april, 2016 - legend financial

1THE GLOBAL INVESTMENT PULSE, April 2016

April, 2016

Dividend Reinvestment Plans, continued on page 4

DIVIDEND REINVESTMENT PLANS – DO THEY MAKE SENSE?

By James J. Holtzman, CFP®, CPA Inactive, Legend Financial Advisors, Inc.® and

EmergingWealth Investment Management, Inc.

Dividend reinvestment plans of publicly-traded stocks have been getting a good deal of press recently in the various financial publications. What’s not to like about them? Dividends that

are paid from a company’s stock can be used to purchase additional shares of that dividend paying stock without any commissions being paid. Sometimes shares may be purchased at a slight discount from current market prices. It used to be that the only way that investors could participate in these plans was to hold the shares directly and any reinvestment of dividends would have to be held in account form by the transfer agent of the stock. However, these days many brokerage firms are now offering dividend reinvestment on more and more corporations that have dividend reinvestment plans. Is this a good deal? From strictly an economic sense, it is. From a practical sense, it may not be. Why? For taxable investors, dividend reinvestment plans can be a lot of work when calculating the cost basis

TOO EARLY TO DETHRONE DIVIDEND STOCKS?

By Jun Zhu, CFA, Senior Analyst, The Leuthold Group, LLC

Too Early To Dethrone Dividend Stocks?, continued on page 14

Over the past few years, dividend paying stocks have been a good investment. From 2010 to 2014, dividend paying stocks outperformed the broad market in four of the five years. During that five year period, the WisdomTree Dividend Index returned +157.0% while the S&P 500 gained 128.0%. The ultra low interest rate environment certainly helped.

However, in 2015 as it began to seem evident that we were closing in on a new era of rising interest rates, the strength of dividend payers stalled. For the most part of the last year, those companies lagged the broad benchmark. Then, in November this subset began to outperform again (See Chart 1 on page 14).

CDs: A HIGH RISK INVESTMENT FOR THE LONG-TERM

By Diane M. Pearson, CFP®, PPCTM, CDFATM, Legend Financial Advisors, Inc.® and

EmergingWealth Investment Management, Inc.

Buying Certificates of Deposit (CDs) has been a loser’s game for the large majority of the time since 2002 due to the fact that the “real interest rate” [meaning the interest rate minus the inflation rate (also known as the Consumer Price Index or CPI)] has returned less than zero percent. Please see the chart on page 4. The red line depicts the interest rates CDs pay minus inflation. As evidenced on the chart, CDs have provided negative real returns most of the time since 2002.

Also, when the red line is below the green line, even if it is above zero, means that inflation is higher than the rate of interest being paid, indicating a loss of purchasing power.

Worse yet, income taxes have to be paid on the interest earned unless the CD is held in a retirement account such as an IRA. In addition, let’s not forget about income taxes. In all situations, unless a CD is purchased within a retirement account, investors have to pay income taxes on a poor investment that have lost

CDs: A High Risk Investment For The Long-Term, continued on page 4

CRIPTIC COMMENTS FROM RAY DALIO, CEO OF BRIDGEWATER ASSOCIATES

VIA A BLOOMBERG RADIO INTERVIEWQUOTES VIA ON MY RADAR

EXCERPTED BY LOUIS P. STANASOLOVICH, CFP®, CCO, CEO AND PRESIDENT OF LEGEND FINANCIAL ADVISORS, INC.® AND

EMERGINGWEALTH INVESTMENT MANAGEMENT, INC.

Criptic Comments From Ray Dalio, continued on page 8

Bridgewater Associates is the world’s largest hedge fund (roughly $155 billion) and has one of the best track records of any type of investment. There are several things that stood out in Ray Dalio’s interview on Bloomberg Radio. We thought readers would enjoy them. They are listed on page 8:

2 THE GLOBAL INVESTMENT PULSE, April 2016

Editor Louis P. Stanasolovich, CFP® CCO, CEO and President Legend Financial Advisors, Inc.® 5700 Corporate Drive, Suite 350 Pittsburgh, PA 15237-2829 [email protected] Newsletter Production Manager Lori L. Albert [email protected] Legend Financial Advisors, Inc.® 5700 Corporate Drive, Suite 350 Pittsburgh, PA 15237-2829 EmergingWealth Investment Management, Inc. 5700 Corporate Drive, Suite 360 Pittsburgh, PA 15237-2829 Postmaster: Send all address changes to: Legend Financial Advisors, Inc.® 5700 Corporate Drive, Suite 350 Pittsburgh, PA 15237-2829 Copyright 2016 by Legend Financial Advisors, Inc.® And EmergingWealth Investment Management, Inc. reproduction, photocopying or incorporation into any information-retrieval system for external or internal use is prohibited unless permission in each case for a specific article. the subscription fee entitles the subscriber to one original copy only. Unauthorized copying is considered theft.

LOUIS P. STANASOLOVICH, CFP®, EDITOR

Louis P. Stanasolovich, CFP® is founder, CCO, CEO and President of Legend Financial Advisors, Inc.®

(Legend) and EmergingWealth Investment Management, Inc. Lou is one of only four advisors nationwide to be selected 12 consecutive times by Worth magazine as one of “The Top 100 Wealth Advisors” in the country. Lou has also been selected 12 times by Medical Economics magazine as one of “The 150 Best Financial Advisors for Doctors in America”, twice as one of “The 100 Great Financial Planners in America” by Mutual Funds magazine, four times by Dental Practice Report as one of “The Best Financial Advisors for Dentists In America” and once by Barron’s as one of “The Top 100 Independent Financial Advisors”. Lou was selected by Financial Planning magazine as part of their inaugural Influencer Awards for the Wealth Creator award recognizing the advisor who has made the most significant contributions to best practices for portfolio management. He has been named to Investment Advisor magazine’s “IA 25” list three times, ranking the 25 most influential people in and around the financial advisory profession as well as being named by Financial Planning magazine as one of the country’s “Movers & Shakers” recognizing the top individuals who have done the most to advance the financial advisory profession.

ABOUT LEGEND FINANCIAL ADVISORS, INC.®

ABOUT EMERGINGWEALTH INVESTMENT MANAGEMENT, INC.

Legend Financial Advisors, Inc.® (Legend) is a Non-Commission, Fee-Only Fiduciary firm with its headquarters located in Pittsburgh, Pennsyl-vania. Legend provides a multitude of services, including Wealth Advisory Services, which incorporate Financial Planning and Investment Management strategies to affluent and wealthy individuals as well as business entities, medical practices and non-profit organizations. We ana-lyze each client’s financial strengths and weak-nesses, then recommend creative solutions for

EmergingWealth Investment Manage-ment, Inc. (EmergingWealth), is the sister firm of Legend Financial Advisors, Inc.® (Legend) and is a Non-Commission, Fee-Only Securities and Exchange Commis-sion (SEC) registered investment advisory firm. EmergingWealth provides Investment

improvement. Additionally, we work closely with our client’s other professional advisors to achieve optimal results.

WHY LEGEND IS DIFFERENT?

1. Legend is compensated exclusively by client fees, known as a Non-Commission, Fee-Only, Fiduciary firm. Unlike Legend, fee-based advisors and brokerage firms have numerous conflicts of interest due to the fact that they receive commissions.

