The Global Investment Pulse March 2019 Issue

March, 2019

PEAK PROFIT MARGINS AND WHAT THEY TELL US

ALL YOU NEED TO KNOW ABOUT BREXIT: THE KEY POINTS

Excerpted from “Peak Profit Margins—And What They Tell Us” by Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc.

By Chun Wang, CFA, PRM, Senior Analyst and Co-Portfolio Manager, The Leuthold Group, LLC

As Edited By James J. Holtzman, CFP , Legend Financial Advisors, Inc.® and EmergingWealth Investment Management, Inc.® ®

The Stock Market remains richly priced. One should expect low equity market returns over the next several years. Retail investors are expecting 10.0% returns per year, but high market valuations are pointing towards 2.0% per year or less.

As Edited By Diane M. Pearson, CFP®, PPCTM, CDFA®, Legend Financial Advisors, Inc.® and EmergingWealth Investment Management, Inc.® 1. The biggest near-term wild card is the infinitely confusing and hopelessly unpredictable Brexit.

Warren Buffet Quote:

2. The U.K. government and EU did agree on a Brexit deal in November 2018, but it was rejected in the so-called “Meaningful Vote” by an overwhelming margin on January 15, 2019.

Warren Buffet once wrote, “We like pessimism, but because we like the prices it produces. It’s optimism that is the enemy of the rational buyer”.

A meaningful market correction willPeak reset the opportunity.

Let’s Profit Margins, continued on page 8

3. A big problem is that the Brexit issue doesn’t fall cleanly along party lines. Almost all parties are divided on Brexit, to varying degrees, and even having a party majority in Parliament can’t guarantee the passage of any deal.

Brexit, continued on page 6

PREFERRED SECURITIES OFFER A SIGNIFICANT INCOME STREAM, BUT NOT NECESSARILY STABILITY

EARNINGS YIELD: ANOTHER WAY TO VALUE STOCKS

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

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

Preferred stocks currently offer some of the highest yields in the fixed income world, but they can be almost as volatile as common stocks at times. After all, they are stocks. They also provide an income advantage, but they can provide an income taxation advantage as well regardless of one’s tax bracket.

The after-tax yield can even exceed that of tax-exempt municipal bonds at times like the current situation. The reason is that distributions from many preferred stocks are taxed as qualified dividend income (QDI), which is taxed at long-term capital gains rates, rather than as regular interest income, which is

Currently, economic activity is slow. Therefore, The Federal Reserve (Fed) probably isn’t going to raise interest rates in the near future (To support this viewpoint, Jerome Powell, the current Chairman of the Federal Reserve, recently indicated that he expected the Fed to not increase interest rates in 2019. This is a complete reversal from the Fed’s policy in the early Fall of 2018 when they expected interest rates to increase four times.).

The really good news is that it doesn’t appear that a recession is on the horizon either, at least not for the next six months.

Preferred Securities, continued on page 10

Earnings Yield, continued on page 6

THE GLOBAL INVESTMENT PULSE, March, 2018

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ABOUT LEGEND FINANCIAL ADVISORS, INC.® Legend Financial Advisors, Inc.® (Legend) is a Non-Commission, Fee-Only, Fiduciary U.S. Securities and Exchange Commission registered investment advisory firm with its headquarters located in Pittsburgh, Pennsylvania. Legend provides Personalized Wealth Management Services Including Financial Planning And Investment Management Strategies to affluent and wealthy individuals as well as business entities, medical practices and non-profit organizations as well as retirement plans. Legend and its award-winning advisors are Fiduciaries.

FIVE REASONS TO CHOOSE LEGEND

1. Legend is a Non-Commission, Fee-Only, Fiduciary advisory firm. Fee-Only means Legend is compensated exclusively by client fees. 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 Publications such as Worth, Medical Economics and Barron’s 70 times as “The Best Financial Advisors In America”.

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

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

5. Legend emphasizes low-cost investments where possible and attempts to trade and allocate investments in an income tax-efficient manner.

