client_letter_6_3_15 6/15/2015 1

A gradual warming trend

Did you know that the economic recovery is nearly six years old? That's right – the Great Recession www.RetireWithTrue.com ended in June 2009, which means the economy pulled out of its nosedive and began to climb higher 913-653-8783 the next month. That is what the National Bureau of Economic Research, which is the official arbiter of the business cycle, reported several years ago.

When I tell clients from time to time that the economy has been expanding since late 2009, I sometimes get a blank stare that screams disbelief.

I get it. We fell into a deep economic hole or what I think of as a deep freeze. Your Investment News from True Private Wealth Management & True Alpha Solutions June 2015 When the temperature plummets to zero, the first upticks to one, two, five or even ten degrees doesn't feel much like a warming trend, especially if it is cloudy and windy outside. What’s Inside... A GradualThat paints a good Warming picture of the first few years of theTrend expansion. Much like a meteorologist who * A Gradual Warming monitors various gauges andthe can average pinpoint person small feels changes any inbetter the weather,about his economists sift through all Trend kinds of economic data whichor haveher financial confirmed security. the improvement in the economy. While the economy is larger than it has ever * Please Stop id you knowMuch that the like economic the small warm up,been it doesn't (Bureau mean of Economic the average Analysis), person feelsa record any better about his or her Undercutting our recovery is nearly six yearsfinancial old? security. That’s right number of Americans are working (Bureau Jobs Growth – the Great Recession ended in June 2009, of Labor Statistics), and the major market which means the economyWhile pulled the economy out of its is largerindexes than it hashave ever climbed been (Buto newreau highs, of Economic many Analysis), a record number of nosedive and began to climb higher the next Americans still feel a bit queasy about the * Part-Time Workers Americans are working (Bureau of Labor Statistics), and the major market indexes have climbed to new month. That is what the National Bureau economic outlook. of Economic highs, many Americans still feel a bit queasy about the economic outlook. * Number of Research, which Adults not in the is the official Market Performance Workforce arbiter of the MTD % YTD % 3-year* % business cycle, Dow Jones Industrial Average 0.95 1.05 12.70 reported several NASDAQ Composite 2.60 7.05 20.87 * The True years ago. S&P 500 Index 1.05 2.36 16.51 Unemployment Russell 2000 Index 2.16 3.47 17.06 Rate When I tell MSCI World ex-USA** -1.33 5.86 11.59 clients from time MSCI Emerging Markets** -4.16 5.01 3.48 * Wages are not to time that the Source: Wall Street Journal, MSCI.com *Annualized Rising economy has been expanding **USD since late 2009, * My Opinion I sometimes get a blankPlease stare thatStop screams Underc utting our Jobs Growth disbelief. Please Stop Undercutting our Jobs * Looking Ahead After more than five years ofGrowth growth in private sector payrolls, you would think that everyone would I get it. We fell into a deepagree economic the jobs recoveryhole or has Afterhappened. more thanBut the five pessimists years of aregrowth still incomplaining. Let's look at their four * Key Investment what I think of as a deeparguments. freeze. private sector payrolls, you would think that Deadlines everyone would agree the jobs recovery When the temperature First:plummets Part- Titome zero, Workers has happened. But the pessimists are the first upticks to one, two, five or even ten still complaining. Let’s look at their four * A Father’s Day degrees doesn’t feel much like a warming arguments. Story trend, especially if it is cloudy and windy outside. First: Part-Time Workers * Coaching Tip That paints a good picture of the first Looking at the civilian employment survey few years of the expansion. Much like a Be careful of the over the past year, shows that part-time meteorologist who monitors various gauges employment is up 196,000, while overall jobs commentary that and can pinpoint small changes in the weather, are up 3,000,000. The share of the workforce works to persuade economists sift through all kinds of economic performing part-time work has continued to you that the data which have confirmed the improvement fall, not rise. Employment reports vary too recovery isn’t there in the economy. much from month to month- and this is what at all. gets the media in full froth. It’s best to look at Much like the small warm up, it doesn’t mean employment trends from year to year. Second: Number of Adults not in the from a year ago. With lower energy prices over the last year or so, overall consumer prices are barely higher than a year Workforce ago which means inflation adjusted wages have increased These are adults not working nor looking for work. These about 2% per hour since last year. This beats the trend of the numbers are at an all-time high. This is 100% true and 100% last several decades! irrelevant. There is nothing here to study because of sheer population growth. When our population grows, so do the My Opinion numbers in every category. But don’t take my word for it, chew on this fact. During the economic expansion from The talk about jobs is strictly political and will continue to 1991 to 2001 the number of adults not in the workforce grew get worse as the Presidential Election marches closer. The by 6,000,000! pessimists would be much more persuasive if they said the economy and jobs would be better with a more free-market set of policies. (i.e.- lower taxes, less regulations and less Third: The True Unemployment Rate government spending on entitlements) Our jobs growth is The government says employment is 5.5%, but the true by no means perfect. But it’s not awful. Be careful of the unemployment rate is 10.8%- or so the pundits claim. commentary that works to persuade you that the recovery First, the government is the one who compiles the “true” isn’t there at all. This talk is political. The economics of unemployment rate, so they aren’t trying to hide anything the four arguments above are happening whether you are here. They have been reporting this number for decades. Democrat, Republican, or Independent. This “true” rate is called the U-6 and includes the unemployed and the underemployed. By counting both: the Looking Ahead U-6 must ALWAYS be higher than the unemployment rate. Caution is on the horizon for the bond markets. Fed Chief (In March of 2007 unemployment was 4.4% and the U-6 was Yellen is marching, albeit as slow as a snail, to our first rate 8.0%) In 2009, the U-6 was 17.1% and today it’s at 10.8%. hike since June 2006 (according to Forbes.com). Money is Thus showing great improvement in the labor market. continuing to move away from longer term bonds- where many investors had moved to get higher bond yields. I Fourth: Wages are not Rising suspect that this “chase for yield” will push these investors to Their argument is that there may be more jobs, but wages take on more risk than they are comfortable as they look to haven’t moved at all. Average hourly earnings are up 2.3% satisfy their thirst for yield.