2. Members of Legend’s Financial Advisory Team have been selected by National Publica-tions such as Worth, Medical Economics and Barron’s more than 50 times as “The Best Financial Advisors In America”.

3. Unlike most advisory firms and all brokerage houses, Legend and its advisors have cho-sen to be governed by the Fiduciary Standard of Law. Fiduciaries are required to work in their clients’ best interests.

4. Legend designs dynamic, creative and personalized financial planning and investment solutions for its clients.

5. Legend emphasizes low-cost investments where possible that are allocated and traded in a tax-efficient manner.

Management services to individuals as well as business entities, medical practices and non-profit organizations whose wealth is emerging. All investment portfolios are sub-advised by Legend. Both Legend and EmergingWealth share a common advisory team, Investment Committee and Fee Schedule.


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CONFUSING TIMES FOR THE BULL MARKET STOCK MARKET:THE FED HOLDS THE KEYS

By Louis P. Stanasolovich, CFP®, CCO, CEO and President of Legend Financial Advisors, Inc.® and EmergingWealth Investment Management, Inc.

The stock market is similar to a dance. Sometimes the partners - the economy, earnings, and the Fed - are in harmony, as they were for a big chunk of the bull run from 2012 to 2014. They can also be wildly out of sync such as the period from May 2015 to February 2016 which has shown violent sector rotation, weaker economic fundamentals around the globe, and now an earnings recession driven largely by the energy meltdown. Most investors are concerned about whether or not a bear market is starting. The slow and steady economy looks like it will keep doing what it does best, muddling on through but with only a 15.0%-20.0% chance of recession in 2016. Generally, if there isn’t a recession, a bear market does not occur. Two questions investors need to answer in order to decide if the bull market has found its legs again. Question #1: Are Investors Seeing The Bottom Of The Earnings Recession?: The first quarter of 2016 is shaping up to see the biggest contraction in earnings since the recession of 2008/2009. Current earnings estimates for the Standard and Poor’s 500 (S&P 500) are calling for a negative 9.5% decline in earnings. If earnings are negative, it will be the fourth consecutive quarter of year-over-year declines. The slide in earnings is expected to continue for the second quarter of 2016 (Q2). Earnings estimates are already being cut for the S&P 500 index. Growth in earnings is expected to be only 2.8% for the third quarter of 2016. As long as these forward earnings estimates continue to be in question, then the stock market continues to be over-valued. The stock market’s trailing Price-To-Earnings Ratio (P/E) is tolerable at 18-19 times earnings. Institutional investors will be willing to pay 17 times (17X) forward earnings estimates so long as they are moving upward. Most investors, however, won’t pay 17X earnings for earnings that are declining.

However, what if those same investors (professional investors) “have to buy” stocks with the money they are given to manage? What if they are looking at Q1 of 2016 as being the trough of the earnings recession? If that is the trough, then they will be buyers for stocks. Those professional investors base case is buoyed by a strong American consumer who has ample employment opportunities. It also doesn’t hurt that the Federal Reserve (Fed) still has the backs of the economy and investors too. If large investors can envision the worst already and see light at the end of the tunnel, then investors don’t want to stand on the tracks of that bull train. Instead, investors will want to tactically play the new trading range up to the June Fed meeting between S&P 1900 and 2100.

Question #2: What Message Did The Fed Deliver By Signaling Just Two Hikes This Year?: The Federal Open Market Committee (FOMC) surprised many investors and strategists on March 19, 2016 with a much more dovish stance than expected. The projection of four rate hikes for 2016 was embedded with “implied easing” because all they had to do was reduce the probability of one or two of those hikes occurring and the economy and investors would feel like they just got a rate cut. However, who thought the Fed would be so eager to look so dovish, so soon. That’s what a manufacturing recession, driven by the energy implosion and other global threats, will do to monetary chieftains who don’t want the economy faltering on their watch. Obviously they are very worried about the U.S. economy. Further tightening of financial conditions would only hurt more. Continued Concern: Janet Yellen and several other FOMC members are more likely concerned about other factors that could potentially evolve into a bigger problem for the U.S. economy if the Fed keeps pushing for higher interest rates.

Global economic concern is already washing over to our shores from Europe and Asia, impacting demand for U.S. exports. The direct transmission mechanism for this is through the currency markets. While the European Central Bank (ECB) and the Bank of Japan (BOJ) take historic leaps in Quantitative Easing (QE) policy to keep the Euro and Yen weak, they threaten to make the U.S. Dollar much stronger. These facts appear to be a much bigger problem for the Fed. The Fed can’t afford to fan the flames of their competitive devaluations by sounding hawkish and driving the U.S. Dollar higher. They needed to move closer to the European Central Bank (ECB) and the Bank of Japan (BOJ) interest rates, not further away. The Fed isn’t fighting in the currency wars; they’re just adapting to them in the best interests of U.S. corporations and households. Second, “easy money for longer” helps out the oil patch and the over-leveraged (those with too much debt) companies pumping crude like crazy to keep from defaulting on their junk bonds. Third, the Chinese Yuan devaluation process is long and slow. When it occasionally jumps like it did last August, markets will panic. The Fed bought some more time to absorb that potential blow by keeping the liquidity pedal to the metal. Answer #2: “Don’t fight the Fed” was never more true. However, the Fed is your ally, if not your friend, in the current macro economic storms. They continue to prove they are still fully committed to supporting the U.S. economy, despite global tremors, and especially during a volatile election year. COPYRIGHT 2016 LEGEND FINANCIAL ADVISORS, INC.®

REPRINTED WITH PERMISSION OF LEGEND FINANCIAL ADVISORS, INC.®


of a stock when an investor sells shares. Why? Many transfer agents only provide you with a limited number of years of cost basis information on reinvested dividends. If an investor purchased the stocks prior to the oldest records that the transfer agent keeps, they will have to determine the cost basis themselves. This is not always an easy task because the investor will have to account for stock splits, purchases in sales of specific logs of shares and the monotonous calculation of little bits of shares being reinvested at various prices. Even if the investor has the “know how” as to how to calculate this information, they may not have the time nor the inclination.

For a tax exempt investor, such as a pension or profit-sharing plan and/or an IRA account, a dividend reinvestment plan makes more sense. However, once again, it might not be for everyone. For instance, would any investor really want to keep reinvesting money into a stock whose financial status is deteriorating? Heck No! Many individuals purchase stock at one point in time and then do not keep up on the economics of the company. In other words, they do not put in the necessary time going through the ongoing analysis that is necessary when investing in individual stocks. Another way to look at this, is would any professional investor such as a mutual

fund portfolio manager having the stocks in his or her portfolio enroll in a dividend reinvestment plan? Nope! That manager would be looked at as having violated their fiduciary responsibilities. In this day and age, with the term “blue chip” being an outmoded concept, buy and hold does not always work and it may even be worse with a dividend reinvestment plan.

COPYRIGHT 2016 LEGEND FINANCIAL ADVISORS, INC.®


Dividend Reinvestment Plans, continued from page 1

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purchasing power. This is known as a real real interest rate – after inflation, after income taxes.