ABOUT EMERGINGWEALTH INVESTMENT MANAGEMENT, INC.® EmergingWealth Investment Management, Inc.® (EmergingWealth), is the sister firm of Legend Financial Advisors, Inc.® (Legend) and is a Non-Commission, Fee-Only Securities and Exchange Commission (SEC) registered investment advisory firm.

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

LOUIS P. STANASOLOVICH, CFP®, EDITOR Louis P. Stanasolovich, CFP® is founder, 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 13 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, five 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”. In 2018, Lou was selected for the inaugural “Investopedia 100”, an award recognizing the top 100 influential advisors in the country. 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.

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THE GLOBAL INVESTMENT PULSE, March, 2019

FOR THE REST OF THE WORLD, IT HASN’T BEEN THAT GOOD

By Doug Ramsey, CFA, CMT, Chief Investment Officer, The Leuthold Group, LLC As Edited By Diane M. Pearson, CFP®, PPCTM, CDFA®, Legend Financial Advisors, Inc.® and EmergingWealth Investment Management, Inc.® We received two media calls in December hoping we would comment for upcoming special features about the tenth anniversary of the bull market. We rolled our eyes, since the S&P 500 was well on its way to a decline that would eventually reach 19.8% on a close-to-close basis on Christmas Eve. Less than three months later, the market has moved much closer to a new high (and, therefore, another anniversary) than we thought probable. Based on standard technical retracements and on our mortality tables for bear market rallies, the best-case S&P 500 bounce “should” have exhausted itself in the 2,700 - 2,750 range. Instead, the index pushed above 2,800 in early March.

1. Interestingly, market breadth measures began to weaken as soon as our initial target zone was reached.

Overall, though, the rally has been impressive enough that we’ve elected to let the equity weightings in our

tactical funds drift up alongside the market. The Leuthold Core and Global Funds are positioned with net equity exposure of around 45.0%, up from 37.0% at the correction low and 29.0% on December 21st.

2. A few analysts have jumped to label the post-Christmas surge as a new bull market. Sorry, but even the creative geniuses that developed last year’s Best Picture can’t wrap their minds around that one. We still view the entire move since March 2009 as a single cyclical bull market…one that likely topped out last September.

3. If the S&P 500 were to deviate from the movie script and move to a new cycle high, we’d have to reclassify the fourth quarter market collapse as a nasty late-cycle correction, rather than as the first couple legs down of a larger bear market.

4. Please Note: Owners of foreign stocks are deeply offended by careless terminology describing the market upswing as “unrelenting” or “one-way” over the last 10 years.

That’s not only terribly provincial, it’s just plain wrong. For example, the MSCI EAFE and EM Indexes have each suffered at least three legitimate bear market declines since 2009, and neither index has managed to do what the S&P 500 did way back in 2013—surpass its 2007 high.

Source: This article was excerpted from “Yet Another Anniversary?”, by By Doug Ramsey, CFA, CMT, Chief Investment Officer, The Leuthold Group, LLC, (Perception Express, March 7, 2019), http://leuth.us/ stock-market COPYRIGHT 2019 THE LEUTHOLD GROUP, LLC REPRINTED WITH PERMISSION OF THE LEUTHOLD GROUP, LLC

THE POST-GFC BULL MARKET MARCH 9, 2009 TO ???

As of: March 7, 2019 COPYRIGHT 2019 THE LEUTHOLD GROUP, LLC

Source: The Leuthold Group, LLC, Perception Express, March 7, 2019, http://leuth.us/market-internals REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

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ECONOMIC CYCLE LATE UPSWING PHASE • Boom Mentality • Inflation gradually picks up • Policy becomes restrictive

EARLY UPSWING PHASE • Increasing confidence • Healthy economic growth • Inflation remains low

MARKETS: • • • • •

MARKETS: • • • • •

Short rates rising Bond yields rise Stock market topping out Commodities rising strongly Property prices rising strongly

Short rates at neutral Bond stable Stock market strong Commodities strong Property prices picking up

