the

best beers and wines from around the country.

Thursday, September 13th, 2018 6:00 – 9:00 PM

Location:Somerset Clubhouse(same location as 2017)

8075 Trotters ChaseCincinnati, Ohio 45249

Hold the Date

Grapes &

Hops

Please R.S.V.P. to 513-605-2500, dial 1 then ext. 2170or sculver@resonatecompanies.com by September 6, 2018

Resonate, Inc.8837 Chapelsquare Drive, Suite BCincinnati, OH 45249phone: (513) 605-2500fax: (513) 605-2505www.resonatecompanies.com

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Estate Planning Mistake: Relying Only on a Will (Cont.)

the need for the documents most often arises in two scenarios. One scenario is the occurrence of a sudden

event, such as an accident or a health crisis, such as a stroke. Once that occurs, it’s too late to have the documents executed. The other scenario is a steady decline that isn’t apparent to the person or the person is in denial. By the time others are ready to intervene, either

a lot of damage has been done to the person’s estate or the legal capacity to execute the documents no longer is there. The bottom line is you need to execute the documents well before there’s a need for them

Another reason a will isn’t enough is that ownership ofmany assets transfers outside the will and probate process. These assets include annuities, life insurance, retirement accounts (such as 401(k)s and IRAs), jointly-owned property, and more. The beneficiary designations of these assets decide who inherits them, often without reference to your will.

You need to review periodically the beneficiary designation forms for these assets. Numerous court cases and Internal Revenue Service rulings have concluded that the owner’s intent and statements in the will rarely matter. The only thing that matters is what was written in the latest beneficiary designation form.

Trusts, with their many uses and flexibility, are another reason a will isn’t enough.

Trusts can accomplish many goals that a will can’t. With a trust, your assets can avoid probate. Your privacy can be maintained. A trust can protect assets from creditors of you and your heirs. The right trust can provide security for your heirs while protecting the wealth from them.This article was written by Bob Carlson from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network. Advisory services may only be offered by Investment Adviser Representatives in connection with an appropriate Valmark Advisers, Inc. advisory services agreement and Disclosure Brochure (Form ADV Part II, as provided).