In reality, CDs are useful only for a very short-term timeframe such as a month or two – in other words, a place to keep

money very short-term. As evidenced in this article, CDs make little, if any, sense as a long-term investment. The only guarantee you are receiving from CDs is that you will lose purchasing power, which is the only thing money is good for.

COPYRIGHT 2016 LEGEND FINANCIAL ADVISORS, INC.®


CDs: A High Risk Investment For The Long-Term, continued from page 1

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SOURCE: BLOOMBERG INVESTMENT SERVICECOPYRIGHT 2016 LEGEND FINANCIAL ADVISORS, INC.®As of: March 31, 2016


WHY GOLD IS ATTRACTIVE NOWBy Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors

Gold has tended to respond well when inflationary pressure pushes real interest rates below zero. To obtain the real rate of interest, you subtract the headline Consumer Price Index (CPI) from the U.S. Treasury yield. When it’s negative, as it is now, gold becomes more attractive to investors seeking preservation of their capital. The yellow metal has risen more than 18.0% so far this year.

Month

5-YearTreasury

Yield Minus Inflation EqualsReal Interest

Rate

ActualGold Price

Change

January,2015 1.37% Minus 0.2% Equals

January,2016 1.51% Minus 2.2% Equals

IS IT TIME TO BUY GOLD?(Read Across)

+9.8%

+1.35% -5.4%

February 2015

-0.69%

February 2016as of the 24th

Source: Bloomberg, Treasury Department via U.S. Global Investors,Advisor Alert, February 26, 2016, www.usfunds.com

REPRINTED WITH PERMISSION FROM U.S. GLOBAL INVESTORS

As of: February 26, 2016COPYRIGHT 2016 U.S. GLOBAL INVESTORS

Conclusion: Yes, it is a good time to buy gold.

Source: This article was excerpted from “Rising Global Taxes and Regulations (Indirect Taxation) Are Chipping Away At The Benefits Of Low Interest Money”, by Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors, (Advisor Alert, March 18, 2016), www.usfunds.com. COPYRIGHT 2016 U.S. GLOBAL INVESTORSREPRINTED WITH PERMISSION OF U.S. GLOBAL INVESTORS PULSE

BELIEVE IT OR NOT

By Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc.

Since 1901, the Dow Jones Industrial Average has spent 76.4% of the time declining in value or recovering from loss and just 23.6% of the time creating wealth.

Source: This article was excerpted from “The Central Bank, The Market And Wealth Creation”, by Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc., (On My Radar, January 22, 2016), www.cmgwealth.com. COPYRIGHT 2016 CMG CAPITAL MANAGEMENT GROUP, INC.REPRINTED WITH PERMISSION OF CMG CAPITAL MANAGEMENT GROUP, INC.


Source: The Leuthold Group, LLC, Perception Express,March 8, 2016, http://leuth.us/stock-market

REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

As of: March 8, 2016COPYRIGHT 2016 THE LEUTHOLD GROUP, LLC

S&P 500 INDUSTRIES (GICS LEVEL III)Percent Declines From Cyclical Highs To Correction Lows

(Through March 4th)


“Do You Want A SecondOpinion?”

To see if your investment portfolio is builtto navigate the pitfalls and opportunities ahead,

call us today for a “Free Second Opinion”at (412) 635-9210.

www.legend-financial.com


1. Over a period of time, productivity matters the most—what you earn and what you have to spend.

2. There is a long-term debt cycle.

3. When you have too much debt and you can’t service it anymore and when interest rates go to zero, we have run out of monetary policy #1 and we have to go to #2 Quantitative Easing (QE)—this happened in the recession of 2008/2009 and again recently.

4. QE causes the assets to rise in price resulting in future returns which are then lower. Now when you’ve done that, the next move is less powerful – in effect it is like pushing on a string.

5. Japan was in this spot first (pushing on a string) with their interest rates at zero. Going nowhere and still trying to get 2.0% inflation.

6. Europe is there now—interest rates are slightly positive to negative. Therefore, lower interest rates are not going to work—they are pushing on a string in Europe.

7. U.S.—we are close to pushing on a string.

8. Long-term (10 or more years) expected forward equity returns will approximate 4.0%. In other words, some return, but not much.

9. Risk/reward, therefore, is not asymmetric (similar in proportion)—the bigger risk is on the downside versus reward on the upside.

10. Globally, we are moving to monetary policy or step #3 (“MP3”) or “helicopter money” (see #11). It will not be QE – QE was asset purchases that helped financial institutions, but stays in the financial community.

11. Globally, we are going to move to a policy that puts money directly in the hands of spenders. Print and lend

directly to spenders, in other words, helicopter money.

12. The central bank (The Federal Reserve Board or Fed for the U.S. version) has capacity, legally, to put money directly in the hands of spenders. There are a range of ways it can be done.

13. Long-term debt cycles come once a lifetime, but in history they have regularly happened.

14. We may see the Fed increase the Fed Funds Rate up 25 basis points (bps) or so, but the very next big move is down.

15. Dalio believes the Fed is not paying enough attention to the long-term debt cycle.

16. Asset prices correct to a point where the risk premiums come back (Valuations fall-in other words). At that time it is time to get aggressive in equities.

17. This is not a bearish view, just what the valuations offer over the next decade or longer. In other words, investors can make a choice in investing, cash (0.0% return), bonds (2.0%) or stocks (4.0%).

18. When stocks go down, they have a negative wealth effect which has a negative effect on the economy. The problem is the Fed, at zero interest rates, doesn’t have the ability to ease. They have to do something else.

19. The long-term debt cycle is what we need to look at—the Fed is not looking at it.

20. Japan is more likely of what our (the U.S.) outcome will be—unless we restructure our debt somehow.

21. Overall, U.S. debt is too large. We are at limits of debt relative to the income we produce. Look at individuals and corporations as a country, then as each separate country, then collectively as a world. There is a limitation to how much debt we can take on.

We can’t borrow more to grow our way out of this. Also, we can’t borrow more that will help us out of the slow growth, low inflation problem.

22. Globally, we have a low return environment, slow growth, low inflation. Increased difficulty of monetary policy (central banks) working.

23. Commentary: Ray Dalio is not expecting anything like 2008. That was a debt crisis. Debts couldn’t get paid. He doesn’t see a big bang crisis this time.

24. We are going to see low returns, relative stagnation.

25. Choppier markets are expected for a period of time.

26. We’ll see more currency volatility.

27. Globally, there is a tightening of economic activity now.

28. No one knows exactly what range for the market is.

Dalio doesn’t think it is more difficult for him (Bridgewater) to invest today. The reason is that he doesn’t make systematic investments (i.e., equities for the long-term where a market crash can cause great loss. They have the opportunity to go either way [bet both up and down]—buy long for appreciation at times and short some or all markets at other times. Cash, money markets, Treasury bills, Certificates of Deposit effectively is a safe haven for the very short-term, but a guaranteed loss to inflation—in other words, a high risk strategy for the long term.).

Source: This article was excerpted from “The Draghi Bazooka”, by By Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc., (On My Radar, March 11, 2016), www.cmgwealth.com COPYRIGHT 2016 CMG CAPITAL MANAGEMENT GROUP, INC. REPRINTED WITH PERMISSION OF CMG CAPITAL MANAGEMENT GROUP, INC.