Bryan A. Sarff, CFP®, RFC KEY PLANNING CERTIFIED FINANCIAL PLANNER™ TRUE Private Wealth Management & INVESTMENT 13220 Metcalf Suite 365 DEADLINES Overland Park, KS 66213 SUMMER 2015 [email protected] www.RetireWithTrue.com FINANCIAL DATES & DEADLINES SPECIAL OBSERVANCES Parks and Recreation Month JULY July 3. Markets close at 1 p.m. ET July 4-26. Tour de France Caring for a parent? July 18. Nelson Mandela Day FOCUS: July 4. Independence Day You need a plan! Caregiving July 31. Form 5500 due July 19. Ice Cream Day July 23. Gorgeous Grandma Day National Golf Month What Will be Your Legacy Month Prepared AUGUST August 3. Watermelon Day for rising None. Enjoy your summer! FOCUS: August 3-9. Sturgis Rally college College Planning August 8. Garage Sale Day tuitions? August 21. Senior Citizens Day

College Savings Month September 7. Labor Day (markets closed) September 11. Patriot Day Do you know the SEPTEMBER September 15. 3Q 2015 estimated taxes due September 13. Grandparents Day new health care FOCUS: September 15. Last day for corporations, S-corp Health Care Planning September 17. Constitution/Citizenship Day rules? & partnerships to file 2014 Q1 extended returns September 27. Museum Day

