WEALTH MANAGEMENT MI DWEST, I N C

As I see it—Winter 2016

20 N. Lake Street

Suite 310

Forest Lake, MN 55025

Phone: 651-464-2664

Toll Free: 888-600-2664

Website:

www.wealthmanagementmidwest.com

David E. Purdy

Founder & CEO

david.purdy@lpl.com

Chad P. Olson

President/Operations Manager

chad.olson@lpl.com

Sarah Bjork

Client Services Manager sarah.bjork@lpl.com

Sherri Watters

Client Services Assistant

sherri.watters@lpl.com

Lorelei N. Purdy

Client Events-Marketing

lori.purdy@lpl.com

Securities Offered Through LPL Financial

Member FINRA/SIPC

2015 could be known as the great cover up. Equity markets appeared tame

with the S&P 500 down just 0.7% (it actually gained 1.4% when dividends

are included), but a much different picture lurked beneath the surface. The

year turned out to be a rollercoaster where the anticipation of rate hikes by

the Federal Reserve brought with it the return of volatility. This was felt

significantly in August when a surprise devaluation of the Chinese yuan

sparked a worldwide selloff that resulted in the first “correction,” or 10%

pullback, for domestic equities in years. On top of this, a very narrow mar-

ket where a handful of names drove overall performance and masked the

weakness in the majority of stocks. For the year, the top ten stocks in the

S&P 500 were up 14%; the other 490 were down approximately 6%. This is

the largest divergence since the late 1990s.

The disappointment wasn’t just contained to equities. Commodities suffered

through 2015 as well. Gold ended the year down just under 11% to $1,060 per

ounce, its lowest level since 2010. And, oil suffered its second consecutive

year of declines, slipping more than 30%.

US economic news has been somewhat mixed. Recent manufacturing

measures have shown declines, but we think this is mostly an inventory prob-

lem at this stage. Other parts of the economy are relatively strong, with em-

ployment, auto sales, home building and business activity showing growth,

leading us to believe the US economy is reasonably healthy.

We expect volatility to continue through the year, but the recent one-sided,

violent moves lower should subside as we reach valuations that support the

market, and we believe we are nearing those levels.

Overall, the US economy isn’t booming, profits aren’t soaring; China isn’t out

of the woods. However, we believe this selloff reflects fear more than funda-

mentals and in the long run, fundamentals should prevail.

So what should you do? The truth is we are all emotional when it comes to

money and there is no shame in worrying about the current volatility. Howev-

er, as difficult as it can be, not reacting emotionally is your best choice. Over

the past 35 years, we have suffered through an average intra-year drop of

14.2%. In 27 of those 35 years, we have ended with a positive return for the

year.

Chad and I are here to help and would enjoy visiting with you if you have any

questions regarding your investments and/or financial plan.

Let’s make it a great quarter. Source: LPL Research 2016

David E. Purdy

Quarterly Investment Newsletter Volume 4, Issue 1

Page 2 Quarterly Investment Newsletter—Winter 2016

Wealth Management

Midwest’s Services:

Wealth Planning*

Tax Planning

Estate Planning

Risk Management Planning*

Small Business Planning*

*Securities offered through LPL Financial Member FINRA/SIPC

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Contact Sherri to be

added to our email list.

Quote of the Quarter

Office News

From

Sarah and Sherri Ineffective Beneficiary Designations:

Clients do not always review beneficiary desig-

nations after the initial designation on the appli-

cation. Due to divorce or changes in circum-

stances, it is important that you review these

designations to ensure the proper person or en-

tity will receive the benefits at death. If you

want to double check your beneficiary infor-

mation, please contact our office and we would

be happy to review this information with you.

The opinions expressed in this publication are for general information only and are not intended to provide specific advice or recommenda-

tions for any individual. To determine which investments may be appropriate for you, consult with your financial advisor prior to investing.

