Dear Clients and Friends of Insight,

The U.S. economy continues to grow and the current bull market, having just celebrated its 10th anniversary, remains intact. This is a bold statement, but one which we believe will prove out. Many market participants do not agree. As the first quarter closed, again serious doubts emerged as to whether our resilient economy’s long expansion had finally run its course, as it must be inescapably dragged down by slowing overseas economies. Hence, stock prices have wobbled a bit and interest rates have retreated.

Upcoming headlines most likely will continue to send confusing messages for the direction of the economy and corporate earnings. Stock and bond markets most definitely will continue to react, moving up and down, sometimes dramatically. It warrants reminding ourselves, especially in light of this bull market’s age, that successful investing requires equanimity. Patient investors understand that their wealth compounds tax-efficiently over time by remaining invested and allowing their holdings to ripen to their potential.

This patience has been tested repeatedly since the bull market launched in March of 2009 and the

U.S. economy resumed its growth. On numerous occasions worrisome global events have precipitated fears of recessions. Each of them knocked the market down 10% or more, but only temporarily. Here are a few brief reminders. Greece restructured its debt in 2010. The Eurozone struggled with issues of excessive and entangled debt in 2011. China’s economy slowed in 2012. China devalued its currency in 2015. Oil prices collapsed sending the energy sector into a bear market in 2016. Global businesses were disrupted by tariffs and trade renegotiations in 2018. And now, in 2019, Federal Reserve Board policy miscues are the culprit, potentially guiding our economy into recession.

Stock prices reflect, in aggregate, investor expectations for future results, currently signaling some slowing ahead. Yet, we know the future is uncertain, and we won’t know until after-the-fact whether a market correction is a pothole in the road to more prosperity, or part of a longer journey to lower prices in the months or years ahead. This presents a dilemma for patient, yet preservation-minded investors trying to stay their course, and why it is imperative to have a well- articulated investment selection process. If thoughtful and executed with discipline, this process should result in owning a portfolio of companies more likely to achieve longer-term desired results. And having this additional knowledge should provide more conviction in portfolio decisions, enhancing the odds for investment success. Contrast this with the approach of somewhat blindly investing in a broad list of securities or an entire market index through various exchange-traded funds: in fact, we believe that investing in this indiscriminate way is a mistake for preservation-minded investors.

Insight’s selection process involves many criteria but is biased toward investing in the most resilient and financially strongest of companies. We believe these businesses are better able to

deliver sustainable growth and strengthen their competitive position across difficult and varying economic environments, while sustaining their intrinsic values. The results of our disciplined execution of this search for resilient, financially sound businesses can be found in our clients’ portfolios.

One of the many research services we utilize is the Value Line Investment Survey which provides extensive quantitative and qualitative financial information on thousands of companies. Value Line has a long-standing reputation as one of the most objective, thorough and professionally staffed research organizations covering Wall Street. They are particularly careful in grading a company’s financial strength and assessing its overall safety. There are 9 financial strength grades ranging from A++ to C, and there are 5 safety rankings ranging from 1 to 5.

 Value Line CoverageS&P 500 IndexInsight Top 50
Number of stocks4,60050050
Graded A++ or A+3%25%74%
Safety Rank of 13%19%56%
Meet both criteria2%15%52%

We audited our client portfolio holdings to see how we stack up, by focusing on only the top two financial strength grades of A++ and A+ and the highest safety rating of 1. The accompanying table demonstrates how elite this group truly

is. It shows the share of all companies among Value Line’s coverage universe, the S&P 500, and a typical Insight portfolio that meet these criteria. Our findings did not surprise us. Fully 52% of our most commonly owned positions are judged to be both the safest and the most

financially sound of businesses. We trust these are the findings that you expect from us.

We believe that the stock market can continue its long advance, but we are monitoring the environment carefully. At some point our economy will slow significantly and eventually contract, and this bull market will have ended. This will be an unpleasant time for stock investors. Yet those investors who followed an investment process focused on the highest-quality of battle- tested businesses can more confidently stay their course and emotionally endure the contraction. And remember, broad market declines can present great opportunities for patient, preservation- minded investors searching for new ideas.