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Copyright 2015 by Horsesmouth LLC. All Rights Reserved. Horsesmouth is an independent organization not associated with the licensee or any of its affiliates. 2 In a speech just before Memorial Day weekend, Fed Chief and emphasize the longer-term. The odds of a recession this Yellen said she believes a 2015 rate hike is appropriate, but year are low, but it’s inevitable. stressed that it all depends on the economic data. However, like the morning sun that follows the dark night, A more rapid improvement in the economy could result in a the economy has always turned higher. Patience is a virtue, faster pace of rate increases, while less favorable economic as it has rewarded investors with a long-term perspective. conditions could slow a series of rate hikes and/or delay the first As always, I’m honored and humbled that you have placed rate increase. your trust and confidence in my firm, and I am proud to She believes the latest economic slowdown is primarily the serve as your financial advisor. result of temporary factors. She specifically noted, “The U.S. I trust that you have found this month’s summary to be economy seems well-positioned for continued growth.” beneficial and educational. I always emphasize that as She is probably right, but I couldn’t help but take note of an your financial advisor, it is my job to partner with you as interesting remark she made during her talk on the economy. you travel down the road to your financial goals. If you “Based on many years of making economic projections, I can ever have any questions about what I’ve conveyed in this assure you that any specific projection I write down will turn out month’s message or want to discuss anything else, please to be wrong, perhaps markedly so,” she said. feel free to reach out to me. That’s transparency and candor taken to a new level. And it comes from the leader of the world’s most powerful central bank. It’s just one more reason why we customize your financial plan More Income, Less Taxes Client and Friends Workshop July 14th at 6:30pm at Granite City 15085 W 119th St Olathe KS 66062 Dinner Menu choices; Starter House Salad, with Choice of Ranch or Balsamic Vinaigrette Dressing Entrée Choice 1) Garlic Top Sirloin with Asparagus and Garlic Mash Potatoes Choice 2) Mediterranean Chicken and Rice, with Broccoli and Tomato Onion Relish Dessert Brownie with Ice-cream Don’t forget to reserve your seat! 913-653-8783 3 Hence, soccer: the only way to forget the pangs of an empty belly. When the tourists went inside their hotels to sleep, Rivaldo could play, run, and dream; dreams of playing before thousands of adoring fans. Dreams of playing like the legends he saw on television, dreams of a better, safer, easier life. But to Rivaldo, they were only dreams. “I never really thought I could be that good,” he once said.

But one person did believe: his father, Romildo. The two were very close. Romildo had his own dreams, too: dreams of a real escape from the slums, not just A Father’s Day Story... a fantasy one. He encouraged his three sons to train hard and get better at the sport they all loved. It was As you know, the world is full of important people. From their best hope at a better life. “He always said to us presidents to scientists to singers, all celebrities influence that one of the three brothers would be a professional our culture in different ways. But when it comes to us footballer,” Rivaldo recalled in an interview. as individuals, there are few people more influential than our fathers. Fathers inspire us, guide us, and motivate us. But when Rivaldo was 16, his number one fan was They not only shape who we are, but also what we will taken away forever. His father was killed in a car become. Their impact can even be felt long after they’re accident. Rivaldo was devastated. gone. Without his father, soccer meant nothing anymore, Take the story of Rivaldo Vitor Borba Ferreira … or just and he went a whole month without playing. But his Rivaldo for short. Rivaldo is a retired Brazilian soccer mother begged him to continue, saying, “You can’t player, famous the world over for the goals he scored, the give up now. You must make your father’s dream trophies he won, and the skill he displayed. But that’s not come true.” what makes his story so compelling … nor is it what this letter is about. This letter is not about Rivaldo the athlete, So Rivaldo but Rivaldo the father and Rivaldo the son. It’s about the son kept family. on playing for Rivaldo spent his childhood in Recife, a city on Brazil’s Romildo the northeast coast. Like most cities, Recife has both its father. And glamor side and its less glamorous side, and it was the he worked, latter where Rivaldo was raised, in the favelas (Portuguese even going so for slums) of the giant port city. far as to walk ten miles by Soccer has always been huge in Brazil’s metropolitan himself almost areas, especially in the poorer quarters. That’s because, every night in for children growing up in a favela, soccer is more than order to train just a game—it’s a means of escape. Rivaldo spent most with his team. of his days selling souvenirs to tourists in order to bring He couldn’t money home for his family, before devoting his nights afford a bus. to kicking a ball around on the beach. But while playing But through it all, he once said, “My father never left with his friends was fun, it wasn’t enough to stave off my side; on the street, on the beach, he was always the effects of poverty and hunger. Rivaldo and his four with me. He helped me on the road to becoming a siblings all suffered greatly, especially due to malnutrition. professional, and now I play just for him.” Even today, as a famous and successful athlete, Rivaldo still seems unable to cast off the physical effects of And what a professional he was! By the age of twenty, malnutrition. His face and frame are still as gaunt as ever, Rivaldo had turned pro. Soon he was playing for one and he’s worn dentures for years—the hunger he suffered of the biggest teams in Brazil. By his mid-twenties, as a child made his teeth fall out. Europe was calling. Rivaldo spent over a decade 4 playing overseas, including a stint at Barcelona, one of the biggest teams in the world. He made more money than he ITALIAN CRESCENT CASSEROLE ever thought possible, and listened as tens of thousands of fans chanted his name. Just like in his dreams. Just like in 1 lb. ground beef his father’s. ¼ c. onion, chopped 1 pkg. spaghetti sauce mix In 1999, he was officially named the best player in the 1 can (8 oz) tomato sauce world. Three years later, he won the World Cup with 1 ½ c. Mozzarella cheese, shredded Brazil. ½ c. sour cream 1 can (8 oz) refrigerated crescent dinner rolls Despite his success, he never forgot his background. He 1/3 c. Parmesan cheese, grated founded his own charity, and always donated a part of his 2 T. butter, melted wages to help the children who looked up to him the way he had looked up to the legends of his own youth. He also Heat oven to 375 degrees. In skillet, brown meat started a family of his own. Rivaldo the son had become and onion. Drain. Stir in spaghetti sauce mix and Rivaldo the father. tomato sauce. Heat until hot and bubbly. Combine Mozzarella cheese and sour cream. Pour hot meat One of his sons is named Rivaldinho, Portuguese for “little mixture into 8 x 12 or 9 x 13 pan. Spoon cheese Rivaldo.” True to his namesake, Rivaldinho is a soccer over meat. Separate crescent dough into rectangles talent, too, currently playing for a team called Mogi Mirim and place over cheese mixture. Combine Parmesan EC, one of the first teams his father played for … and the cheese and butter. Crumble evenly over dough. Bake last. for 18-25 minutes, or until deep golden brown. Cut into squares and serve. Rivaldo’s long road out of the slums passed a new milestone on February 19th, 2014. Forty-one years old, Notes: Can be made without the butter; just sprinkle Rivaldo returned home and signed with Mogi Mirim. On the Parmesan cheese over the crescent rolls. Also, the aforementioned date, ten minutes into the second half, just kind of daub the cheeses evenly over the meat Rivaldo came off the bench and joined his eighteen-year- mixture. It melts out as it bakes. old son on the pitch for an official game. They played together for just over half an hour inside the Estadio Romildo Ferreira … the stadium named after Rivaldo’s father, Romildo.

