2019 Market Outlook: The Three T’s
December 2018
Midyear Update
August 2019

Priscilla’s Newsletter

MARCH 2019


Then and Now

On March 7, 2009, our office convened a meeting for clients. There was a sense of malaise in the room, which we expected after months spent in account review meetings and on phone calls listening and talking about the depressed state of the economy and the markets. The fear was palpable, which we understood, and wanted to provide some perspective to try and alleviate. What we had been hearing –

"I have lost so much money, I’ll never…"

“Ever see my account values at the level they were before the recession.” (She did)
“Be able to retire.” (He did)
“Get to send my child to college without loans.” (They did)

Many financial goals have been met since then, but only for investors that didn’t allow fear to consume them and derail their investment plan. I’m taking the time to remind you of the bleak mood of the time, because the 10-year anniversary of the bottom of the ’08-’09 recession, is upon us and the media loves to remind us of the pain of the time and proffer up dire predictions of the investment landscape ahead. Often left out, is the recognition of all the growth that has occurred, wealth created, and goals achieved since 2009.

Fast-forward to today, market volatility, which has been minimal since the end of the last recession has returned and the question on the minds of many is, “When will the next recession start?” We don’t know. Recessions occur when there is an imbalance of some kind in the economy, and while it doesn’t look like we’re on the cusp of a recession—corporate earnings, while possibly slowing, are still good, unemployment continues to be low, housing remains strong—at some point an imbalance and subsequent correction will occur and economic growth will slow. The technical definition of a recession is two consecutive quarters of negative GDP (gross domestic product). Funny thing about a recession, because we only see it in the rear-view mirror, by the time we are aware that we are in one, it is often almost over. Recessions are usually short lived, on average lasting 11 months, with cycles of expansion tending to last much longer, as the following chart makes clear.

Some of the strongest returns for stocks typically occur immediately after a market bottom, which is why it normally pays to stay invested through the economic cycle, uncomfortable as that can be. We know from our own experience as well as from wisdom offered by the best minds in the investment industry, that timing the market does not work, in part because of that frequent, robust rebound after a downturn.

We don’t know when the next period of recession will roll around, but we know it will, so we do the following when managing your assets to be as prepared as possible—

Build and maintain portfolios that are broadly diversified across asset classes, sectors and regions.
Take advantage of good buying opportunities when they occur through rebalancing and investing cash from accumulated dividends and capital gains. Right now, we are finding attractive valuations in foreign markets and in tax-exempt municipal bonds.
Encourage investors in the accumulation phase to continue investing, buying more shares at lower prices.
Include stabilizing assets of bonds and dividend paying stocks in most client’s accounts.
Utilize variable annuities for clients needing guaranteed income options.
Recommend keeping a healthy cash cushion to provide liquidity and prevent having to sell portfolio holdings during a down cycle.
Keep a long -term perspective. Money you have invested is not money you can afford to lose, but money you can afford to leave.


As previously mentioned in the November ’18 newsletter, we are converting to new software that will enable us to easily generate a range of dynamic reports for you. Information on transactions, holdings, account performance, asset allocation, and capital flows will be available. In addition, we will provide you with a mobile app for both iPhone and Android devices. We are in the final stages of this conversion and expect the new software to be available to you within 30 days. With that said, we encourage you to download any archived quarterly reports from the old system since you will not have access to these reports once the new software is available. Nevertheless, we are able to reproduce these reports upon request.

We are delighted to now offer video conferencing as an option for your annual review. We work with families all over the world and this is a way for us to offer a richer client experience knowing it’s not always convenient to meet in our office. If you would like to use the video conference option, simply visit Zoom.us or download the Zoom Cloud Meetings App in the Apple or Android App Store and we will provide you with a Meeting ID number prior to your review. Thank you to all the clients who have allowed us to use you as our “guinea pigs”. The feedback has exceeded our expectations.

By now, many of you have heard that we are in the process of building a new office. If all goes according to plan, we will be in our new location at 370 W. Sunset Road, San Antonio, 78209, by the end of the year. The location is very central in the city and easily accessed. We will keep you posted as construction progresses.

Thank you for your business. We wish you a lovely spring, filled with wild flowers.

— Priscilla "Cilla" McKinley