Equity markets have displayed extreme volatility in recent months, but we believe the worst is over.  On Monday, December 24th the S&P 500 index experienced Capitulation.  Capitulation is reached when a large number of investors “throw in the towel,” so to speak, based on a complicated mathematical calculation of market momentum.    Although the calculation of Capitulation is not fool proof, historically it has often been a reliable buy signal.

As you know, we at Southwest Investment Advisors are not advocates of market timing.  However, we do follow technical analysis as well as market fundamentals and we do not believe a recession is around the corner.  The economic expansion is likely to continue, albeit at a slower rate.  In our opinion, too much emphasis is being placed on negative low probability scenarios.

We believe we help people make more money by keeping them from making common investor mistakes than from our investment selection. In keeping with that theme, we believe we need to help calm fears when market volatility rises, and to keep our clients invested and to fight the desire to get out when account values fall.

Stock market declines are scary, but they are an inevitable part of investing.  A look back at stock market history since 1900 shows that declines have varied widely in intensity, length, and frequency. In the midst of a decline, it’s nearly impossible to tell the difference between a slight dip, a more prolonged correction, or the start of a Bear Market.  Especially one like this one, where the economy is still growing, company earnings are increasing, and a recession is not within sight.

Although no one can accurately predict the duration, since 1982, with few exceptions, market declines have been relatively brief.   The biggest mistake one can make now is to get out and lose the opportunity to recover.  It is for this reason that most investors do quite poorly investing in the stock market; buying high and selling low.

The table on the back demonstrates that declines in the Dow Jones Industrial Average have been somewhat regular events, although it has been seven years since a -15% decline like we are experiencing now.

Source: Capital Research and Management Company

1Assumes 50% recovery rate of lost value.  2Measures market high to market low.


Again, we believe that the worst is over, and look forward to a more prosperous new year in 2019.  Those of you making Roth IRA and traditional IRA contributions should know the limits are higher in 2019: $6,000 for those under 55 and $7,000 for 55 and over.  Please contact our office is you wish to change any current contribution amounts.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

After more than 18 months of rising markets, we’ve started to see a decline, with large sell-offs and heightened volatility in recent days. Although this might feel unsettling, I want to encourage you that market pullbacks like this are a normal part of investing and a healthy market cycle. We cannot have times of growth without corresponding declines. I’d like to share with you some additional thoughts on what’s happening and my philosophy in times like these.

The Markets vs. the Economy

Even when markets seem volatile, it doesn’t mean the economy is in a bad place. In times of market volatility, it’s important to take a look at the underlying economy. This not only helps us understand why the markets could be acting a certain way, but also how to respond. Right now, there are many indicators that recent economic and profit growth may continue, including historically low interest rates and inflation. This doesn’t mean continued growth is a certainty, but it can help us feel more confident in the future.

Short-Term vs. Long-Term

When I create your investment strategy, I look at your long-term goals and your risk tolerance and put in place a strategy designed to work for you no matter the market conditions. My aim is to work toward your end goal, which is certain, rather than market performance, which is uncertain. It’s especially important to stick to our strategy when markets are volatile and emotions are high, as moving strategies in difficult times could compromise your goals.

However, if I believe changes are needed to keep you on your trajectory, there are shifts I can make, and I’ll let you know if updates become necessary. But in most cases, I believe it’s important to remain invested in our strategy for the long term and not make changes in response to short-term market movements.

Staying the Course

When it comes to money, all of us tend to want to follow the herd and sell off—it’s a natural reaction, but it may not be the best one. My job as a financial advisor is to look at your situation and the markets objectively and help guide you through challenging times like these. I value our relationship and am committed to helping you pursue your lifelong goals. I will continue to do my best to help you navigate these volatile times and make recommendations that I believe in your best interests.

Thank you for your partnership!

The recent declines in equity markets have been attributed to rising interest rates by many pundits and our media in general.  We believe, however, that there may a different culprit: uncertainty.  The midterm elections coming in early November have cast a lot of uncertainty regarding hundreds of seats in Congress. Will there be a shift in power and policy?  We don’t think markets care who wins these elections so much as just knowing who wins so business can make plans and proceed.  Indeed, the equity markets have often fared well in the year following the midterm elections.  Of course, past performance is no guarantee of future results, but we view this as a “normal” pattern.