“I thank God for this moment,” Rivaldo said afterward, MEMORIES OF A SMALL TOWN shortly before retiring. “I am really happy to have played by Bess Sibley with my son.” Once upon a time, he had wanted to quit. But Rivaldo the When, as young parents, son kept playing for his father, so that, in the end, Rivaldo we raised up our crew the father could play with his son. In a small Kansas town (populations a hundred and two), How well I remember From all of us here at True, Happy Father’s Day! Thank you to all fathers everywhere! The commotion and sound As our kids and their friends made our home their playground. "Shut the door!" I yelled loudly, my voice carried far, As children raced through, leaving the back door ajar. My husband came in and said, "Mama, cool down! I just heard doors slamming -- all over town."

5 13220 Metcalf Avenue, Suite 365 Overland Park, KS 66213 913-653-8783 Coaching Tip: Watch your money grow in one pot and see when you have overlap or your allocation may be out-of- balance.

Eleven Most Common Mistakes # People Make With Their IRAs Part 9 of an 11 part continuing series 9 Every week we help people like you rollover or transfer assets to Keeping Money and from an IRA. There are a number of pitfalls and potholes along the way that can turn an easy transaction into an IRS in a Former headache. We hope this series of Eleven IRA Mistakes to avoid Retirement Plan will help lessen any time you might spend trying to unwind a mess with the IRS or investment company...

Consolidation and aggregation are the Stretch, each may have very odd of-balance. Plus, you’ll only have to simply a way to have less paperwork provisions upon your death, and many become familiar with the IRA rules of and headaches to track year after may not follow all of the rules of one custodian instead of many. year. By keeping money in a former your trust and estate plan documents. retirement plan, you may have fewer Remember, the beneficiary on the choices for investing, you may have account trumps any beneficiaries in overlap with your current retirement your trust or will. plan, your beneficiary choices may be limited, and it’s usually not a good (Watch for #11 for mistakes that are idea. (Unless you need to take a loan made by not converting to Roth IRAs.) against the money or you need to make a hardship withdrawal– two of the few Coaching Tip: Consolidate your exceptions in my book.) IRAs as you move along in retirement. You’ll be able to watch your money As we stated in a previous edition, grow in one pot and see when you have not all retirement plans allow for overlap or your allocation may be out- 6