By Barb Rishel
Why are there so many trucks on the road and why are the store shelves so empty? Why is it taking so long to get my stuff? And why does everything seem more expensive?
These are questions we find ourselves asking almost every day. The U.S. economy is strong, with gross domestic product (GDP) up 12.2% in 2Q21. People are going back into the office (more traffic!), and the holidays are fast approaching. So why are there so many shortages?
With the fireworks long faded and the bunting stowed away, the high holiday of summer has come and gone. But if the party is over, a question now looms large. Who’s going to tell that to the American stock market?
For starters, let me once again begin with what matters most – your family’s health. In these humbling and unprecedented times, one cannot help but be reminded of life’s true priorities. As vaccines are widely available and a true “reopening” seems to be here, it is my sincere hope that this letter finds you and your loved ones in good stead.
By Eric Schopf
Investors were rewarded once again in the second quarter. The Standard & Poor’s 500 provided a total return of 8.55%, bringing the year-to-date return to 15.25%. The S&P 500 is now 90% higher than the pandemic low point of March 20, 2020 and 30% higher than the February 14, 2020 pre-pandemic high. The reward for risk has been substantial. Fixed income investors were not left out as yields on ten-year United States Treasury bonds fell to 1.45% from 1.74% during the quarter.
By Scott Murphy
Founded in 1994 by Jeff Bezos, Amazon.com is the world’s largest internet department store, and also one of the largest companies based on revenue and stock market capitalization. Originally offering only books through its website, Amazon has expanded both the breadth of products sold through its ecommerce platform and the absolute number of services offered. The products offered range from consumer staple products to Amazon-manufactured electronic devices such as their Kindle and Echo. More than a retailer of consumer goods and electronic items, Amazon has purchased companies including Whole Foods, Ring and Audible as bolt-on businesses to take full advantage of its retail reach and to add to its overall business portfolio. Ultimately, scale and efficiency are what drive Amazon in its pursuit of building out its ecommerce platform to both sell directly to consumers and to serve as the middleman between customers and third-party sellers.
By Rick Rubin
In Tufton’s Winter 2020 newsletter, we provided an overview of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which was signed into law in late 2019. The SECURE Act allows more individuals to access workplace retirement plans and to increase retirement savings. Many of the provisions became effective on January 1, 2020. But in response to the Covid-19 pandemic in the U.S., new legislation (the CARES Act) was enacted in March 2020 that delayed many of the SECURE Act’s provisions for 2020.
Greetings from Tufton Capital, where the tinsel has been packed away, the winter weather has formally arrived, and your team of investment professionals has been busy closing the books on a year that will never be forgotten. (more…)
By Eric Schopf
The stock market posted strong returns in the fourth quarter. The Standard and Poor’s 500 reached record levels in December and finished the year with a total return of 18.4%. The recovery from the March 20 low was a robust 65.2%. The 10-year U.S. Treasury yield continued to march higher with a year-end yield of 0.92%. The yield is up from a low-water mark of 0.50% in March and 0.68% at the beginning of the quarter. We are, however, still a long way from the 1.92% yields offered at the beginning of the year.
By Scott Murphy
Over the past decade we have seen incredible growth in our reliance on technology and the impact it has on our daily lives. Technology has moved away from the individual PC in a closed environment to an always on, interconnected world where the real time delivery of technology applications and data through the internet and 5G communications platforms is an absolute must. The worldwide Covid-19 pandemic has further pushed the limits on this need to be connected. Whether using Zoom for “work-from-home” demands or keeping in touch with family for non-traditional Thanksgiving celebrations, the need to remain connected for social and business reasons has never been more important. Like it or not, the concept of “cloud computing” is slowly making its way into our daily lexicons.
By Ted Hart
One hundred years ago, our country embarked on a decade now referred to as the “Roaring Twenties”, a period that encapsulated a new era of consumerism and extravagance to the American culture. New technologies and mass production made new products more affordable to the middle class. Armed with the right to vote, American women felt liberated to try out new fashion trends, which gave rise to the widespread use of makeup. A new trend in the American home emerged with an increased desire for home furnishings and decor.
In a 1946 essay, George Orwell laid out his six rules for writing. The first five—including such gems as “never use . . . a jargon word if you can think of an everyday English equivalent”—reflect the famed author’s expert approach to his craft. But it is the final command that stands out. “Break any of these rules,” Orwell instructs, “sooner than say anything outright barbarous.”
By Eric Schopf
The stock market continued marching higher in the third quarter. The Standard and Poor’s 500 provided a total return of 8.9% and finished the quarter with a year-to-date return of 5.6%. The strong returns came despite a mild correction that set the market back 7% in the first three weeks of September. Prior to the September correction, the S&P 500 was at an all-time high. Interest rates held steady with the 10-year U.S. Treasury bond closing at 0.68%, little changed from 0.65% at the end of June. The stock market stands in sharp contrast to an economy that is slowly healing from what we hope is a once in a lifetime pandemic. The “V” shaped recovery in the stock market has been compared to a “K” shaped economic recovery. Companies and individuals doing well continue their upward trajectory while those most negatively impacted by the virus fall further behind. Although the stock market has reached record highs, averages continue to be driven by large growth companies. Broader market strength will be a positive sign that the economy is normalizing.
By Barbara Rishel
On April 1, 2020, United Technologies (ticker: UTX) merged with Raytheon Corporation (ticker: RTN) and is now Raytheon Technologies (new ticker: RTX). As part of this transaction, United Technologies spun off its two non-aerospace and defense businesses, Otis Corp (OTIS) and Carrier Corp (CARR) in a tax-free transaction to its shareholders. For every share of UTX owned, shareholders received one share of RTX, one half of a share in OTIS, and one share of CARR in place of UTX, which no longer exists as an independent company. Raytheon Technologies’ CEO is the highly respected former CEO of United Technologies, Greg Hayes.
By Randy McMenamin
Receiving dividend payments from your equity holdings every quarter is similar to collecting interest on money in a savings account. It’s very nice but it’s not exciting. Buying a stock and betting its share price will increase is much more exhilarating. There are, however, several advantages of owning dividend-paying stocks.
A 401k plan for a company’s employees should be a rewarding benefit to the business owners as well as to the participants. Many owners, or plan sponsors, continue to hire outside advisors who are not fiduciaries to oversee their plans. By hiring non-fiduciaries, such as investment brokers or insurance agents, fiduciary duties are not being upheld.
by Chad Meyer, CFA
The case for American Independence, as it was argued some two hundred and fifty years ago, comprises scenes familiar to any schoolchild—British troops in the streets, tea in the harbor, and a felt need for self-government. But writing to a friend in 1816, Thomas Jefferson identified a less obvious threat to his young country—one that he viewed as more dangerous than the Red Coats. “I sincerely believe,” he admitted from his Monticello desk, “…that banking establishments are more dangerous than standing armies.” Although July 4th has come and gone, American investors can be forgiven for keeping that particular founding concern at the front of their minds all summer long.