Our last Lunch and Learn is October 23rd so if you have never attended this is your last chance.  Thanks to everyone who has joined us the last few years at the Gaslight Music Hall and then the Oro Valley Country Club.

It’s hard to believe but the holiday season is upon us.  Christmas decorations have been up in stores for weeks now.  Please save the date December 9th for our annual Client Appreciation Event at the historic Arizona Inn at 2200 E. Elm Street. We will have brunch and music by Rob and the Wildcats.

As always, thank you for your business and referrals.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


It’s hard to believe that Fall is just around the corner but here it is.  The U.S. economy is rocketing forward with over 4% GDP growth two quarters in a row, with the stock market leading the way after an 11% correction in February.  Now with the S&P500 at all-time highs, domestic equity markets continue to rise in anticipation of continued earnings growth.

As our company continues to grow you will notice more new faces at Southwest Investment Advisors.  In that regard, please welcome Claudio Gonzalez, our newest Advisor.  Claudio has a strong analyst background, speaks Spanish fluently and is a welcome addition to the team.  Chris Johnson and Alix Kusler are conducting more account reviews with Claudio sitting in as he continues his training.

Stephanie is working mostly with portfolio management and trading as Kataya and Sarah have taken on more of the paperwork.  Lacey continues as Operations Manager and is approaching eleven years with our company.

We thank you for your continuing business and referrals.  We feel blessed to work with the amazing individuals and families that make up our clients.

The S&P500 Index is comprised of approximately 500 stocks that are major factors in their industries and widely held by individuals and institutional investors.


Welcome back to volatility. The reason we say “welcome back” is because we haven’t seen much in recent years and appear to be returning to normalcy. The S&P500 hit an all-time high in late January only to see a pullback of just over ten percent. The market has been moving in spurts for much of this year and is currently ahead for the year as evidenced by the following chart. *

The market moves Up, Down, or Sideways. We are encouraged by the market despite the negative headwinds the economy is facing, such as rising interest rates, the potential of trade wars, and the negative impact of tariffs. The effects of the recent tax cuts, accommodative federal regulations on businesses, and the easing of

financial constraints on our banking system keep us optimistic as we continue to see resiliency in the economy. So again, we are encouraged as we continue to monitor your investments.

Operationally we are in the final stages of our arduous transition. Should you receive a notice directly from a fund company about an advisor change, please disregard. Let us reassure you that we are still your advisor. If you do get such a notice and have questions, please feel free to call our office at (520) 544-2500. Thank you for signing and returning documents and for your continued patience.

Now for some very pleasant news, please join us in congratulating Alix on the birth of her second son, Grant! We are happy to have her back in the office and look forward to adding Grant’s photo to our baby wall.

As always, thank you for your business and referrals.

The markets have lifted out of correction territory and seem to be back on the rise. We won’t be out of the woods until we break above the all-time highs of January.  A bear market is always a possibility but it seems unlikely with year-over-year earnings up 26% on the S&P500*.  Thus, there is still no recession in sight, largely because of the new tax law.

So, unless your investment objectives have changed, we will continue to monitor and rebalance your accounts as needed.  If those objectives have changed, please make an appointment so we can be sure your investments are aligned with your current investment needs.

As a reminder, save the date for our monthly Lunch and Learn presentations on the 4th Tuesday of every month.  Call for any details.

Now that we are experiencing triple digit temperatures in the desert we hope everyone has some fun vacation plans to visit somewhere cool.  Or, there is always the swimming pool!

Also, Alix is due back from maternity leave the third week of June.

Thank you for your business and referrals.

* Source: https://lpl-research.com/hoc/Charts/QuarterlyUpdates/EarningsDashboard.jpg as of 5/11/18
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The S&P 500 is comprised of approximately 500 stocks that are major factors in their industries and widely held by individuals and institutional investors.

If you have been watching the news you may think the world is coming to an end.  Is everything spinning out of control:  Deficit budgets, trade wars, China, Russia, Iran, North Korea?  Also, it doesn’t help that the numbers are so large.  We see headlines of -700 points and -400 points along with words like plunge, plummet and crater, which can cause investor unrest when mixed with the drama in Washington.   Are we doomed?  Hardly.  At least no more than usual, but our media often blows things out of proportion, primarily to attract viewers.  We urge everyone to keep things in perspective.

