Quarter-End Snapshot: Q2 2019
Firm Update
from Richard Joyner, President

One of the most common questions we encounter when we’re working with client families is how to help children and young adults build the skills – especially financial or business – they need to more successfully manage their increasingly complex lives.
Very few elementary schools or high schools include curriculum focused on developing these skills. I just finished reading “Make it stick – The Science of Successful Learning” and was struck by new research that seems to turn many of our old assumptions about learning upside down. Reading, highlighting, repetition and memorization, repeated lectures, and “cramming” (like most of us did before final exams in school) are some of the most common strategies, but also some of the least effective. So, what does the research show?
According to the authors of this book:
- Learning that requires effort (periodic quizzes, regular recall, and use of the ideas) makes for more permanent learning and better recall. Spacing practice times and varying practice routines improves results. In short, using what you’ve learned repetitively, over time, and in a variety of ways helps.
- Your intellectual abilities are not hardwired; effective learning changes the composition of the brain and increases intellectual capabilities.
- You learn better when you wrestle with new problems before an answer is revealed.
- To achieve excellence in any field and learn more, it’s important that you work to surpass your current level of ability.
- Striving often results in setbacks, and setbacks often provide the information you need to adjust your learning strategies and ultimately to achieve mastery. In short, mistakes are part of the learning process.
Developing future family leaders is critical to sustaining a family over the long term – and that requires two things: effort and time. The research cited in this book confirms the importance of both, and it suggests that advisors, and the families they serve, would do well to envision better ways to go about it. Regular, consistent effort, which can include both classroom and much less structured learning approaches, is crucial. It should allow family members to struggle (ie, fail), to re-use the skills being learned on a regular basis, and continuously work for increasing levels of knowledge. The importance of the task makes the extra creativity and effort worthwhile.
What's Hotter – Dallas or the Stock Market
from Eric Bennett, CFA, CHIEF INVESTMENT OFFICER
What a year so far! Double digit returns in equities, GDP growth, higher than expected corporate earnings growth, inflation in check, and low unemployment. And, the Fed is giving investors confidence by standing ready to reduce short-term interest rates, should the economy start to cool off. The only thing hotter these days is the summer temperatures here in Dallas! Risk is back on for now, and nothing in the short-term seems to be slowing this down. Globally, valuations and growth opportunities look more appealing overseas, but investors today prefer the more-predictable and good ‘ole USA.
So, what does the investment team think about today’s equity market?
• We believe global diversification is important going forward, and we particularly like our themes in the Asia-Pacific region and the recently added Frontier Markets.
• Our preference to own high quality and valuation sensitive equities keeps us away from the hot stocks that have pushed the S&P 500 returns higher over the past three years, like Amazon and Netflix. We stayed away from the Dot.com boom in the late ‘90s, resulting in strong equity outperformance from 2000 to 2002.
• Managers that provide exposure to a certain theme or niche strategy are attractive to us and the ones we have been using have performed well over the past 18 months.
Our Investment Team is actively seeking new investment ideas that may provide excess returns over the next 3+ years.
What risks are we looking out for?
The biggest risk everyone is talking about is the timing of the next recession. Consensus is that we are still 1-2 years away, yet this was the case for the last 3-5 years. This isn’t our main concern today.
Something to watch is the fight for the Presidential democratic nomination. That will start to heat up a bit in the fall and become the hot topic after year-end. This is a risk, as the business world and stock market may negatively react to a far-left candidate nomination due to higher economic and business uncertainty. We will watch this closely.
We have spent a great deal of time this year ensuring client portfolios are well positioned as the seasons change, whether it remains a red-hot stock market or not.
Tolleson Wealth Management is not a CPA Firm.