Q 2 2016 Quarterly Cover Letter

Dear Investor,

It has been a very interesting year thus far.

First out of the starting gate, we had a headline making, “Record Breaking” bear claw dropping start to the year. Just when many called for a terrible year and gave up hope, footing was found in February and a smart, confidence building Bull market rebound occurred, bringing us back from the alleged brink, to about where we started the year. Just one more reminder to just stay calm, allocated and look longer term.

The fireworks appeared over, and as promised in our last report, the coming Newsletter has a very interesting review of the frequency of Federal Open Market Committee (FOMC) rate increases during an election year – (Oh it’s an election year as well) Normal consensus is higher rates slow the economy. Anyone involved in the presidential race, would most likely NOT like a slowing economy, therefore no rate increases either. We take issue with the common thought that higher rates will slow the economy due to the fact that they are so low currently. We were delighted to find just how many times rates have been raised DURING AN ELECTION YEAR over the past 45 years!

Then came Brexit (British-exit) – The British vote to exit the European Union. While we again stand with few others that longer term, the Brexit may be a good thing for the global economy and Britain, the vote throws cold water on our above mentioned rate increase. We think rates will likely not be raised soon, which will be a positive for capital markets in the near term.

For the record, after two down days in the markets, investors who were most likely positioned wrong due to overconfidence in a stay/non-Brexit vote turned confident and bid markets right back up again. Our June video review on street-cents.com discusses this in greater detail.

Commodity related sectors continue to rebound, with oil rising from the $20’s to the $50’s/ barrel mark. While it may be more expensive to travel this summer, the widening positives for the US economic situation may turn out to be much greater than many estimated.

In closing, the errors of the Brexit polls may make for an interesting presidential election later in the year. We remain happily diversified and sure footed as any knee jerk reaction seems to be wrong after the passing of time!



John A. Kvale CFA, CFP

Enclosure (Q 2 2016 Performance Report)

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