The stock market established new all-time high on the Dow Jones Industrial Average two months ago on January 26th.  Since then the index established a recent low on February 8th when it declined about 10.4%.  Last Friday the Dow dropped to an even lower low, down 11.6% from January’s all-time high.

To keep things in perspective, according to Capital Research and Management Company since 1900 there have been corrections of 10% or more about once a year.   This equates to about once a year lasting an average of 115 days.  The last correction was in August of 2015, so it may have been overdue.

It’s always possible to slip into a bear market but the strong economy and rising earnings make that seem doubtful.  Again, we urge you to keep things in perspective.

Thank you for your business and referrals and we hope to see many of you at the baseball game April 22nd.


After a fast start in January the equity markets stumbled in February, which sent the major indices into correction territory.  Since then the markets have been in a period of consolidation and have remained above the February lows.  The economy still appears to be strong and we remain positive and bullish.

Things are getting more “normal” as we near the completion of our transition to LPL.  In that regard, if you receive correspondence from our Operations Team of Lacey, Kataya or Sarah, please respond without delay.  Their email may come from @LPL.com.  They have been working tirelessly to complete what turned out to be a monumental task.  Hats off to our staff!

Speaking of our staff, Stephanie is moving into trading and portfolio management as Alix prepares for maternity leave.  Alix’s new baby will be our sixth in the last four years here at Southwest Investment Advisors.

Save the Date:

Our Spring Client Appreciation Event this year is a U of A baseball game against Stanford on Sunday, April 22nd, so please save the date.  The game begins at 12:00pm so we will be ready to go at 11:00am.

Thank you for your business and referrals.

Last week the Dow Jones Industrial Average interrupted its strong run, and thus far is within the fluctuation realm when considered on a percentage basis.  The size of the numbers makes the decline seem far more dramatic than it really is.  Many of the pundits from the media attributed the decline to expected interest rate hikes by the Federal Reserve.  However, on average there’s been a 10% annual market correction since 19001. A correction is defined as a drop of at least 10% but not more than 20%. A bear market is a drop of more than 20%.  Historically, the average correction sends the market down 13.5% and averages 54 days, less than two months.  We believe the markets were long overdue for a pull back, but not a Bear Market.

We see no recession in sight.  Earnings growth and unemployment numbers are healthy.

Due to the recent transition process of our back office from National Planning Corporation (NPC) to LPL Financial (LPL), you could be receiving two sets of year end 1099 tax documents for 2017: one from NPC’s Pershing covering January 2017 through November 2017, the other from LPL covering December 2017.  Both will be available online if you signed up for online access.

You can expect the Pershing 1099s to be mailed on February 15, 2018.  Should a correction be needed, it will be mailed by February 28, 2018.  LPL is expecting to mail theirs also on February 15, 2018.

Due to this transition, we will not receive a copy of your Pershing 1099s here at our office, so it is important for you to retain them.  Now, being at LPL, we will have a copy of LPL documents for future needs.  If your account is held directly with an annuity or mutual fund, you should receive just one 1099.

As always, please let us know if you need help or have questions regarding your tax documents.

Thank you for your business and referrals.  We look forward to a prosperous 2018.


1 Forbes: Understanding A Market Correction. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

We hope this letter finds you well.  The transition from NPC to LPL has been a bit bumpy to say the least.  There were some technical glitches in moving everything over, which caused significant delay.  We are aware that, for some accounts, all your holdings were not represented on the December statements.  There has been a lot of progress in the last week and we expect everything to be in good order before the January statements are issued.

Rest assured that nothing is lost!  We are able to see all of your holdings through sources not available to the public.  Thank you for your patience and understanding as we work with LPL to get everything ironed out!

If you have not yet received on-line access to your holdings, please call the office and ask for Sarah, our Client Services Specialist.  She can set up your on-line access as well as assist you with reading your new statements.

The saving grace during all this inconvenience is, we believe, the strengthening economy as reflected in the rising equity markets.

Thank you for your business and referrals.