WEEKLY MARKET COMMENTARY

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WEEKLY MARKET COMMENTARY Update on Risks and Opportunities in the Financial Markets December 2013 Jennifer & Ryan Langstaff Legacy Retirement Advisors LPL Registered Principal 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer@LegacyRA.com www.LegacyCentralCoast.c om CA Insurance Lic# 0B63553 Weekly Market Commentary | Week of December 23, 2013 Highlights The top 10 lessons of 2013 for investors need to be put into two categories: those that investors can take to heart as sound wisdom for the year to come, and those they should try to forget as they prepare for 2014.   2013's Top 10 Lessons for Investors Each year that passes contains some wisdom for investors, but along with that wisdom can be some folly. 2013 was a year that bestowed an abundance of each on investors. The top 10 lessons of 2013 for investors need to be put into two categories: those that investors can take to heart as sound wisdom for the year to come, and those they should try to forget as they prepare for 2014. Lessons investors can take to heart for 2014: Bonds can lose money. After a 13-year streak of annual gains, the bond market measured by the Barclay's Capital Aggregate Bond Index fell about 2% on a total return basis in 2013, as interest rates rose from their all-time low in 2012. Sentiment can matter more than fundamentals. Investors were willing to pay more for stocks, leading to a rise in the price-to-earnings ratio as they grew more confident in the durability of future growth. This brighter outlook drove most of the S&P 500 Index's gain in 2013, not the mid-single-digit pace of earnings growth or lackluster 2% gross domestic product (GDP). This is not uncommon. Historically, stocks have posted the most consistent gains when GDP has been around 3%. When GDP for a quarter was within plus or minus a half of a percentage point of 3%, the S&P 500 has posted an average gain of 6.5% during that quarter -- the highest of any 1% range in quarterly GDP and nearly triple the 2.4% gain when GDP was more than twice as strong. Time heals all wounds. In fall 2013, the one-, three-, and five-year trailing returns for the stock market rose into the double digits, and money finally started flowing into U.S. stock funds after the five years of net outflows that followed the financial crisis. Defensive stocks can lead the market higher. During the first four months of the year, the defensive sectors -- those that are less economically sensitive and tend to fare better when growth is weakening such as utilities, telecommunications, consumer staples, and health care -- led the overall market to double-digit gains. For the year as a whole, the defensive health care sector outperformed with a powerful gain of 39%, as measured by the S&P 500 Health Care Index. This was an unusually strong performance for a sector that tends only to be among the top-performing sectors in years when overall S&P 500 returns are low (2011) or negative (2008). While overall cyclical stocks generally fared the best, for parts of the year defensive stocks led the way up. Annual returns are rarely average. The 27% gain in the S&P 500 Index (30% including dividends) in 2013 was well above the long-term average of 5% (10% including dividends). Historically, annual returns have only been in the 5-10% range in eight of the past 86 years. Lessons that may have to be unlearned to pursue investment success in 2014: Diversification is worthless. A passive, buy-and-hold portfolio of U.S. stocks did very well in 2013, whereas diversification, tactical positioning, or hedging generally acted as a drag on returns. History shows that 2013 was an outlier and that risk management tools like diversification have tended to benefit investors. Risks are never realized. The key risks of 2013 were not realized: a recession from higher taxes and spending cuts, a default from government brinkmanship over the debt ceiling, a European financial crisis from Italian election debacle and Cyprus bank bailouts, a collapse in the housing market due to rising interest rates, etc. But that did not mean the risks were not threatening; any of them could have resulted in a very different outcome for the year. Risks may not always be as well behaved. Stocks go up in a straight line. In 2013, the S&P 500 Index jumped 27%, but it saw only one notable pullback along the way. The pullback was less than 6% from peak to trough and lasted just one month. That compares to an average year that holds four market pullbacks of greater than 5% with at least one major pullback that has a peak-to-trough decline of 15.8% in the S&P 500 over the past 20 years. More volatility may be in store in the years ahead. Dividends do not matter. The S&P 500 Dividend Aristocrats Index, composed of companies that have increased dividends every year for the last 25 consecutive years, performed in line with the overall S&P 500 in 2013. Instead, it was those companies that used their cash to do the most buybacks that outperformed. The S&P 500 Buyback Index, which focuses on the 100 companies in the S&P 500 that are doing the most buybacks, posted a total return of 45% -- outperforming the S&P 500 by 16%. However, in an income-hungry market, dividends