quarterly market review

third quarter 2019

3

O C T O B E R 1 1 , 2 0 1 9

Dear Investors,

As you may remember, the first half of the year delivered remarkably strong returns with all major equity indices

posting double digit gains, despite negative headlines and geopolitical turmoil. Unfortunately the third quarter

brought continued negative headlines and geopolitical turmoil, although the markets finished the three-month

period essentially flat. Over the last several months there has been a noticeable increase in the migration away

from growth/risk assets into more conservative, lower volatility investments. This is evidenced by comparing

indices like the Russell 2000 (smaller cap, growth oriented stocks) which was down 2.4% in the third quarter, while

bonds (measured by the Barclay’s U.S. Aggregate Bond index) were up 2.27%. Another interesting indicator was the

difference between sectors within the S&P 500 Index. An example of this is the fact the total S&P index was up only

1.7% for the quarter while the typically less volatile S&P utility specific sector was up 8.4% for the quarter (according

to Nasdaq.com). The drag on the index was by the very names that have been leading this bull market; for example

FAANG + Microsoft posted a negative 1.84% return for the quarter. This lagging performance of the higher growth

areas of the market is something we have been focused on and will continue to monitor as we rebalance portfolios

going into the end of the year.

Putting this performance into perspective, we have recovered the losses from 4Q 2018, although we are essentially at

the same index levels as the beginning of 2018 and below where we were August of 2018. Considering the escalated

conflicts, continued Brexit complications, protests in Hong Kong, hostilities involving North Korea, Iran, and

Syria, impeachment hearings, and the growing rhetoric on the Democratic campaign trail approaching an anti-

capitalistic tone, perhaps a flat market for the quarter should be considered a win. On the other side of the coin, the

U.S. economy seems to be maintaining GDP growth of around 2%, unemployment came in at 3.5% for the month of

September (the lowest since 1969), wage growth over the last year has been approximately double for those without

college degrees compared to those with higher education, and interest rates remain at progrowth levels (during the

third quarter the Federal Reserve cut the fed funds rate twice in 0.25% increments). Despite these cuts, the 2yr/10yr

yield curve remains inverted, indicating a higher potential for recession.

Clearly the table has been set for continued volatility and emotionally driven markets, which only highlights

the importance of remaining focused on a longer term plan. We have been systematically reducing exposure

throughout our investments, and plan to continue to do so. That said, a time may come when volatility may present

opportunity, and we want to make sure we’re in a position to be able to take advantage of a subsequent sell-off. As we

mentioned in last quarter’s letter, we will not react to headlines and short-term swings in the market. Rather, we will

continue to be attentive to how our portfolio companies are progressing on a fundamental basis and whether our

managed funds are performing as expected for the benefit of our clients’ portfolios, in good markets and bad. As we

monitor your portfolios, we will continue to focus on risk-adjusted returns as preserving capital during market

declines is critical to achieving attractive compounded growth over time.

We would like to share this graphic from the ETF provider First Trust, as a reminder of how the market as a whole

has performed historically over time, despite significant headline risk (noting that past performance is not a

guarantee of future results). This is a terrific illustration of why it is so important to stick to a long-term plan

even when it feels like more headwinds than tailwinds.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

S&P 500 IndexJanuary 1, 2008 – September 30, 2019

1-800-621-1675 | www.ftportfolios.comFirst Trust Portfolios L.P. | Member SIPC | Member FINRA

This chart shows the growth of $10,000 based on S&P 500 Index performance over the last several years. Although past performance is no guarantee of future results, we believe looking at the market’s overall resiliency through several major crises and events helps to gain a fresh perspective on the benefits of investing for the long-term.

T H E A V E R A G E A N N U A L T O TA L R E T U R N O F T H E S & P 5 0 0 I N D E X F O R T H E P E R I O D S H O W N B E L O W W A S 8 . 4 9 % .

Source: First Trust Advisors L.P. This chart is for illustrative purposes only and not indicative of any actual investment. The S&P 500 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. Investors cannot invest directly in an index. Index returns do not reflect any fees, expenses, or sales charges. Stocks are not guaranteed and have been more volatile than the other asset classes. These returns were the result of certain market factors and events which may not be repeated in the future. Past performance is no guarantee of future results.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.