ECONOMY SLOWS/ ENTERS RECESSION

• Confidence suddenly drops • Inflation continues to rise • Inventory correction begins

MARKETS: • • • • •

Short rates peaks Bond yields tops out Stock market starts falling Commodities starts falling Property prices tops out

RECOVERY PHASE

• Stimulatory economic policies • Confidence picks up • Inflation falling

MARKETS: • • • • •

Short rates low or falling Bond yields bottoming Stock market rising Commodities rising Property prices bottoming

As of: March 15, 2019 COPYRIGHT 2019 CMG CAPITAL MANAGEMENT GROUP, LLC 4

THE GLOBAL INVESTMENT PULSE, March, 2019

We are here March 2019

RECESSION

• Confidence weak • Inflation peaks • Production falling

MARKETS: • • • • •

Short rates drops Bond yields drops Stock market bottoming Commodities weak Property prices weak

Source: CMG Capital Management Group, LLC, On My Radar, March 15, 2019 REPRINTED WITH PERMISSION FROM CMG CAPITAL MANAGEMENT GROUP, LLC

CYCLE INVESTING

The chart below organizes which sectors tend to do best based on where the cycle is. For example, tech and financials tend to do well coming off market bottoms, while consumer non-cyclicals (value-based plays like food, personal products and utilities) tend to do well after markets have peaked.

9 2019? 3

ECONOMIC CYCLE STOCK MARKET CYCLE U.S. Banking Index peaked in February 2007

8 4

6

11 Top

7

5

Late Bull Middle Bull

Bottom

Commodities peaked in July 2008 Peak

10 4

Early Bear Middle Recovery

Early Bull Trough

1

S&P peaked in October 2007

Consumer Cyclicals peaked in July 2007

Middle Recession

Middle Bear Late Bear

1

Consumer Non-Cyclicals

5

Technology

9

Energy

2

Consumer Cyclicals (durable and non)

6

Basic Industry

10

Utilities

3

Health Care

7

Capital Goods

11

Precious Metals

4

Financials

8

Transportation

As of: March 15, 2019 COPYRIGHT 2019 CMG CAPITAL MANAGEMENT GROUP, LLC

2

Source: CMG Capital Management Group, LLC, On My Radar, March 15, 2019 REPRINTED WITH PERMISSION FROM CMG CAPITAL MANAGEMENT GROUP, LLC THE GLOBAL INVESTMENT PULSE, March, 2018

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Brexit, continued from page 1

4. The most problematic part of the agreement is the so-called “backstop.” Hardline Brexiteers are upset because they feel this is too close to no Brexit, while the Remainers don’t like the deal because they think it’s worse than staying in the EU. 5. Various amendments have been proposed and voted on since the rejection of May’s Brexit deal. Three of these amendments provided a few clues on what the majority in Parliament wants: no no-deal Brexit, an alternative arrangement to replace the backstop, a possible delay of Brexit.

6. In the near term, the most likely scenario is a short three to six months’

delay of the Brexit deadline (March 29, 2019), simply because time is running out.

7. After a potential delay, all options are still on the table. These range from a no-deal Brexit all the way to a second referendum that could result in no Brexit.

8. In terms of economic and market impact, Remainers tend to paint a scary picture of the U.K. falling into an economic abyss after Brexit. Their claim hasn’t proven true.

9. A second referendum and its associated long path will probably cause a prolonged Brexit limbo that would hurt

U.K. asset markets and its economy much more than a no-deal Brexit.

Source: This article was excerpted from “The Great British Breaking Show—All You Need To Know About Brexit”, by Chun Wang, CFA, PRM, Senior Analyst and CoPortfolio Manager, The Leuthold Group, LLC, (Perception Express, March 7, 2019), http://leuth.us/macro-monitor COPYRIGHT 2019 THE LEUTHOLD GROUP, LLC REPRINTED WITH PERMISSION OF THE LEUTHOLD GROUP, LLC PULSE

Earnings Yield, continued from page 1

So then, how does an investor invest?