are likely to be attractive to many investors in the years ahead. Policy is all that matters. In 2013, all eyes were on Washington as investors and the media obsessed over the fiscal cliff, sequester, tapering, shutdown, and debt ceiling. In 2014, the economy and markets will likely be more independent of policymakers as growth accelerates and high stakes fiscal battles are avoided. These lessons are helpful for pursuing investing success in the year ahead. The accumulated wisdom from lessons learned over many years suggests that with long-term interest rates remaining historically low, corporate earnings likely to grow in the high-single digits, job growth improving, and inflation remaining below 3%, conditions are ripe for stocks to again reward investors in 2014. Please see our Outlook 2014: The Investor's Almanac for further information.         IMPORTANT DISCLOSURES The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Stock and mutual fund investing involves risk including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. INDEX DESCRIPTIONS The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays Capital U.S. Aggregate Index is comprised of the U.S. investment-grade, fixed-rate bond market. The S&P Healthcare Index is comprised of companies in this sector primarily include healthcare equipment and supplies, health care providers and services, biotechnology, and pharmaceuticals industries. This research material has been prepared by LPL Financial. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity. Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit Tracking #1-232038 (Exp. 12/14) If you no longer wish to receive this email communication, remove your name from this specific mailing list, or opt-out of all mailing lists. We are committed to protecting your privacy. For more information on our privacy policy, please contact: Jennifer & Ryan Langstaff 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer@LegacyRA.com The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Jennifer & Ryan Langstaff is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC

WEEKLY MARKET COMMENTARY

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WEEKLY MARKET COMMENTARY Update on Risks and Opportunities in the Financial Markets December 2013 Jennifer & Ryan Langstaff Legacy Retirement Advisors LPL Registered Principal 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer@LegacyRA.com www.LegacyCentralCoast.c om CA Insurance Lic# 0B63553 Weekly Market Commentary | Week of December 16, 2013 Highlights A year ago, The Weather Channel decided it would start naming winter storms in an effort to raise awareness and preparation. If this indeed works, then naming the coming storms in the stock market in 2014 may be a great idea. Get Ready for Market Storm Angel Winter Storm Dion shut down airports, schools, and businesses in parts of the United States last week in the midst of the holiday shopping season, but it is unlikely to have had a measureable economic impact or to cause a storm in the markets. Yes, winter storms have names. For several hundred years names have been assigned to hurricanes and tropical storms; the World Meteorological Organization is in charge of assigning names to those events. But just a year ago, starting with the 2012-13 winter storm season, The Weather Channel announced it would start naming winter storms in an effort to raise awareness and preparation. If this indeed works, then it may be a great idea to apply to the stock market. Perhaps we should name the stock market declines, or market storms, as they unfold during the year in order to raise investor awareness and preparation. An average year holds four market storms that have a magnitude of greater than a 5% decline with at least one major storm that has a peak-to-trough decline of 15.8% in the S&P 500 over the past 20 years. Even when excluding recession years, the average annual peak-to-trough stock market decline is still over 10%, the magnitude that defines a major storm. We forecast a 10-15% gain for the S&P 500 in 2014 (Please see our Outlook 2014: The Investor's Almanac for further information). However, we expect that gain to be accompanied by a few named market storms next year and could even see a major storm of 10% or more develop. There was little need to name the pullbacks in 2013 since all but one were less than 5%. The biggest of them was a peak-to-trough decline of just 5.8%, the smallest such move in a year since 1995. So, in 2013 there were clearly no major storms in the markets -- much like the 2013 Atlantic hurricane season, which was the first since 1994 to end with no major hurricanes. In contrast, 2014 is likely to mark the return of volatility. The Market Storm Names proposed here for 2014 [Figure 1] also happen to be the top dog names for the year. Given Wall Street vernacular, it may seem like naming pullbacks after famous bears like Gentle Ben, Fozzie, Yogi, Winnie-the-Pooh, or Teddy would make more sense, but, counter-intuitively, this just makes them sound too cuddly. Also, the storms are not bear markets; they are just temporary pullbacks on the way to double-digit gains for the year. The 2014 Farmer's Almanac predicts a major winter storm for February 2014. In our 2014 Outlook