$26,054

Haiti earthquake

Obama signs Dodd-Frank

law

Federal Reserve arranges takeover of

Bear Stearns byJP Morgan Chase

Congress passes TARP (Troubled AssetRelief Program)

Lehman Brothersfiles for bankruptcy

protection

$787 billion U.S.stimulus bill signed

Japan earthquake

Brexit Vote

Deep Horizon Oil Spill

Greek debt cut to below investment grade

European sovereign debt crisis continues to

spread

End of QE 2

Obama signs healthcare bill

Obama sworn in as presidentof the U.S

S&P downgrades U.S. debt rating to AA+

ISIS begins offensive in Iraq

QE 3 tapering begins

Hurricane Sandy hits New Jersey

Boston Marathon Bombings

California has worst drought in history

OPEC announces production cut

Detroit, Michigan filesfor bankruptcy

Russia movestroops into Crimea

U.S. Real GDPgrowth in Q1 falls ata 2.1% annual rate

Ebola outbreak in West Africa

Swissde-peg

from Euro

Argentina defaults

on its debts

Oil price collapse begins

Eurozone financeministers approve

second bailout of Greece

EU and IMF bailout Ireland

Flash Crash

Meredith Whitney predicts muni bond

troubles

Euro zone to impose tighter fiscal control

over members

U.S. Supreme Courtaffirms “Obamacare”

Chinese stock market crashes

Russia launchesair strikes in Syria

U.S. hurricanes Harvey & Irma

U.S. fed funds rate hiked to 0.50%

U.S. fed funds rate hiked to 0.75%

With edge of Fiscal Cliff in sight,

still no deal

Portugal receives bailout

U.S. Debt Crisis Imminent

Dubai creditcrisis shakes

global market

End of QE 1

End of QE 3Paris Terror Attacks

N. Korea confirms successful testing of nuclear

device

Partial U.S. federal government shutdown

H1N1 virus “global pandemic”

U.S. budgetsequestration

takes effect

Bull market in stocks turns 8

years old

U.S. Real GDPgrowth in Q1 falls ata 0.2% annual rate

Donald J. Trumpelected 45th President

of the U.S.

U.S. announces tariffs on

imported steel& aluminum

Real U.S. GDPgrowth rises to 4.2%

(ann) in Q2’18

$10,000

U.S.-China announce 90-day tariff truce

Trump hikes Chinese tariffs from 10% to 25%

Fed indicates it won’t hike rates in 2019

U.S. fed funds rate hiked to 1.25%

Fed announcesplan to reduce sizeof its balance sheet

Fed cuts fed funds rateby 25 bps

Oil closed above $70,first time

since 2014

As mentioned in our last quarterly letter, we are continuing to roll out new initiatives aimed at enhancing the way

in which we communicate and interact with you throughout the investment process, all of which are designed

to enrich your experience, increase transparency, and enable us to deliver quality investment services. To that

point, you should have recently received a short questionnaire designed to help us establish and document an

appropriate individual risk profile for you. If you haven’t already done so, please complete the questionnaire and

return it. If you have any questions or concerns please give us a call. One additional housekeeping reminder: to the

extent you would like Sargent Investment Group to process charitable gifts, we request that you avoid waiting until

the end of December as last minute transfer requests during that busy time may result in processing delays by our

custodian. In a worst case scenario this could lead to missing a 2019 deadline that may be part of your tax planning.

As always, we thank you for your faith and confidence in us, and we look forward to the opportunity to continue to

earn both. As always, we thank you for your faith and confidence in us, and we look forward to the opportunity to

continue to earn both.

Regards,

Christopher Sargent

Principal

Ricardo Rosenberg

Principal

Brian McGregor

Principal

Important Considerations:

The views and opinions expressed are for informational purposes only as of the date of writing and may change at any time based on market or other conditions and may

not come to pass. This material is not intended to be relied upon as investment advice or recommendations to buy or sell securities. The information provided is taken from

sources we believe to be reliable but it has not been independently verified. All investments carry a certain degree of risk and there is no assurance that an investment will

provide positive performance over any period of time. Past performance is not a guarantee of future results.