All indices are unmanaged and cannot be invested into directly. All performance referenced is historical and does not guarantee future

results. All economic data in this newsletter including performance figures courtesy of LPL Research and Ron Carson’s/Peak Advisor Alli-

ance. The information in this newsletter is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you

discuss your specific situation with a qualified tax or legal advisor.

From the Desk of Chad Olson:

Warren Buffet Had A Tough Year

Berkshire Hathaway and its infamous figurehead, Warren Buffet, had their worst year relative to the US market since 2009. The conglomerate strug-gled as its subsidiaries in railroads, agriculture and manufacturing sold less products to the battered oil industry and the insur-ance divisions posted worse than expected results. Berkshire Hathaway was down 11% for 2015 while the S&P 500 was down just 40 basis points. This marks on-ly the 11th negative year for the stock since Warren Buffet took over in 1965.

Source: Berkshire Hathaway 2016

Sharp decline in oil prices

To the surprise of many hedge funds who were betting on a rebound, oil prices closed 2015 with a second con-secutive year of sharp declines. Oil witnessed a 30% drop to just over $37 a barrel after being cut nearly in half in 2014. This is the first time domestic oil prices suffered declines for two straight years since 1998. The price drop gained momentum throughout the year when drastic supply cuts failed to emerge as expected. Saudi Arabia led the Organization of Petroleum Export-ing Countries in an effort to keep pumping and defend market share. Meanwhile, U.S. shale producers were able to squeeze suppliers allowing them to pull oil out of the ground at cheaper prices. This kept domestic production higher than most expected throughout the entire year. As we head into 2016, the supply glut looks to continue. Not only have traditional producers com-mitted to maintaining production, but now Iran is ex-pected to begin delivering approximately 500,000 bar-rels a day once sanctions are lifted. On top of this, we now have to worry about demand issues as growth slows in most of the emerging world. However, we note the last time we witnessed two consecutive years of declines (1997 and 1998), sentiment was equally bear-ish yet the price of crude oil more than doubled over the subsequent twelve months.

Source: Carson Institutional 2016

Page 3 Quarterly Investment Newsletter—Winter 2016

Thank You

To Everyone Who

Attended Our 16th Annual Holiday

Open House.

We Had Wonderful Attendance And A

Fantastic Time Visiting With Everyone.

Page 4 Quarterly Investment Newsletter—Winter 2016

From the desk of Dave Purdy:

You May Have Received A Tax Break From Congress Our elected leaders did some re-gifting during 2015. They restored tax cuts that had

been allowed to expire and made them retroactive for 2015. Kiplinger’s reported, “In

an important twist to the habitual year-end gamesmanship, however, this time Con-

gress actually made many of [the tax cuts] permanent and even improved a few.”

The tax law changes help people who:

Commute to work: During 2016, employees who drive can pay for parking with up to

$255 of pre-tax salary, and people who rely on mass transit to get to work can spend

the same amount of pre-tax salary on transportation.

Have children in college: The American Opportunity College Credit, a $2,500 tax

credit for families with qualifying college students, was made permanent, although the credit phases out at higher income levels.

Live in states with no or low income tax: The choice about whether to deduct state income tax or

state sales tax paid during the year on a federal tax return was renewed. It expired at the end of 2014, and now applies retroactively to 2015.

Want to make charitable contributions using required minimum distributions (RMDs): Once again,

IRA owners who are age 70½ or older can donate up to $100,000 of their traditional IRAs directly to charity, tax-free, using all or part of their RMDs. It’s now a permanent tax break.

Own businesses: The $500,000 “expensing” cap was restored for 2015, and will be permanent go-

ing forward. Bonus depreciation also was extended. Source: IRS.GOV 2016

Get your free personal online my Social Security ac-

count today!

You probably plan to receive Social Security benefits someday.