Well, bonds, which are now at historical lows, have always been the primary competition versus stocks for investment dollars. Therefore, the lower the bond interest rates, the more attractive stocks become.

How can investors measure that?

Actually, by a fairly simple concept called Earnings Yield. Earnings Yield is calculated by dividing the S&P 500’s annual Earnings Per Share (EPS) by the S&P 500’s price. This, in effect, is the inverse of the Price-To-Earnings Ratio (P/E). By comparing the Earnings Yield of stocks to interest rates of bonds, one has a direct comparison.

What is a good spread then? Since 1970, the average spreads between the 10-year U.S. Treasury and the S&P 500 Earnings Yield is only 0.06%. In other words, essentially nothing. As a result, if the spread is that narrow and bond interest rates are

low, the better it will be for stock prices.

According to a Website called Multpl. com, the Earnings Yield for the S&P 500 is 5.43% as of March 25, 2019. The 10year Treasury Bond yield is approximately 2.41% as of March 25, 2019. The difference in the yield or the yield advantage for stocks is still significantly higher at this point in time.

Over the last 140 years, the 10-Year U.S. Treasury yield has rarely been this low.

To say that bond yields are unexciting is a gross understatement. With the S&P 500’s Earnings Yield where it is (also very low), stock ownership is still fairly attractive.

While the Earnings Yield concept favors stocks at this time, when does the advantage blow up? Simple! When interest rates increase or corporate earnings decline enough to make stocks unattractive.

Currently, slow earnings growth does not appear to be a problem because earnings

are still high enough to produce a better Earnings Yield than the 10-year U.S. Treasury yield. This is why the stock market rallies when the Fed does not increase interest rates.

However, the stock market, as represented by the S&P 500, currently is at a crossroads. The low interest rate environment fortunately still allows the current bull market to continue its upward ascent albeit slowly. Unfortunately, continued weakening economic data eventually may pave the way for the next bear stock market.

The bottom line for now is the Earnings Yield valuation methodology is a very good analytic measurement tool that should be utilized regularly when investing.

COPYRIGHT 2019 LEGEND FINANCIAL ADVISORS, INC.® PULSE

RECESSION FACTS

By James J. Holtzman, CFP®, Legend Financial Advisors, Inc.® and EmergingWealth Investment Management, Inc.® Of the last ten Recessions in the United States, nine began under a Republican President starting in 1953. That was 66 years ago.

Please note that Democratic Presidents were in office during World War II, the Korean War and the Vietnam War. The Economy usually picks up during wars due to the fact industrial production increases due to the fact war materials and supplies are needed.

The only Recession over this time span that began with a Democratic President in the White House was a six-month Recession that began in January 1980 during Jimmy Carter’s last year as president (Source of Information: National Bureau of Economic Research).

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THE GLOBAL INVESTMENT PULSE, March, 2019

FED WATCH

INTEREST RATES AS OF MARCH 26, 2019 Fed Funds Rate Range:

2.25 – 2.50%

Fed Discount Rate:

3.00%

2019 UPCOMING FED MEETING SCHEDULE May June

1-2 12-13

Jul/Aug September

31-1 25-26

November December

7-8 18-19

Source: Bloomberg Investment Services COPYRIGHT 2019 LEGEND FINANCIAL ADVISORS, INC.® REPRINTED WITH PERMISSION OF LEGEND FINANCIAL ADVISORS, INC.®

THE GLOBAL INVESTMENT PULSE, March, 2018

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Peak Profit Margins, continued from page 1

teach ourselves and our clients to appreciate equity market pessimism.

inflation and, boy, was inflation a problem in the 1970s.

Peak average profit margins are displayed in the following chart. Notice the red “We are here” arrow. The red line tracks average profit margins (earnings/sales) over time. The positive news is average profit margins in the S&P Industrial Average sit at a record high. Is that good news from an investment point of view (think initial starting conditions and subsequent returns) or is it the “enemy” of future returns? Take a look at the level of the red line at the Bull Market peak in 1966.

The top section of the chart (the blue line) plots the S&P Industrial Average. Focus on the path of the blue line from 1966 to 1982.