Criptic Comments From Ray Dalio, continued from page 1

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BANK LOAN DEBT MARKETSBy Blaine Rollins, CFA, 361 Capital, LLC

With debt markets showing the first signs of life in weeks, Wall Street banks are trying to break a logjam that could leave them with big losses on $88 billion of risky corporate loans. They won’t get much help from one of their most reliable buyers.

Collateralized Loan Obligations (CLOs), or bonds backed by pooled corporate debt, bought more than 61.0% of the leveraged loans (bank loans) sold last year. In 2016, CLOs are struggling to

get off the ground having raised just $1.2 billion, according to data compiled by Bloomberg, down from $10 billion at the same time in 2015.

Investors have good reason to be leery of CLOs. As energy prices stay low and economic growth slows globally, many companies are having more trouble paying their obligations, gutting returns on the securities. Losses in some of the instruments are more than 11 times as they are in similarly-rated junk bonds.

Source: This article was excerpted from “The Bull Still Has Reason To Look Skeptical…”, by Blaine Rollins, CFA, 361 Capital, LLC, (Weekly Briefing, February 29, 2016), www.361capital.com COPYRIGHT 2016 361 CAPITAL, LLC

REPRINTED WITH PERMISSION OF 361 CAPITAL, LLC

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THE DANGER OF MARGIN DEBT!By Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc.

Margin debt and how high it is remains a concern (Please see the chart to the right.) Market declines tend to be much more severe when margin debt is high. This is when investors either buy more stock on margin (leveraging up their risk) or borrow money out of their brokerage accounts essentially doing the same thing.

If an investor deposited $100,000.00 in a stock account and bought $200,000.00 worth of stock, a 20.0% decline in the market is a loss of $40,000.00 on your $200,000.00 leveraged investment. That means the actual account value less the money you borrowed is worth $60,000.00 ($100,000.00 minus $40,000.00). It is at about this time that margin calls kick in. An investor either ponies up more money or the brokerage firm begins to force sell the stock. A 50.0% decline in the market on $200,000.00 is a $100,000.00 loss. Subtract that from the original investment of $100,000.00 and the balance is zero.

Thus, high margin debt and cyclical bear markets do not mix. Forced selling begets more forced selling and it is why stock market corrections seem to happen quickly. As one looks at the next chart, note the high level of margin debt today and also note the level of margin debt after the corrections in 1987 and 2000. Interestingly, it stays fairly high following the 2008 market melt-down.

SOURCE: BLOOMBERG INVESTMENT SERVICECOPYRIGHT 2016 LEGEND FINANCIAL ADVISORS, INC.®As of: February 29, 2016

It is a good idea to keep a close eye out for the unwinding of margin debt. It may be a good time to start getting interested in over-weighting equities again.

Source: This article was excerpted from “A Cyclical Bear Market (Here’s Why)”, by Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc., (On My Radar, January 15, 2016), www.cmgwealth.com COPYRIGHT 2016 CMG CAPITAL MANAGEMENT GROUP, INC. REPRINTED WITH PERMISSION OF CMG CAPITAL MANAGEMENT GROUP, INC.

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THE STATUS OF THE OIL PATCHBy Blaine Rollins, CFA, 361 Capital, LLC

While the Organization of Petroleum Exporting Countries (OPEC) members attempt to speed date all other producing nations and talk them into slowing production, the U.S. players continue to pump. Only problem now is that the U.S. players will have nowhere to store their production come summertime.

Oil industry participants gathered for a big conference towards the end of February, 2016. It was not a good time.

Dozens of indebted U.S. shale companies face annihilation over coming months as their hedge protection runs out and creditors pull the plug, but veteran frackers insist defiantly that the slump will not stop the industry’s march to world conquest.

“What is happening scares the heck out of you. We’re going to see a decimation for the industry, with bodies and corpses all over the place,” said Mark Papa, the former head of EOG Resources.

“Lower for longer, is starting to feel like the Great Depression. You run for cash. You ride out the storm,” said John Hess, founder of the Hess Corporation.

“It is probably a three-year process and we’re in the middle of it. The impact on investment has been devastating, he told the IHS CERAWeek summit of energy leaders in Houston.

“Our activity is at a bare minimum, and we’re just preserving our operational capability. We had 17 rigs two years ago, eight last year, and now we’re running two. Very few things make sense at $30.00. It’s better to leave the oil in the ground,” he said.

Mr. Papa said the 70.0% crash in oil prices since mid-2014 will wipe out those companies that leveraged to the hilt betting that crude prices would stay above $100.00 forever.

It’s time for oil investors to start taking electric cars seriously.

In the next two years, Tesla and Chevy plan to start selling electric cars with a range of more than 200 miles priced in the $30,000.00 range. Ford is investing billions, Volkswagen is investing billions, and Nissan and BMW are investing billions. Nearly every major carmaker—as well as Apple and Google—is working

on the next generation of plug-in cars.

This is a problem for oil markets. OPEC still contends that electric vehicles will make up just 1.0% of global car sales in 2040. Exxon’s forecast is similarly dismissive.

The oil price crash that started in 2014 was caused by a glut of unwanted oil, as producers started cranking out about two million barrels a day more than the market supported. Nobody saw it coming, despite the massively expanding oil fields across North America. The question is: How soon could electric vehicles trigger a similar oil glut by reducing demand by the same two million barrels?

Source: This article was excerpted from “The Bull Still Has Reason To Look Skeptical…”, by Blaine Rollins, CFA, 361 Capital, LLC, (Weekly Briefing, February 29, 2016), www.361capital.com COPYRIGHT 2016 361 CAPITAL, LLCREPRINTED WITH PERMISSION OF 361 CAPITAL, LLC

Source: 361 Capital, LLC. Weekly Research Briefing, February 29, 2016, www.361capital.comREPRINTED WITH PERMISSION FROM 361 CAPITAL, LLC

As of: February 29, 2016COPYRIGHT 2016 361 CAPITAL, LLC

U.S. STORAGE

EIA Stocks Crude OilTrendProjected Inventory Crude Oil80.0% Capacity

6/17/16540,868

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Source: 361 Capital, LLC. Weekly Research Briefing, March 7, 2016, www.361capital.comREPRINTED WITH PERMISSION FROM 361 CAPITAL, LLC

As of: March 7, 2016COPYRIGHT 2016 361 CAPITAL, LLC

U.S. RIG COUNT – SEVERE DOWNTURN

2400

1900

1400

900

400

U.S. Baker Hughes Total Rig Count

WTI Crude Oil Price

91 93 95 97 99 01 03 05 07 09 11 13 15

140

120

100

80

60

40

20

0

Source: 361 Capital, Weekly Research Briefing, December 8, 2014, www.361capital.comREPRINTED WITH PERMISSION FROM 361 CAPITAL

As of: December 8, 2014COPYRIGHT 2014 361 CAPITAL

SEASONALITY IN THE S&P 500Month of December, 1950 to 2011

Aver

ageR

eturn

Day of Month

PercentageofTimePositive

0.50%

0.40%

0.30%

0.20%

0.10%

0.00%

-0.10%

-0.20%

-0.30%

0.40%

-0.50%

75%

70%

65%

60%

55%

50%

45%

40%

35%

30%

25%1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Average Return

Percentage Positive

Editor’s Note: The S&P 500 for some reason tends toperform better in the last ten tradingdays of December. This has been thecase so far in 2014.