entitled The Investor's Almanac, we forecast a rise in stock market volatility in 2014 -- as some market storms are likely to develop. We expect those storms to be driven by the emergence of occasional "growth scares," as economic activity may not accelerate in a straight line. Temporarily weak data on jobs or demand-more than actions by policymakers -- are likely to drive the market storms in 2014. When may Market Storm Angel -- the first of the 2014 market storms -- arrive? Weak economic data readings led to 5% or more pullbacks in the spring of each of the past four years. We may again see some seasonal weakness in the economic data that could fuel a market storm in the early months of the year. However, a spring pullback in the S&P 500 Index is very likely to be from higher than current levels, so there is no need to take action now. Instead it may be helpful simply to prepare mentally for a stormier market in 2014 than we experienced in 2013. More market storms are not necessarily a bad thing for long-term investors. Greater volatility may provide an opportunity to buy the dips in the market and for active managers to outperform their benchmarks. In fact, the average U.S. large cap active manager has historically outperformed the S&P 500 most of the time during periods of heightened volatility, defined by the VIX being more than 2 points above its 3-year average. That compares to outperforming just 38% of the time when market volatility is lower, as measured by the Morningstar U.S. Large Cap Blend category. Whether naming a market storm raises awareness in a positive way or prompts beneficial actions is debatable, and this proposal to name market storms is a bit tongue-in-cheek in keeping with the fun spirit of the holiday season. But it is important for individual investors to be aware of and prepare for greater volatility as they allocate to stocks in their portfolios.         IMPORTANT DISCLOSURES The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Stock and mutual fund investing involves risk including loss of principal. INDEX DESCRIPTIONS US Large-Cap Blend Equity category is fairly representative of the overall US equity market in size, growth rates, and price. Equities in the top 70% of the capitalization of the US equity market are defined as large cap. The blend style is assigned to investments where neither growth nor value characteristics predominate. Managers invest at least 75% of their total assets in equities, and invest at least 75% of equity assets in US equities. The VIX is a measure of the volatility implied in the prices of options contracts for the S&P 500. It is a market-based estimate of future volatility. When sentiment reaches one extreme or the other, the market typically reverses course. While this is not necessarily predictive it does measure the current degree of fear present in the stock market. The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. This research material has been prepared by LPL Financial. To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity. Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit Tracking #1-230410 (Exp. 12/14) If you no longer wish to receive this email communication, remove your name from this specific mailing list, or opt-out of all mailing lists. We are committed to protecting your privacy. For more information on our privacy policy, please contact: Jennifer & Ryan Langstaff 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer@LegacyRA.com The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Jennifer & Ryan Langstaff is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC

INDEPENDENT INVESTOR

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INDEPENDENT INVESTOR Timely Insights for Your Financial Future December 2013 Jennifer & Ryan Langstaff Legacy Retirement Advisors LPL Registered Principal 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer@LegacyRA.com www.LegacyCentralCoast.c om CA Insurance Lic# 0B63553 Independent Investor | December 2013 An Estate Planning Checklist Because you have worked hard to create a secure and comfortable lifestyle for your family and loved ones, you will want to ensure that you have a sound financial strategy that includes trust and estate planning. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about. A Needs Evaluation One of the first steps in the estate planning process is determining how much planning you will need to undertake. No two situations are alike. And even individuals who don't have a great deal of wealth require some degree of planning. On the flip side, those with substantial assets often require highly sophisticated estate planning strategies.   Two key components of your initial needs evaluation are an estate analysis and a settlement cost analysis. The estate analysis includes an in-depth review of your present estate settlement arrangements. This estate analysis will also disclose potential problems in your present plan and provide facts upon which to base decisions concerning alterations in your estate plan.   