Look at the chart below and notice the Stock Market levels in 2001 and again in 2007 (red “Market tops” arrows). Compare that to the level of profit margins in 2002 and 2009 (green “Market bottoms” arrows). Were they not outstanding entry points? As Buffett said, “We like pessimism, but because we like the prices it produces.” I know this is counterintuitive, but large corrections followed those two “peak profit margins” and great buying opportunities followed those prior very poor profit margin periods. More defense until pessimism returns. In other words, keep a close eye on profit margins.

Subsequent returns from 1966 to 1982 were approximately 1.0% per year before

The Bottom Line: Investors, keep your risk radar up and, importantly, get ready to seize opportunity when profit margins dip to levels seen near the green “Market

bottoms” arrows. Keep Buffett’s message front of mind. No one will be singing a happy song. It will be a scary time. The selling will drive prices lower. At that time, few investors will be buyers. That is the opportunity to look for.

Source: This article was excerpted from “ Peak Profit Margins—And What They Tell Us” by Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc., (On My Radar, March 15, 2019), www. cmgwealth.com.

COPYRIGHT 2019 CMG CAPITAL MANAGEMENT GROUP, INC. REPRINTED WITH PERMISSION OF CMG CAPITAL MANAGEMENT GROUP, INC.

S&P INDUSTRIAL AVERAGE VERSUS S&P INDUSTRIAL AVERAGE PROFIT MARGIN

As of: March 15, 2019 COPYRIGHT 2019 CMG CAPITAL MANAGEMENT GROUP, LLC

Source: Ned Davis Research via CMG Capital Management Group, LLC, On My Radar, March 15, 2019 REPRINTED WITH PERMISSION FROM CMG CAPITAL MANAGEMENT GROUP, LLC

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THE GLOBAL INVESTMENT PULSE, March, 2019

THIS ECONOMIC EXPANSION LENGTH NEAR ALL TIME RECORD

By Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc. As Edited By James J. Holtzman, CFP®, Legend Financial Advisors, Inc.® and EmergingWealth Investment Management, Inc.® The chart below shows the length of every economic expansion since 1858. The Federal Reserve Board (Fed) was formed in 1913.

All economic expansions eventually end. Economically speaking, this economy is only three months from tying the longest expansion cycle in history. The economy is definitely late cycle.

LENGTH OF ECONOMIC EXPANSIONS AND RECESSIONS

As of: December 31, 2018

Source: BEA, NBER, J.P. Morgan Asset Management COPYRIGHT 2019 J.P. MORGAN ASSET MANAGEMENT REPRINTED WITH PERMISSION OF J.P. MORGAN ASSET MANAGEMENT

Average U.S. Business Cycle Expansion: 40 Months There have been 34 Expansions since 1854 There have been 8 longer than 40 months They lasted 43, 80, 105, 60, 92, 77, 117 months The average of the 8 longest: 72 months Currently at 117 months as of February 28, 2019 Source: This article was excerpted from “ Peak Profit Margins—And What They Tell Us” by Stephen B. Blumenthal, Founder and CEO, CMG Capital Management Group, Inc., (On My Radar, March 15, 2019), www.cmgwealth.com.

COPYRIGHT 2019 CMG CAPITAL MANAGEMENT GROUP, INC. REPRINTED WITH PERMISSION OF CMG CAPITAL MANAGEMENT GROUP, INC.

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Preferred Securities, continued from page 1

taxed at marginal rates. This helps investors keep more of what they earn. Keep in mind; these securities are not bonds!

2. Own more higher-coupon/higherincome securities (They pay higher rates though because they are risker).

Think high-yield bonds.

