The Year in Review: 2016 Market Summaryby Mark Niederhelman

It’s difficult to predict the market over the short term, and 2016 has proven that point. Here are a few things that surprised the markets this year.

Interest rates remain mainly unchanged for the year. In December 2015 the Fed increased interest rates for the first time in 9 years, and indicated plans to raise rates slowly in 2016. Due to concerns about less than robust economic growth, rates have remained at historic lows. Only post-election have interest rate sensitive sectors moved in response to anticipated rate increases in 2017. Late year rising bond yields during the quarter resulted in outright declines in bond-proxy sectors, such as utilities, staples, and real estate.

A Quar ter ly Publication Vol . 9 Issue 1 / Januar y 2017the WealthWATCHSM the WealthWATCHSM 1

INSIDE THIS ISSUE

The Year in Review: page 1 2016 Market Summary

Letter From The President page 2

Client Success Stories page 2

Economic Commentary page 3

FIND US ON:

Mark Niederhelman

In 2015 the China stock market declined, setting off global market declines and a return to volatility, but by late year that was all behind us – or so we thought. 2016 started with another steep sell-off in the Chinese stock market which in turn caused global markets to sell off.

World markets also tumbled after the United Kingdom voted to leave the European Union. Investors lost more than the equivalent of 2 trillion United States dollars on June 24, 2016, making this day the worst single day drop in history according to data from S&P Global. The losses were extended to a combined total of the equivalent of 3 trillion dollars by additional selling on June 27, 2016, also according to data from S&P Global. Fortunately, that sell-off was short lived, and within a few days US investors surmised the Brexit was more of a political challenge for the UK, and not a global economic challenge.

In spite of less than robust economic growth the broad market indices ended the year higher, with the Dow up 13.5%, and S&P 500 up just under 10% for the year, thanks to a post-election rally. Before the presidential election, Wall Street dreaded Donald Trump as a dangerous, unpredictable and disruptive, if improbable, president. Since his victory, fear has turned to hope. Stock markets are at record highs and shares in financial institutions have been among the best performers.

With the Republicans taking control of the White House and Congress on election night, fossil fuel stocks have since outperformed the S&P 500 (even before the bullish OPEC production cut announced Nov. 30th); renewables and yield related holdings have underperformed; and Health Care Facilities & Medicaid levered Managed Care have also underperformed. Additionally, infrastructure stocks and Aerospace & Defense stocks have outperformed.

Hopes are that with the incoming administration, the U.S. economy might be able to break out of our unimpressive but steady economic growth. While the range of likely stock market outcomes seems wider under a Trump presidency, you must keep in mind the market is not immune to systemic shocks, nor the natural fluctuations of the business or credit cycles.

For weekly updates and more information, check out our blog! You can find it at lineweaver.net/blog

Securities offered through Triad Advisors, member FINRA/SIPC. Advisory services offered through Lineweaver Wealth Advisors, LLC. Lineweaver Wealth Advisors is not affiliated with Triad Advisors. This is for informational purposes only and should not be construed as tax or legal advice. Consult your tax or legal advisor in regard to your specific situation.

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by Jim Lineweaver, CFP®, President and FounderLE T TER FROM THE PRESIDENT

For a lot of people, 2016 was a challenging year. Following a year of contentious rhetoric on the primary campaign trail, the presidential election was perhaps even more divisive. We lost music icons Prince, David Bowie, and Leonard Cohen. Even Brad and Angelina - the epitome of the Hollywood love story gone right - announced that they would part ways.

But it wasn’t all bad – at least not in Cleveland. This year brought the RNC to Cleveland, which show-cased the city and allowed Cleveland to shine in the national spotlight. In a city traditionally ridiculed for our sports performances, the Cleveland Cavaliers brought us our first championship title in 52 years. The Indians, while ultimately less successful, still went a full 7 games in the World Series, and Ohio State did win their championship and is a contender again this year after beating Michigan. OH – IO!

On a personal note, time is flying for the Lineweaver family. We sent our oldest daughter off to college at the Farmer’s School of Business at Miami of Ohio. She is actively pursuing a finance degree (I can’t imagine where she came up with that idea) with a minor in entrepreneurship. She made the rowing team, and is involved with the Wilks Institute for Leadership. Tyler turned 16 and is now driving (so keep in mind that the roads may be safer during school hours). He also made the JV basketball team and started his own landscaping business this summer. Delaney is in 8th grade now and playing soccer, basketball, and is singing in show choir.

So, while we’re sad to see 2016 go, we’re also excited for a new year, and new beginning. As we kick off 2017, we at the Lineweaver family and Lineweaver Financial Group want to wish you and your family a happy, prosperous, and safe new year.

CLIENT SUCCESS STORIES

Every year, I am very lucky to be able to help our clients in ways that change their lives for the better whether it’s helping someone to build their dream home, take their entire family to Europe, or fully pay for their college education and avoid student loan debt. While those are some of my highlights for this year, I also wanted to share some of the amazing work our other advisors or doing.

Look for Jim’s article “Is Retirement Still a Part of the American Dream?” in the January-February issue of Boomer and Beyond Magazine, or head over to Lineweaver.net for the online version. If you have any questions about planning for your own retirement, please give us a call. We’re happy to help!