For example, you may believe that your current arrangements are all taken care of in a will that leaves everything to your spouse. However, if you have named anyone else as a beneficiary on other documents--life insurance policies, retirement or pension plans, joint property deeds--those instructions, not your will, are going to govern the disposition of those assets. You want to ensure that all your instructions work harmoniously to follow your wishes. In addition, under certain circumstances, you may want to consider alternative asset ownership arrangements. An estate plan that leaves everything to a surviving spouse enjoys the unlimited marital deduction against all estate taxes but fails to take advantage of the decedent spouse's applicable exclusion amounts against estate taxes under federal and state law. This may result in a larger estate tax burden at the death of the second spouse. Yet these are taxes that can potentially be minimized with careful planning. While your spouse will receive your estate free of estate taxes if he or she is a U.S. citizen, anything your spouse receives above his or her federal applicable exclusion amount may eventually be subject to estate taxes upon his or her death.1 Many states also have their own estate tax regimes and apply different (lower) estate tax applicable exclusion amounts, which you will need to consider with your estate planning professional.   An estate settlement cost analysis summarizes the costs of various estate distribution arrangements. In estimating these costs, the analysis tests the effectiveness of any proposed estate plan arrangement by testing various estate settlement scenarios, the inflation and date of distribution assumptions as well as specific personal and charitable bequests. Needless to say, estate planning can be very complex. And while a simple will may adequately serve the estate planning needs of some people, you should meet with a qualified legal advisor to be sure you are developing a plan that is consistent with your objectives.   Finally, be sure to recognize that estate planning is also an ongoing process that may require periodic review to ensure that plans are in concert with your changing goals. In addition, because estate planning often entails many facets of your personal finances, it often involves the coordinated efforts of qualified legal, tax, insurance and financial professionals.   Estate Planning Checklist Bring this checklist to a qualified legal professional to discuss how to make your plan comprehensive and up-to-date. Part 1: Communicating Your Wishes • Do you have a will? • Are you comfortable with the executor(s) and trustee(s) you have selected? • Have you executed a living will or healthcare proxy in the event of catastrophic illness or disability? • Have you considered a living trust to avoid probate? • If you have a living trust, have you titled your assets in the name of the trust?   Part 2: Protecting Your Family • Does your will name a guardian for your children if both you and your spouse are deceased? • Are you sure you have the right amount and type of life insurance for survivor income, loan repayment, capital needs and all estate settlement expenses? • Have you considered an irrevocable life insurance trust to exclude the insurance proceeds from being taxed as part of your estate? • Have you considered creating trusts for family gift giving?   Part 3: Reducing Your Taxes • If you are married, are you taking full advantage of the marital deduction? • Is your estate plan designed to take advantage of your applicable exclusion amount?1 • Are you making gifts to family members that take advantage of the $14,000 annual gift tax exclusion? • Have you gifted assets with a strong probability of future appreciation in order to maximize future estate tax savings? • Have you considered charitable trusts that could provide you with both estate and income tax benefits?   Part 4: Protecting Your Business • If you own a business, do you have a management succession plan? • Do you have a buy/sell agreement for your family business interests? • Have you considered a gift program that involves your family-owned business, especially in light of "estate freeze" rules? (These rules were enacted by Congress to prevent people from artificially freezing their estate values for tax purposes.)   1The estate tax exemption is $5.25 million for 2013, with a top tax rate of 40%. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor. This article was prepared by Wealth Management Systems Inc., and is not intended to provide specific investment advice or recommendations for any individual. Please consult me if you have any questions. Because of the possibility of human or mechanical error by Wealth Management Systems Inc., or its sources, neither Wealth Management Systems Inc., nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscribers' or others' use of the content.  Wealth Management Systems, Inc. and LPL Financial are not affiliated entities.   Tracking # 1-226114 If you no longer wish to receive this email communication, remove your name from this specific mailing list, or opt-out of all mailing lists. We are committed to protecting your privacy. For more information on our privacy policy, please contact: Jennifer & Ryan Langstaff 565 8th St Paso Robles, CA 93446 805-226-0445 Jennifer@LegacyRA.com The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Jennifer & Ryan Langstaff is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC