You are here:

January 14, 2020 | Wealth Planning

Quarter-End Snapshot: Q4 2019

Quarter-End Snapshot

Q4 2019

Scroll Down

Firm Update



It’s hard to believe that 2020 marks our 20th year in business, and we’ve been thinking a lot about how to celebrate such a significant milestone. While a lot of thoughts rush through my head, I keep landing on the numbers that tell our story: 20 years in business, 175 client families, and a team of 180 hardworking professional team members. When I think about the range of services very few firms – single-family or multi-family offices – can deliver, it reminds me that John Tolleson and Eric Bennett had incredible foresight when they started this business in 2000. Who would have guessed that Tolleson Wealth Management would look like this at age 20?

I’ve been along on this ride for 16 of those 20 years, and our story continues to get better every day. I remind myself, even now, that with the changes we’ve made, families who have worked with us for 10 or 15 years may not know all the things we can do for them. Sometimes I hear clients say: “I didn’t know your bank made loans,” or “you can actually serve as a corporate trustee?” Most recently, it’s things like “you can help me run a private foundation or research a charity for me?” The answer is yes to all of these questions and many more. Whether it’s core services like investing and estate planning, paying bills or doing complex income tax planning, or conducting family meetings and teaching the next generation of family leaders, Tolleson Wealth Management focuses on delivering not only what your family wants, but what they need. Our mission is to help you sustain and enjoy what you and your family members worked so hard to build and grow.

One of the things I haven’t seen in 35+ years of practice is an entrepreneur who works hard to achieve his or her success just so other family members can avoid work, travel lavishly, and spend excessively. Parents want their children to be capable, productive adults who lead meaningful lives, continue to grow the ‘family enterprise,’ and use their resources for the benefit of their own families and communities. This is precisely why we exist. Every day, we use our accumulated experience, knowledge, and wisdom to deliver results that help families protect and grow their resources for the long term, while preparing spouses, children, and siblings to do the same. Other firms may offer similar services, but few can deliver with the same clarity of purpose. We are a family office, founded by one family and serving others. This mission is what will continue to drive us forward for the next 20 years and beyond.



The year 2019 was an exclamation mark to the end of a great decade for investing in the markets. Although it’s been a slow economic recovery, the financial markets bounced back much quicker and stronger than expected. Diversification did not matter much in the end as U.S. stocks, heavily weighted to big technology, were the best performers.

The three largest changes in financial markets in our mind were the:

  1. transformation of big technology companies;
  2. massive rise in passive and factor investing where algorithms make the decisions;
  3. and the growing economic superpower of China.

We believe these trends are unlikely to change, however, we are not expecting the top performers of the past decade to remain on top over the next 10 years.

Rather than “joining the bandwagon” and investing along with the masses in today’s hot areas, we continue to manage risk and invest in areas that we think have a better investment outlook.

For equity markets, we see great opportunities in foreign stocks, particularly emerging markets, as well as certain U.S. sectors like financials, non-large technology companies, and life sciences. For bonds, we are still able to find investments with attractive yields that are not closely tied to risks we see in corporate high-yield bonds.

It's proven difficult to make accurate predictions of what's to come over any future time period, especially when it comes to forecasting the timing of the next recession. Rather than try to time the market, the key is to have an asset allocation that fits your goals and risk profile while focusing on the long term.

We remain convicted that client portfolios are prepared for what may lie ahead. With this important milestone of celebrating 20 years in business, we thank you for trusting us with your assets and look forward to working with you in this new decade.


We talked with Matthew Lindenbaum, the founder and portfolio manager of Basswood Capital Management. Matthew has 30+ years of experience investing in the financial sector.


Question: If you meet someone at an airport and they ask what you do for a living, what’s your answer?

Answer: My wife tells people that I read for a living because I’m always reading a book, article, or financial report. I’m an investor, not a trader, and for me that means I’m looking to understand what’s really going on with a company; I’m trying to cut through the bull to get to the truth. Without getting too detailed, I look for situations where there is a gap between the price of a company’s stock and its true value. In order to find the true value of the company, I try to figure out the present value of the company’s future cash flows. In order to do this, I need to understand the macro environment, the industry dynamics, the competitive landscape and the company itself. Over time I expect the gap between the stock price and the company’s true value to close as the market better understands the company or becomes less worried about near term issues.


Question: What was it like to be a portfolio manager that invest in bank stocks during the financial crisis of 2008?

Answer: As I mentioned earlier, we are investors and we focus on finding cheap stocks to own. In 2006, finding cheap stocks in the financial sector became increasingly difficult because valuations were so high. As a result, we shut down our financial fund and returned the money to our partners. We didn’t predict the financial crisis - our view was that the asymmetry in valuations was to the downside and the risk/reward was unfavorable. This will undoubtedly happen again in the future.


Question: How long have you invested in the financial sector?

Answer: I’ve been doing this with my brother for 30+ years. We’ve been through crashes and banking crises and we’ve learned a lot about investing. The most important part of this experience is the mistakes we’ve made in the past and the lessons learned from them. You learn nothing from success, but a lot from failure if you can honestly and objectively evaluate your decisions.


Question: Over the last five years, your portfolio has annualized at 16%. Do you believe the opportunity set is as good today as it was five years ago?

Answer: The opportunity set today is comparable to the one in 2015, but the composition is different. Five years ago, the opportunity set included more regional and large banks. Today, the bank opportunity is more concentrated in smaller banks because the larger ones have appreciated significantly. Also, today we have more exposure to homebuilders and finance companies. We also see a significant opportunity in select international banks in Europe and the U.K.

General Performance Information
This presentation was compiled by Tolleson Wealth Management (“TWM”). This material has been prepared and is distributed solely for informational purposes only and is not a solicitation or an offer to buy a security or instrument or to participate in any trading strategy. This report may not be reproduced, distributed or transmitted, in whole or part, by any means, without written permission from TWM. If you have any questions regarding this presentation, please contact your TWM representative. 


*From Dennis Jaffe, PhD, and research article, “Social Impact in Hundred-Year Family Businesses: How Family Values Drive Sustainability Through Philanthropy, Impact Investing and CSR.”


The views and opinions expressed in the Q&A are the author’s own and may not necessarily reflect the view of Tolleson Wealth Management.