Maybe you already do. Either way, you’ll want a my Social Security

account to:

Keep track of your earnings and verify them every year;

Get an estimate of your future benefits if you are still working;

Get a letter with proof of your benefits if you currently receive

them; and

Manage your benefits:

Change your address;

Start or change your direct deposit;

Get a replacement Medicare card; and

Get a replacement SSA-1099 or SSA-1042S for tax season.

Setting up an account is quick, secure, and easy. Join the millions

and create an account now at www.SSA.gov Source: WWW.SSA.GOV

Sarah Bjork

Hello Winter and hi to all of you! I have been

busy with school and I am looking forward to

being done with the Organizational Manage-

ment & Leadership program in May of this

year. I don’t know what I will do with all of my

free time, because I have grown so accus-

tomed to writing 3-4 papers a week. Jon and I

hosted a New Year’s Eve party with a few

close friends and we

had so much food at

the party that we could

have hosted the same

party 3 times over

again! Roscoe even

joined in celebrating

the New Year

(pictured). I hope eve-

ryone stays warm this

winter and I hope to

see you all soon.

Dave Purdy

Lori and I enjoyed a great Thanksgiving with my Mother, her hus-

band and extended family in Edina. It was a lot of fun! My nephew,

Ryan Collins, is a starter for the Minnesota Gopher hockey team

and it was a real treat to visit with him. He is the only relative I can

look eye-to-eye with! Lori and I took a

quick trip out to San Diego the first

week in December for the LPL Business

Leaders Forum Convention. While

there, we were able to enjoy some spec-

tacular views from our room, great food

and warm weather. We hosted the an-

nual Holiday Christmas Party at our

home again this year, having guests

greeted with Christmas music being

played by a harpist, some fantastic food

and great attendance, made for a won-

derful way to kick off the holiday season. Lori and I spent Christ-

mas Eve with her folks and Christmas day with my mother and her

husband having just a fantastic day. My older brother Chip from

San Diego came too, so it was a special time. Lori is excited to be

returning to Tokyo in a couple weeks to be a spectator at a dog

show; she said she will absolutely not be eating 100 year old eggs

like last time. Lastly, we are excited to announce that we will be

remodeling and expanding our office shortly and I look forward to

keeping you posted with our progress.

Sherri Watters

Happy New Year everyone! I’m getting settled in on the team here and have already met a lot of very friendly faces. The last few months have been very busy as Dustin and I prepare for our fast approaching wedding in March! We had our engagement photos taken in the fall and we had the honor of using his dad’s 1964 Ford Galaxie, which made the experience much more memorable!

There have been a lot of DIY projects going on at my house these days; you can find me covered in glitter most week-ends! After our nuptials we are heading to sunny Mexico for some rest and relaxation and we could not be more excited! I hope you all enjoy the rest of the winter and I look forward to meeting many more of you over the coming months.

Chad Olson

I hope everyone enjoyed the holidays! It

was so nice to see everyone that was able to

attend the holiday open house at Dave and

Lori’s home. I’m glad many of you were

able to meet my daughters Brielle and Aria

and my wife Ashley at the open house this

year. The holidays were a very busy time

for us, as we hosted family for Thanksgiving

and Christmas Eve,

and had a New Year’s

party with friends and

their kids. Christmas

was an especially fun

time this year with

Brielle, our 3 year

old, really getting into

the idea of Santa and

all the decorations,

lights and fun. It re-

ally is amazing to see

Christmas through

the eyes of your children; it is something I

will always remember.

Quarterly Investment Newsletter—Winter 2016

Personal Notes

Page 5

Award based on 10 objective criteria associated with providing quality

services to clients such as credentials, experience and assets under

management among other factors. Wealth managers do not pay a fee

to be considered or placed on the final list of 2012, 2013, 2014, 2015,

and 2016 Five Star Wealth Managers.

20 N. Lake Street, Suite 310

Forest Lake, MN 55025

651-464-2664

Securities offered through

LPL Financial Member FINRA/SIPC

“ I N D E P E N D E N T A N D P R O U D O F I T ! ”