STARTING MEDIAN PRICE-TO-EARNINGS RATIO (P/E)AND 10-YEAR RETURNS

Starting DateStarting

Median P/E10-Year

Annualized Return

December 31, 1989 13.9 12.28%

December 31, 2000 20.6 -0.48%

December 31, 2001 23.5 0.92%

December 31, 2002 18.8 4.94%

February 28, 2003 16.9 6.06%

December 31, 2003 21.2 2.17%

December 31, 2004 20.3 5.54%

December 31, 2005 19.0 5.24%

December 31, 2008 12.5 13.21%*

February 28, 2009 11.0 16.69%*

December 31, 2015 22.0 ???

Source: CMG Investment Research, Ned Davis Research,Worldscope via CMG Capital Management Group, Inc.,On My Radar, March 25, 2016, www.cmgwealth.com

COPYRIGHT 2016 CMG CAPITAL MANAGEMENT, INC.

As of: March 25, 2016REPRINTED WITH PERMISSION FROMCMG CAPITAL MANAGEMENT GROUP, INC.

* Less than 10 years (through December 2015)

Starting P/E ratios over 20 (in red) usually result in poorinvestment returns. Low starting P/E s (in green) usuallyresult in double digit returns. The current median P/E is 22.

JANUARY, 1926 TO DECEMBER 31, 2014RETURNS BY PRICE-TO-EARNINGS RATIO (P/E) QUINTILE

P/E Ratio Quintile(1=Lowest, 5=Highest)

RETURN(Median Annualized Total Return Subsequent 10 Years)

1 15.7%

2 12.9%

3 9.9%

4 7.8%

5 4.3%

Source: CMG Investment Research, Ned Davis Research, Worldscope via CMG Capital Management Group, Inc.,On My Radar, March 25, 2016, www.cmgwealth.com

COPYRIGHT 2016 CMG CAPITAL MANAGEMENT, INC.

As of: March 25, 2016REPRINTED WITH PERMISSION FROMCMG CAPITAL MANAGEMENT GROUP, INC.

Note that risk is higher when the market is richly priced.


FOREIGN STOCKS SET FOR A NEW “BEAR”-ING?By Doug Ramsey, CFA, CMT, Chief Investment Officer, The Leuthold Group, LLC

Based on comparative valuations alone, one could have made a case for investing in foreign stocks over domestic ones as early as 2010—when EAFE’s valuations sunk to a historical low, relative to the S&P 500. Today, that gap remains extreme: the Europe, Australia, Far East (EAFE) trades at 14.7x (times) Five-Year Normalized Earnings Per Share (EPS), almost six points below the same reading for the S&P 500 (20.5x). Yet that hasn’t prevented EAFE from sinking to an all-time relative performance low versus the S&P 500 in the past two months.

What might trigger a change to foreign stocks’ relative fortunes? Foreign stock bulls have cited a list of conventional catalysts, such as (1) the current divergence in central bank policies—the Fed tightening while Japan and Europe adopt Negative Interest Rate Policy (NIRP); or (2) a major downside reversal in the U.S. Dollar. [Although (2) seems

inconsistent with (1).] But there’s another catalyst that’s coincided with some important turning points in domestic/international relative performance: A cyclical (short-term – one to three years) bear market.

Since 1970, there have been seven major reversals in the EAFE/S&P 500 Total Return Ratio. Four of these inflections occurred during bear markets in the U.S., with the last two of those, in particular, coinciding with (if not catalyzing) long-term reversals in leadership. A fifth turning point—in October 1982—occurred two months after that summer’s historic secular low.

We’ve frequently emphasized that late-phase cyclical bull markets tend to favor leadership themes that are already well-entrenched, and at times, seemingly independent of their inflated valuations. Value strategies, by contrast, usually

begin to take hold during the ensuring bear market. Foreign stocks certainly offer relative value, and a catalyst (through perhaps an unpleasant one) may at last be at hand. (See “Domestic Versus International Stocks” chart below.)

Source: This article was excerpted from “Foreign Stocks Set For A New “Bear”-ing?”, by Doug Ramsey, CFA, CMT, Chief Investment Officer, The Leuthold Group, LLC, (Perception Express, March 8, 2016), http://leuth.us/stock-market COPYRIGHT 2016 THE LEUTHOLD GROUP, LLC REPRINTED WITH PERMISSION OF THE LEUTHOLD GROUP, LLC

Source: The Leuthold Group, LLC, Perception Express, March 8, 2016,http://leuth.us/stock-market

REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

As of: March 8, 2016COPYRIGHT 2016 THE LEUTHOLD GROUP, LLC

DOMESTIC VERSUS INTERNATIONAL STOCKS:MAJOR LEADERSHIP TRENDS FREQUENTLY REVERSE

DURING CYCLICAL BEAR MARKETS

Shaded areas represent cyclical bear markets.

EAFE/S&P 500Total Return Ratio

PULSE


It appears this trend will continue for the rest of 2016. The case for dividend paying stocks and also discuss dividend paying investing strategies is presented below. While dividend paying stocks have a good chance to outperform in 2016, not all dividend paying stocks are equal. Investors should try to identify high quality, sustainable dividend growers.

The Case For Dividend Paying Stocks In 2016

Nowadays the biggest psychological hurdle for dividend stock investing seems to be the Federal Reserve’s (Fed) action. General perception is when rates are rising, dividend paying stocks lose their appeal to income hunting investors, and as a consequence, underperform. Interestingly, historical data indicates this is a misperception.

The folks at Al Frank Asset Management have researched this topic. They looked

at the 17 periods since 1954 when the Fed initiated a tightening cycle and compared performance of dividend paying stocks versus non-payers over the next 12 months (See Table 1 on the top of page 15).

Contrary to popular belief, dividend payers did just fine in the first 12-months of a tightening cycle. They outperformed non-payers 10 times out of the 17 incidents. And more importantly,among the four 12-month periods where the market declined after Fed tightening, dividend players outperformed. Heading into 2016 with a muted outlook for the equity market, dividend payers may have a good chance of winning again.

Another reason optimism rises about dividend paying stocks is their relative attractiveness compared to other income investment vehicles. In the context of low growth/low inflation, the Fed may take its time to move interest rates upward. In

that environment, an extended period of low interest rates, fixed income type of investments would pale by comparison to dividend paying stocks.

Chart 2, on the bottom of page 15, shows that the current spread between the dividend yield of S&P 500 stocks (calculated by dividing total market cap with total last twelve months (LTM) cash dividend payout) and 10-year Treasuries is now one of the narrowest gaps since 1990. Over that time period, the median spread has been minus 2.67% (dividend yield lower than Treasury yield), while right now it stands at +0.57%.

In addition to cash payouts in the form of dividends, the majority of dividend paying companies engage in share-repurchases as another way of returning capital. Among the 349 S&P 500 components that pay dividends, 265 of them also actively buy back their own shares. Counting share buybacks as way of returning

Too Early To Dethrone Dividend Stocks?, continued from page 1

Source: Bloomberg, via The Leuthold Group, LLC, Perception Express,February 5, 2016, http://leuth.us/stock-market

COPYRIGHT 2016 THE LEUTHOLD GROUP, LLC

As of: February 5, 2016REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

CHART 1DIVIDEND PAYING STOCKS COMING BACK IN FAVOR?