However, preferred stocks, like other forms of fixed income securities, can be sensitive to the effects of rising interest rates. Corporate financial issues such as profit and losses can also affect their prices. To combat rising interest rates, portfolio managers of actively managed portfolios of preferred securities have a number of different tools that allow them to effectively manage through changing conditions. Those tools are:

3. Foreign currency-denominated securities often offer higher yields but, again, they are riskier.

4. If a portfolio manager is sophisticated, they can use derivatives to hedge interest rates.

The Current State Of Affairs:

that preferreds are more volatile than most fixed income securities, currently, they provide enough yield over and above other fixed income securities to at least compensate for the large majority of the added volatility. Furthermore, the additional income may help to soften the impact of rising interest rates. Investors should not forget though these securities are still stocks.

COPYRIGHT 2019 LEGEND FINANCIAL ADVISORS, INC.ÂŽ

Preferred stocks continue to offer higher yields relative to most other fixed income categories. Coupon rates are generally in the 5.0%-6.0% range. Despite the fact

1. Utilize more floating-rate type securities that are less sensitive to interest rates.

PULSE

MONTHLY RISK AVERSION INDEX (RAI)

RISK INDEX DECREASES SLIGHTLY-STILL NEAR LOWEST LEVEL EVER Note: The Risk Aversion Index combines ten market-based measures including various credit and swap spreads, implied volatility, currency movements, commodity prices and relative returns among various high- and low-risk assets.

4

4

3

3

2

2

1

1

0

0

1980 1982

1984 1986 1988 1990

1992 1994

As of: March 7, 2019 COPYRIGHT 2019 THE LEUTHOLD GROUP, LLC

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THE GLOBAL INVESTMENT PULSE, March, 2019

1996 1998 2000 2002

2004 2006 2008 2010 2012 2014 2016 2018

Source: The Leuthold Group, LLC, Perception Express, March 7, 2019, http://leuth.us/macro-monitor

REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

1998 PARALLELS

By Doug Ramsey, CFA, CMT, Chief Investment Officer, The Leuthold Group, LLC There are enough parallels between the 1998 and 2018 market declines that we decided to flesh out the comparison a bit more, with results shown in the table below. The corrections themselves were remarkably similar. Based on comparative valuations, Fed (Fed Open Market Committee) policy, and the relative maturity of the economic expansion at both junctures, we’d conclude that chasing the market here is a riskier proposition than after the late-1998/early-1999 market bounce.

1998 Market Low

Source: This article was excerpted from “1998 Parallels”, by Doug Ramsey, CFA, CMT, Chief Investment Officer, The Leuthold Group, LLC, (Perception Express, February 7, 2019), http:// leuth.us/stock-market COPYRIGHT 2019 THE LEUTHOLD GROUP, LLC REPRINTED WITH PERMISSION OF THE LEUTHOLD GROUP, LLC

2018 Market Low

1. The S&P 500 escapes an official Bear Market declaration by dropping “only” 19.3% over six weeks.

1. The S&P 500 drops 19.8% over three months, again allowing pundits to declare the Bull Market intact.

2. All Country World Index (AWCI) falls 21.1%.

2. All Country World Index (AWCI) falls 20.8%.

3. The intraday S&P 500 low occurs one month before U.S. mid-term elections.

3. The market low occurs several weeks after U.S. mid-term elections. If the low holds, it would mark the 10th time among the last 12 major S&P 500 declines (>19.0%) that a final low was made during the U.S. mid-term elections.

4. Technology, the long-time sector leader, falls 23.5%. Russell 1000 Growth falls 22.3%, three points worse than the Value Index.

4. Technology, the long-time sector leader, falls 24.1%. The Russell 1000 Growth falls 22.2%, two points (0.02%) worse than the Value Index.

5. Financials are the worst performers during the decline, falling 35.1%.

5. Energy is the worst performing sector, falling 31.2%

6. The decline prompts the Fed to cut interest rates three times in six weeks. At the same time, yields on two-year and ten-year U.S. Treasuries shoot up by 80 basis points (0.80%), resulting in a significant steepening of the yield curve.

6. The decline prompts the Fed to put further rate hikes on hold. Yield on two-year and ten-year U.S. treasuries tend sideways during the stock market rally, keeping the yield curve fairly flat (but inverted shortterm U.S. Treasury Rates are higher than ten-year U.S. Treasury Rates).

