Commentaries

January 2019

Economic Comment and Market Outlook

Equity markets became reacquainted with volatility in 2018, leaving investors smarting after a weak fourth quarter and an especially sudden decline during the month of December. In fact, from the September peak to the Christmas Eve low, the S&P 500 lost just shy of 20% of its value before rebounding modestly in the last week of the year. The full year total return for the S&P 500 was a loss of (4.4%), a figure that does not fully capture the feeling that many investors experienced toward the end of the year. Experiencing a correction like the market did late in 2018 naturally causes investors to reflect on how the investment environment is changing. Our previous expectations have included rising volatility in the markets as the business cycle ages and financial conditions grow gradually tighter, but we have also drawn comfort from superb corporate profits, a healthy US economy, and reasonable equity valuations. Those factors still remain supportive, and we believe the market can climb the “wall of worry” established in late 2018. Furthermore, we believe the strength of our portfolio companies’ balance sheets and cash flows provide financial flexibility and resilience to weather the volatile periods that are a regular part of investing over any long-term period.

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July 2018 Commentary

January 2018 Commentary

August 2017 Commentary

January 2017 Commentary

July 2016 Commentary

January 2016 Commentary

July 2015 Commentary

February 2015 Commentary

The above commentaries do not constitute an offer of any securities or investment advisory services. Fayez Sarofim & Co. does not represent that the information contained in the commentaries is accurate, true or complete, makes no warranty, express or implied, regarding the information herein and shall not be liable for any losses, damages, costs or expenses relating to its adequacy, accuracy, truth, completeness or use. Each commentary is subject to a more complete description and does not contain all of the information necessary to make an investment decision.

The volatility of any indices referenced in the commentaries may be materially different from that of Fayez Sarofim & Co.’s products. In addition, Fayez Sarofim & Co.’s holdings may differ significantly from the securities that comprise any highlighted indices.

Any projections, market outlooks or estimates expressed in the provided letters are forward looking statements and are based on certain assumptions. Such projections, outlooks and assumptions should not be construed to be indicative of the actual events that will occur and do not constitute investment advice. Opinions and information included in the commentaries were current opinions and information only as of the date thereof or as of the date indicated, and are subject to change without notice. Additionally, while information presented in the commentaries is believed to be accurate as of the date written and/or derived from sources which Fayez Sarofim & Co. believes to be reliable, Fayez Sarofim & Co. disclaims any and all liability as to the completeness or accuracy of the information contained therein.

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