2.090

Dec-14

2.085

2.080

2.075

2.070

2.065

2.060

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16

Relative Strength of Dividend Paying Stocksis ticking up (Relative Strength: WisdomTreeDividend Index versus S&P 500)




TABLE 1DIVIDEND PAYERS VERSUS NON-PAYERS 12 MONTHS AFTER FED TIGHTENING

Source: Al Frank Asset Management, via The Leuthold Group, LLC, Perception Express,February 5, 2016, http://leuth.us/stock-market



EffectiveFFR

Non-DividendPayers

DividendPayers

Dividend PayerOutperform?

December, 1954 1.3% 18.6% 26.0% YES

August, 1958 1.5% 33.5% 31.0%

August, 1961 2.0% -22.6% -9.6% YES

November, 1964 3.5% 35.6% 12.0%

August, 1967 3.9% 22.6% 10.3%

April, 1971 4.2% 3.1% 6.5% YES

March, 1972 3.8% -28.9% 3.0% YES

March, 1974 9.4% -13.5% -5.0% YES

February, 1977 4.7% 13.3% -4.5%

August, 1980 9.6% 9.2% 7.9%

January, 1982 13.2% 32.7% 29.2%

May, 1983 8.8% -27.5% -5.9% YES

April, 1987 6.4% -15.3% -5.2% YES

April, 1988 6.9% 17.2% 22.2% YES

February, 1994 3.3% 1.7% 6.7% YES

June, 1999 4.8% 39.8% -4.8%

June, 2004 1.0% 5.5% 7.9% YES

Source:The Leuthold Group, LLC, Perception Express, February 5, 2016http://leuth.us/stock-market



CHART 2DIVIDEND YIELD OF STOCKS IS AT A VERY ATTRACTIVE LEVEL

COMPARED TO TREASURIES

0.00

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Black Line: Dividend Yield (Calculated by dividing totalmarket cap of dividend paying stocks within the S&P 500by their total Last Twelve Months Dividend Payouts)

Grey Line: U.S. Treasury – 10 Year

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00




capital, the total yield (dividend buyback plus dividend payouts) currently stands at a whopping 5.35%, significantly higher than the 10-year Treasury yield of 2.16% (See Chart 3 to the top right).

Besides the fact that companies are returning capital like never before, investors should take note that those companies have the means to do so. Cash has piled up on companies’ balance sheets, while capital expenditures have been low.

Among non-financial companies in the S&P 500 which pay dividends, cash and short-term assets as a percent of market capitalization (shares outstanding times the price of the shares) is currently at 8.3%. While this reading is lower than peaks reached in 2009 and 2011, it is still high by historical standards. Capital expenditures, on the other hand, remain low, at only 0.93% of market capitalization. (See Chart 4 to the bottom right.)

With anemic growth on a global scale, we might see lower top line and bottom line growth going forward. However, barring a recession, U.S. companies should continue generating ample free cash flow to support dividend payouts or share buybacks, attracting income hungry investors.

What about valuations? Here we take the largest 1500 stocks excluding energy Master Limited Partnerships (MLPs) and royalty trusts, and compare the valuations of dividend paying stocks versus the stock universe. Chart 5, on the top of page 17, shows that dividend payers are trading at a 6.2% discount to the stock universe on the Price-To-Earnings (P/E) measure, slightly below the long-term median discount of 7.4%. While on the Price-To-Book (P/B) measure (see Chart 6 on the bottom of page 17), dividend payers are currently trading at an 11.5% discount, even cheaper compared to the median discount of 8.9%. Valuations do not make a strong case for dividend paying stocks, but at least they aren’t a major concern.




CHART 3TOTAL YIELD (DIVIDEND PLUS SHARE REPURCHASE)

COMPARED TO TREASURIES

0.00

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Black Line: Total Yield (total dividend payout plus cashused for share repurchase in the past 12 months)

Grey Line: U.S. Treasury – 10 Year

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00




CHART 4CASH PILED UP ON COMPANIES’ SPREADSHEETS

0.00

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Black Line: Cash as Percentage of Market Cap

Grey Line: Capex as Percentage of Market Cap

(non financials divided paying stocks within S&P 500)

2.00

4.00

6.00

8.00

10.00

12.00







CHART 5PRICE-TO-EARNINGS (P/E) DISCOUNT OF DIVIDEND PAYING STOCKS

-30.0%85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Tech Bubble:Dividend payingstocks traded athuge discount(30.0% discount)

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

Now dividend payingstocks trade at a6.2% discount,slightly below thelong-term mediandiscount of 7.4%




CHART 6PRICE-TO-BOOK (P/B) DISCOUNT OF DIVIDEND PAYING STOCKS

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Tech Bubble:Dividend payingstocks traded athuge discount(44.0% discountat the peak)

Now dividend payingstocks trade at a11.5% discount,cheaper than thelong-term mediandiscount of 8.9%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%




Dividend Payers Are Not All Equal: Go For High Quality:

A survey of dividend investing Exchange-Traded Funds (ETFs) shows that varied dividend investing strategies are available (see Chart 7, above). Almost all these ETF strategies start from a basic size and liquidity screen. Certain ETFs tracking a broad range of dividend paying stocks would stop here (Strategy 1). However, ETFs utilizing this strategy can further refine their targets by going to sub-segments of the screen output such as: Large/Mid/Small Caps, geographic, or other loose criteria to further limit the list of investable stocks. Several ETFs employ another step of screening:

Strategy 2: Only invest in the highest dividend yielding stocks.

Strategy 3: Only invest in stocks with consistently rising dividend payouts (normally measured over a longer 5-10 year span).

Strategy 4: Only invest in dividend paying stocks which are ranked high by an array of quality factors. Some of these strategies also include consistent historical dividend growth as one criteria.

Source:The Leuthold Group, LLC, Perception Express, February 5,2016 http://leuth.us/stock-market



CHART 7STRATEGIES OF DIVIDEND INVESTING

Screen Criteria: Rank stocks bydividend yield

Screen Output: Only include topyielding dividendpaying stocks

Strategy 2: High Dividend Yield

Screen Criteria: Stocks’ historicaldividend stream

Screen Output: Only include stocksthat have raiseddividendsconsistently

Strategy 3: Dividend Growers

Screen Criteria: Quality factors suchas ROE, ROA,dividend coverage,ratio, etc.

Screen Output: Only include stocksranked high by thesequality factors

Strategy 4: Quality Dividends

Screen Criteria: Minimum size andliquidity screen andsome other loosescreen criteria

Screen Output: All investabledividend payingstocks

Strategy 1: Broad DividendPaying Stocks




Backtesting was conducted to see which of the strategies work best: Broad Dividends, High Dividend Yield, Dividend Growers, or Quality Dividends. For the purpose of this study, a two-step screen is employed. The portfolio is re-balanced every quarter and stocks are equally weighted.