7. Annual growth in M2 Money Supply prior to the decline was high (7.2%) and rising, and the growth accelerated to almost 9.0% in three months after the correction.

7. Annual growth in M2 Money Supply prior to the decline was low (3.5%) and falling, but the rate accelerated to 5.0% in six weeks after the correction.

8. The median S&P 500 Trailing P/E bottoms at 18.2x (18.2 times earnings), the highest ever recorded after a market decline that large.

8. The median S&P 500 Trailing P/E bottoms at 18.8x (18.8 times earnings), the highest ever recorded after a market decline that large.

9. The median S&P 500 Price/Sales ratio bottoms at 1.27x (times).

9. The median S&P 500 Price/Sales Ratio bottoms at 2.25x (times).

As of: February 7, 2019 COPYRIGHT 2019 THE LEUTHOLD GROUP, LLC

Source: The Leuthold Group, LLC, Perception Express, February 7, 2019, http://leuth.us/stock-market REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

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2019 YEAR-TO-DATE PERFORMANCE January 1, 2019 to February 28, 2019 (2 months) 2019 Year-to-Date Return Consumer Price Index (Inflation)

0.61%

90-Day Treasury Bills Index-Total Return

0.39%

Bloomberg Intermediate Term Corporate Bond Index

0.95%

Barclays Aggregate Bond Index-Total Return

1.00%

High Yield Corporate Bond Index – Total Return

5.12%

S&P Leveraged Loan Index – Total Return

4.18%

S&P 500 Index (U.S. Stock Market)

11.48%

Russell 2000 Index (U.S. Small-Caps)

17.02%

MSCI EAFE Index (Developed Foreign Equities)

9.36%

MSCI Emerging Market Index (Equities)

8.99%

Newedge CTA Index (Managed Futures)

-1.47%

HFRX Global Hedge Fund Index

2.77%

Dow Jones–UBS Commodity Index-Total Return (USD)**

6.09%

Dow Jones U.S. Real Estate Index-Total Return (USD)**

12.36%

Gold Bullion

2.72%

As of: February 28, 2019 Compound and Total Returns include reinvested dividends. Newedge Index is equally-weighted. ** USD = U.S. Dollar COPYRIGHT 2019 LEGEND FINANCIAL ADVISORS, INC. ® Source: Bloomberg Investment Service

REPRINTED WITH PERMISSION OF LEGEND FINANCIAL ADVISORS, INC. ®

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THE GLOBAL INVESTMENT PULSE, March, 2019

SECULAR BEAR MARKET WATCH April 1, 2000 to February 28, 2019 (18 years and 11 months) Annual Compound Return

Total Return

Consumer Price Index (Inflation)

2.08%

47.65%

90-Day Treasury Bills Index-Total Return

1.58%

34.43%

Barclays Aggregate Bond Index-Total Return

4.79%

142.58%

High Yield Corporate Bond Index – Total Return

8.58%

375.26%

S&P Leveraged Loan Index – Total Return

4.87%

146.02%

S&P 500 Index (U.S. Stock Market)

5.36%

168.58%

Russell 2000 Index (Small-Caps)

7.23%

274.78%

MSCI EAFE Index (Developed Foreign Equities)

3.47%

90.57%

MSCI Emerging Market Index (Equities)

6.78%

245.83%

Newedge CTA Index (Managed Futures)