“I had a client – a police officer – who was nearing retirement. He had cancer, and unfortunately passed away. He and his wife have daughters in college, and, as you can imagine, they were all devastated. When his wife came in to see me, we looked at the student loans he had for his daughters. We were able to have the debt forgiven and avoid any tax. I was really glad we were able to help a family who was in a difficult situation.” – Mark Sipos, LFG Tax Consultant

“A client came to me a little over a year ago. She was very unhappy at work, and didn’t think she’d be able to retire soon. After looking over her assets and walking through a few strategies, we found a way for her to retire immediately, and have a very comfortable retirement. I’ll never forget it - it gave her so much relief that she burst into tears! She’s retired now, spends all her time with her family, and she is so much happier.” – Mark Niederhelman, LFG Financial Consultant

“My client’s wife became very ill. To help with her care, they were putting huge balances on high interest credit cards. I was able to help him get a loan against his deferred comp and refinance that debt at a much lower interest rate to help them through a difficult time.” – Hugo Souza, LFG Financial Consultant

by Jim Lineweaver, CFP®, President and Founder

In many ways, 2016 has proven to be predictably unpredictable as highly covered events and predictions have not met up with outcomes (a few examples: Growth concerns in China, Fed uncertainty, Global slowdown fears, and Brexit). Q4 proved to be no different with the surprise election outcome of President-elect Donald Trump, and continued shifts in the political landscape abroad. Optimism about the incoming administration’s plans for fiscal stimulus through reduced taxes and increased infrastructure spending, along with a move toward deregulation in the financial industry, seemed to drive sentiment for Q4. This positive sentiment was the primary driver of outperformance in the financial and industrial sectors, the expectation of nationalistic trade policies weighed on EM Equities, while positive sentiment surrounding U.S. equities drove investors out of Treasury and into U.S. equities, sending the yield on the 10-year Treasury Note to 2.37%.

Some key highlights over the quarter:

• According to the second estimate of economic growth released by the Bureau of Economic Analysis (BEA), third quarter GDP increased at an annual quarter-over-quarter rate of 3.2%.

• As expected, the Federal Open Market Committee announced in December that they raised the federal funds rate by 0.25%. It’s the first increase this year and just the second since June 2006.

• The post-election rally helped bring all major benchmarks to a series of record highs. U.S. stocks rose mostly higher in the quarter, with Goldman Sachs, JPMorgan, and Caterpillar leading blue chip stocks higher.

• While High Yield Bonds stood their ground, US / Global Bonds mainly sold off as U.S. Treasury yields surged and the dollar strengthened in Q4. The 10-year alone increased 53 basis points (to 2.37% at the end of November). This move is a reflection of investors anticipating future fiscal stimulus given less political gridlock, given Republican control of the White House and majorities in both the Senate and House of Representatives.

• Largely driven by yield-proxy investors, Real Estate and Utilities trended lower as retail sentiment drove rotation out of yield-ori-ented assets and back into fixed income instruments.

• Oil trended higher as OPEC brokered the first global petroleum cut in 15 years. If implemented, inventories will decline 760,000 barrels per day. Markets generally see this decision as a positive for U.S. Shale Drillers as rigs continue to come back on line during the quarter.

While the world appears uncertain, investors were reminded in 2016 that having a broadly diversified portfolio and a long-term approach can help improve return outcomes. Even though bouts of volatility are painful, those moments are often temporary and returns appear to have much longer staying power.

Tune in to WKYC Channel 3 at 11:30am every other Sunday to see a member of our team on the Golden Opportunities show with Laurie Steiner, where we discuss current financial topics in an easy to understand format.

Upcoming shows and topics:

GOLDEN OPPORTUNITIES SHOW

ECONOMIC COMMENTARY3

In a Japanese study that examined how to make the most of a nap, people who took a “coffee nap”—consuming about 200 milligrams of caffeine (the amount in one to two cups of coffee) and then immediately taking a 20-minute rest—felt more alert and performed better on

Sunday, January 15, 2017Income Benefit Riders

Sunday, January 29, 2017Kids Back Home

Sunday, February 12, 2017Health is Wealth

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Thanks to our clients, staff, and anyone who attended one of our educational programs, we were able to donate the food we mentioned in the last newsletter which came to 962 pounds when we weighed it at the Cleveland Food Bank, just before the Thanksgiving Holiday! This food will provide thousands of meals for families in need in the Cleveland area and sub-urbs. We are grateful for your support!

HEALTHWATCH Try drinking coffee to have a better nap

computer tests than those who only took a nap.

Why does this work? A 20-minute nap ends just as the caffeine kicks in and clears the brain of a molecule called adenosine, maximizing alertness. “Adenosine is a by-product of wakefulness and activity,” says Allen Towfigh, MD, medical director of New York Neurology & Sleep Medicine. “As adenosine levels increase, we become more fatigued. Napping clears out the adenosine and, when combined with caffeine, an adenosine-blocker, further reduces its effects and amplifies the effects of the nap.”

To read the full article, please go to Health.com.

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Ed had a great adventure this summer when he had the chance to take his 24 foot Sea Ray 110 miles up the Erie and Seneca Canals. Ed and his wife, Gladys, took several days to make the journey and take in the history of the canals from Amherst to Seneca Falls. You can read all about Ed’s trip, the old canal and lock system, and his thoughts about the trip as part of his article this past August in the Lakewood Observer.

Google, the search giant based in Mountain View, CA, was originally named “backrub,” because of its ability to search the “back links” of websites. In 1997, as founders Larry Page and Sergey Brin looked for a better name, they misspelled “Googol” – a mathematical term for a 1 with 100 zeroes - as “Google” when checking the current domain registry, and the name stuck.

A retired sergeant with 37 years of service to the Lakewood Police Department and member of the Lakewood Board of Education, Ed is a member of the Lakewood Chamber of Commerce, the American Legion, and Lakewood Kiwanis. He stays busy as Marine Patrol Supervisor for the Lorain Port Authority and as a polygraph examiner in the government and private sectors. Gladys will retire from Lakewood Schools in March and they are traveling to Hawaii.

If you would like to receive our newsletter through email, please email Annika at Annika@lineweaver.net

CLIENT SPOTLIGHTEd Favre

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