Step 1: Screen for all investable dividend paying stocks in our Leuthold 3000 universe (largest 3000 U.S. listed companies with daily trading volume larger than $400 million). Real Estate Investment Trust (REITs) and Master

Limited Partnerships (MLPs) are excluded. Only companies with dividend yields lower than 20.0% are considered to avoid distressed companies.

Step 2: For the High Dividend Yield strategy, only stocks ranked in the top 20.0% by yield are included. For the Dividend Growers strategy, only companies which have raised dividends for 10 consecutive years are included. For Quality Dividends, we employ Leuthold’s own proprietary Sector Neutral Stock Quality Model to rank the stocks; only stocks in the top 20.0% by this

ranking are included regardless of their yield or dividend history.

The backtesting result is quite interesting. As shown in Chart 8, below, of the four strategies, only Quality Dividends stands out, significantly outperforming during the study period. Cumulative returns of the other strategies do not differ that much. Table 2 shows that even though the Quality Dividend approach outperformed, it does not do so by taking on more risk. The standard deviation of monthly returns is comparable to the other strategies.




CHART 8CUMULATIVE RETURNS OF DIFFERENT DIVIDEND STRATEGIES

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

4,000

0

2,000

1,000

500

1,500

3,000

2,500

3,500 Chart lines represent the following dividendstrategies in order, from top to bottom:

Quality Dividends (Top Line – Black)

Dividend Growers (Red)

Broad Dividend Paying Stocks (Blue)

High Dividend Yield (Bottom Line – Green)

Granted, the result of this backtesting may not be translated fully into the real world as most ETF sponsors have to keep an eye on portfolio turnover (no matter what approach they take). Also, in reality, a lot of these equity income ETFs are somewhat hybrid strategies, taking advantage of different factors. Nevertheless, this study still shows that focusing on the quality of the companies, instead of past dividend paying records, should be the emphasis of a successful equity dividend approach seeking long term total returns (See Table 2 below).


Source: The Leuthold Group, LLC, Perception Express, February 5, 2016http://leuth.us/stock-market



TABLE 2DIVIDEND STRATEGIES: 1989 TO 2015 RETURNS AND RISK

AnnualizedReturns

Average MonthlyReturns

Monthly StandardDeviation

Quality Dividends 13.4% 1.1% 4.0%

High Dividend Yield 10.7% 1.0% 4.3%

Dividend Growers 10.4% 0.9% 3.9%

Broad Dividend Paying Stocks 10.6% 1.0% 4.5%

S&P 500 8.6% 0.8% 4.2%



TABLE 3Symbol Name

Type ofDividends Index Weighting

DTD WisdomTree Total Dividend Fund All Dividends WisdomTree Dividend Index Dividends

KBWDPowerShares KBW High Dividend YieldFinancial Portfolio

All Dividends(Financials)

KBW Financial SectorDividend Yield Index

DividendYield

VYMVanguard High Dividend Yield IndexFund

All Dividends(Large Caps)

FTSE High Dividend YieldIndex Cap Weight

DTN WisdomTree ex-Financials FundAll Dividends(Large Caps)

WisdomTree Dividendex-Financials Index

DividendYield

DLN WisdomTree LargeCap Dividend FundAll Dividends(Large Caps)

WisdomTree LargeCapDividend Index Dividends

DON WisdomTree MidCap Dividend FundAll Dividends(Mid Caps)

WisdomTree MidCap DividendIndex Dividends

DES WisdomTree SmallCap Dividend FundAll Dividends(Small Caps)

WisdomTree SmallCapDividend Index Dividends

NOBL ProShares S&P 500 Aristocrats ETFDividendGrowers

S&P 500 Dividend AristocratsIndex Equal

RDVYFirst Trust NASDAQ Rising DividendAchievers ETF

DividendGrowers

NASDAQ U.S. Rising DividendAchievers Index Equal

PEYPowerShares High Yield Equity DividendAchievers Portfolio

DividendGrowers

NASDAQ Dividend Achiever 50Index

DividendYield

PFMPowerShares Dividend AchieversPortfolio

DividendGrowers

NASDAQ U.S. Broad DividendAchievers Cap Weight

VIG Vanguard Dividend Appreciation ETFDividendGrowers

NASDAQ U.S. DividendAchievers Select Index Cap Weight

SDY SPDR S&P Dividend ETFDividendGrowers

S&P High Yield DividendAristocrats

DividendYield

SCHD Schwab U.S. Dividend Equity ETFHigh QualityDividends

Dow Jones U.S. Dividend 100Index Cap Weight

Dividend Investing Vehicles – ETFs:

Table 3, below, shows available ETFs employing the four dividend strategies. Note that some ETFsmight use screen criteria from different strategies to define their stock universe. We tried to group these ETFs based on the driving factors determining their investment universe.

Symbol Name Type of Dividends Index Weighting

HDV iShares High Dividend Equity Fund High Quality DividendsMorningstar DividendYield Focus Index Dividends

QDFFlexShares Quality Dividend IndexFund High Quality Dividends

Northern Trust QualityDividend Index Optimized

FVD First Trust Value Line Dividend Fund High Quality Dividends Value Line Dividend Index Equal

DGRWWisdomTree U.S. Dividend GrowthFund High Quality Dividends

WisdomTree U.S.Dividend Growth Index Dividends

QDYNFlexShares Quality DividendDynamic Index Fund

High Quality Dividends(Higher Beta)

Northern Trust QualityDividend Dynamic Optimized

QDEFFlexShares Quality DividendDefensive Index Fund

High Quality(Low Beta)

Northern Trust QualityDividend Defensive Index Optimized

RDIV RevenueShares Ultra Dividend Fund High YieldRevenueShares UltraDividend Index Revenue

DVYiShares Dow Jones Select DividendIndex Fund High Yield

Dow Jones U.S. SelectDividend Index

DividendYield

DIV Global X SuperDividend U.S. ETF High YieldINDXX SuperDividend U.S.Low Volatility Index Equal

FDLFirst Trust Morningstar DividendLeaders Index Fund High Yield

Morningstar DividendYield Leaders Index Dividends

SDOG ALPS Sector Dividend Dogs ETF High YieldS-network SectorDividend Dogs Index Equal

DHS WisdomTree Equity Income Fund High YieldWisdomTree EquityIncome Index Dividends

SPHDPowerShares S&P 500 High DividendPortfolio High Yield (Low Beta)

S&P Low VolatilityDividend Index

DividendYield







Separately, shifting towards dividend stocks could also affect the performance of industry groups. Groups dominated by high quality dividend paying companies could outperform in 2016. Table 4, below, shows the groups currently ranked Attractive by our Group Selection (GS) model sorted by their median dividend yield.