3.95%

108.11%

HFRX Global Hedge Fund Index

2.17%

49.99%

Dow Jones–UBS Commodity Index-Total Return (USD)**

-1.00%

-17.39%

Dow Jones U.S. Real Estate Index-Total Return (USD)**

10.45%

555.78%

8.55%

372.74%

Gold Bullion As of: February 28, 2019

Compound and Total Returns include reinvested dividends. MSCI Indexes do not include dividends prior to 2002. Newedge Index is equally-weighted. SECULAR BEAR MARKET WATCH (CONTINUED) ** USD = U.S. Dollar COPYRIGHT 2019 LEGEND FINANCIAL ADVISORS, INC. ® April 1, 2000 to February 28, 2019 Source: Bloomberg Investment Service WITH PERMISSION OF LEGEND FINANCIAL ADVISORS, INC. ® (18 years REPRINTED and 11 months) Note: During Secular Bear markets U.S. Stocks have historically returned a little more than inflation or a little less than inflation—plus or minus 1.50%—and generally last between 15 to 25 years. The last Secular Bear market (1966 to 1982) lasted 17 years and underperformed inflation by approximately one-half of one percent per year. The other Secular Bear markets since 1900 were 1901 to 1920 and 1929 to 1949. In both cases, the U.S. Stock market outperformed inflation by approximately 1.50% per year. All of the aforementioned performance numbers are pre-tax.

The performance of the U.S. Stock market so far in the current period (April 1, 2000 to the present) certainly appears to indicate that we are in a Secular Bear market. Long-term returns (over the next 10 years) for the S&P 500 will probably be slightly worse than the last 18 years and 11 months. Current 10 year normalized P/Es (long-term valuations) indicate approximate annual compound returns of slightly less than 3.00% over the next 10 years. Of course during the next 10 years, returns during various periods will be significantly higher and lower than the expected return. For example, the more the stock market rises in the near term, the less returns after that period will be and vice versa.

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U.S. SMALL CAP TO U.S. LARGE CAP HISTORICAL PRICE TO EARNINGS (P/E) RATIO U.S. Small Cap Valuations 3.0% Less Expensive Than U.S. Large Stocks

120

120

110

110

100

100

90

90

80

80

70

70

60

60 1983

1986

1989

1992

As of: March 7, 2019

2.50

1995

1998

2001

2004

2007

2010

2013

2016

2019

Source: The Leuthold Group, LLC, Perception Express, March 7, 2019, http://leuth.us/market-internals REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

The Leuthold Group Copyright © 2019

EARNINGS ADVANCE/DECLINE RATIO First Two Months Of Each Quarterly Period Based On Reported Earnings

2.25

2.00

Earnings Reports For Jan. – Feb. 2019 (Q4 2018 Results)

SOFT LANDING

SOFT LANDING 1.75

AVERAGE 1.54

1.50

1.25

1.00 RECESSION

RECESSION RECESSION

0.75

0.50

0.25 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 As of: March 7, 2019

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THE GLOBAL INVESTMENT PULSE, March, 2019

04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Source: The Leuthold Group, LLC, Perception Express, March 7, 2019, http://leuth.us/market-internals REPRINTED WITH PERMISSION FROM THE LEUTHOLD GROUP, LLC

VOLATILITY INDEX (VIX): LARGEST 10-WEEK PERCENTAGE DECLINES (1990 TO 2019)

As of: March 4, 2019 COPYRIGHT 2019 361 CAPITAL, LLC

Source: @CharlieBiello via 361 Capital, LLC, Weekly Research Briefing, March 4, 2019, www.361capital.com REPRINTED WITH PERMISSION FROM 361 CAPITAL, LLC

JUNK BOND MATURITY WALL * 2019: 2020: 2021: 2022:

$108B $191B $293B $385B

* Moody’s data, combined leveraged loan and high yield bond maturities.

As of: January 18, 2019 COPYRIGHT 2019 CMG CAPITAL MANAGEMENT, INC.

Source: CMG Capital Management, Inc., On My Radar, January 18, 2019, www.cmgwealth.com REPRINTED WITH PERMISSION FROM CMG CAPITAL MANAGEMENT, INC.

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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, CEO and President of both firms for a confidential discussion at (412) 635-9210 or email us at legend@legend-financial.com.

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 openend 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.

PERFORMANCE REPORTING 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.

FEES To find out more about the fees for either Legend or EmergingWealth’s Investment Management services, please contact Louis P. Stanasolovich, CFP®, founder, CEO and President of both firms for a confidential discussion at (412) 635-9210 or e-mail us at legend@legend-financial.com.

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THE GLOBAL INVESTMENT PULSE, March, 2019