Attractive Groups Sector Leuthold Group Ranking Median Dividend Yield

Oil & Gas Refining & Marketing Energy Attractive 3.06%

Advertising Consumer Discretionary Attractive 2.73%

Property & Casualty Insurance Financial Attractive 2.26%

Water Utilities Utilities Attractive 2.21%

Consumer Finance Financial Attractive 2.17%

Reinsurance Financial Attractive 1.99%

Marine Industrials Attractive 1.98%

Human Resources & Employment Services Industrials Attractive 1.83%

Drug Retail Consumer Staples Attractive 1.76%

IT Consulting & Other Services Information Technology Attractive 1.75%

Aerospace & Defense Industrials Attractive 1.73%

Health Care Distributors Health Care Attractive 1.52%

Apparel Retail Consumer Discretionary Attractive 1.03%

Airlines Industrials Attractive 1.03%

Technology Distributors Information Technology Attractive 0.95%

Data Processing & Outsourced Services Information Technology Attractive 0.75%

Managed Health Care Health Care Attractive 0.71%

Broadcasting Consumer Discretionary Attractive 0.43%

Home Entertainment Software Information Technology Attractive 0.00%

Biotechnology Health Care Attractive 0.00%

Life Sciences Tools & Services Heath Care Attractive 0.00%

Research & Consulting Services Industrials Attractive 0.00%

Automotive Retail Consumer Discretionary Attractive 0.00%

TABLE 4




Dividend Investing Yields – Individual Stocks:

Table 5, on page 22, lists an assortment of high quality, dividend paying stocks with associated sector andindustry group classification (sorted by market capitalization).

Source: This article was excerpted from “Too Early To Dethrone Dividend Stocks?”, by Jun Zhu, CFA, Senior Analyst, The Leuthold Group, LLC, (Perception Express, February 5, 2016), http://leuth.us/stock-market COPYRIGHT 2016 THE LEUTHOLD GROUP, LLC REPRINTED WITH PERMISSION OF THE LEUTHOLD GROUP, LLC




TABLE 5Select Large Cap High Quality Dividend Payers

Ticker Company Sector IndustryDividend

Yield Market Cap

MAMasterCard IncorporatedClass A

InformationTechnology IT Services 0.5 96,501

DHR Danaher Corporations Industrials Industrial Conglomerates 0.5 58,405

TJX TJX Companies, Inc.ConsumerDiscretionary Specialty Retail 1.0 48,193

AET Aetna, Inc. Health CareHealth Care Providers &Services 1.0 35,285

SWKS Skyworks Solutions, Inc.InformationTechnology

Semiconductors &Semiconductor Equipment 0.8 12,687

NOV National Oilwell Varco, Inc. Energy Energy Equipment & Services 2.8 10,521

TMK Torchmark Corporation Financials Insurance 0.9 6,443

AFGAmerican Financial Group,Inc. Financials Insurance 3.3 6,036

RGAReinsurance Group ofAmerica, Inc. Financials Insurance 1.5 5,433

AIZ Assurant, Inc. Financials Insurance 1.6 5,231

Select Mid Cap High Quality Dividend Payers

Ticker Company Sector Industry Dividend Yield Market Cap

TTC Toro Company Industrials Machinery 1.3 4,038

SYA Symetra Financial Corporation Financials Insurance 1.7 3,719

MORN Morningstar, Inc.ConsumerDiscretionary

Diversified FinancialServices 1.1 3,461

OII Oceaneering International, Inc. EnergyEnergy Equipment &Services 1.8 2,938

BCPC Balchem Corporation Materials Chemicals 0.5 2,050

JJSF J&J Snack Foods CorporationConsumerStaples Food Products 1.4 1,968

UNF UniFirst Corporation IndustrialsCommercial Services& Supplies 0.2 1,933

CORE Core-Mark Holding Company, Inc.ConsumerDiscretionary Distributors 0.8 1,741

AWR American States Water Company Utilities Water Utilities 2.3 1,686

CHS Chico’s FAS, Inc.ConsumerDiscretionary Specialty Retail 1.8 1,429

Source: The Leuthold Group, LLC, Perception Express, February 5, 2016http://leuth.us/stock-market



Select Small & Micro Cap High Quality Dividend Payers

Ticker Company Sector IndustryDividend

Yield Market Cap

FWRD Forward Air Corporation IndustrialsAir Freight &Logistics 1.0 1,329

EXPO Exponent, Inc. IndustrialsProfessionalServices 1.2 1,252

HMN Horace Mann Educators Corporation Financials Insurance 2.8 1,199

AAON AAON, Inc. Industrials Building Products 0.8 1,138

TYPE Monotype Imaging Holdings, Inc.InformationTechnology Software 1.1 984

AMSF AMERISAFE, Inc. Financials Insurance 1.1 945

UFCS United Fire Group, Inc. Financials Insurance 2.7 941

IPCCInfinity Property and CasualtyCorporation Financials Insurance 1.9 870

SAFT Safety Insurance Group, Inc. Financials Insurance 4.4 838

LNN Lindsay Corporation Industrials Machinery 1.4 760

PULSE


LEGEND FINANCIAL ADVISORS, INC.® &EMERGINGWEALTH INVESTMENT MANAGEMENT, INC.’S

INVESTMENT MANAGEMENT SERVICES

Legend Financial Advisors, Inc.® (Legend) and EmergingWealth Investment Management, Inc. (EmergingWealth) offer Personalized Investment Management Services to individuals and institutions. Investment portfolios are developed to match the client’s return and risk requirements, which are determined by the clients’ completion of a Risk Comfort Zone Questionnaire, with the guidance of a Legend Wealth Advisor or EmergingWealth Advisor, respectively. Each type of investment portfolio is managed to achieve the short, intermediate and long-term investment objectives of the client, as may be applicable.

INVESTMENT PROCESS

Investment Portfolios:

Unlike most financial advisory firms that offer one style of investment or portfolio type, we offer a wide array of investment portfolios that usually fit with the large majority of client needs. If necessary, we will create customized solutions as well. For the types of investment portfolios, please see our Investment Portfolios, Potential Return and Risk Spectrum Chart on the next page. For a detailed description of our portfolios, please contact Louis P. Stanasolovich, CFP®, founder, CCO, CEO and President of both firms for a confidential discussion at (412) 635-9210 or e-mail us at [email protected].

Investment Research:

Our Investment Committee performs extensive research to identify opportunities, mitigate risks and structure investment portfolios. Emphasis is placed on developing portfolios that maximize the potential return relative to the amount of risk taken.

In-depth due diligence including face-to-face interviews in many instances with portfolio managers for open-end mutual funds is performed on each investment we select for a portfolio. Factors (both from a qualitative and quantitative standpoint) that we conduct a thorough analysis of each investment include, but is not limited to, liquidity (including the primary investment and/or the underlying investments, if utilizing pass through vehicles such as open-end mutual funds or exchange-traded products), income taxation, all related costs, return potential, drawdown potential (historical declines from peak-to-trough), volatility and management issues (Anything having to do with the management team of a stock, open-end mutual fund or an exchange-traded product.).

All portfolios for EmergingWealth are subadvised by Legend.

Client Education:

Education is very important to us. We are dedicated to educating each client about the different investment portfolio types and how they relate to market volatility, time horizons, and investment returns. It is our goal to ensure that the client understands and agrees with our investment philosophy. Furthermore, we assist each client in selecting a risk tolerance level with which they are comfortable. Ultimately, an investment portfolio is designed to meet the client’s objectives.

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Many investment firms only offer monthly brokerage statements, which provide minimal information; typically only account and investment balances. We, on the other hand, provide detailed quarterly reports that outline performance, income and management fees (among other items) in a simple, easy-to-read report. In addition, each performance report is sent with an extensive index page that illustrates the investment environment during the reporting period.

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