by Barbara Rishel
Bristol-Myers Squibb (Ticker: BMY) is a leading biopharmaceutical company that discovers, develops, manufactures, and distributes products worldwide. Squibb was founded in 1858 and Bristol-Myers Corporation was founded in 1887, and the two came together a hundred years later in 1989 to form BMY. Today, the company generates annual revenues of $20 billion.
BMY’s product line serves several important therapeutic areas, but most important to Bristol is its oncology business. Within oncology, investors’ hopes focus on Bristol’s drug Nivolumab, marketed as Opdivo. Opdivo works as a checkpoint inhibitor, using the patient’s own immune system to combat cancer. Immune checkpoint science has been progressing in the fight against cancer for almost twenty years, but Opdivo only received FDA approval for the treatment of melanoma in 2014, making it a cutting-edge treatment. The drug is undergoing further testing in combination with other drugs to improve outcomes and expand the addressable market.
by Ted Hart
Started by John D. Rockefeller as Standard Oil in 1870, ExxonMobil (Ticker: XOM) is the world’s largest diversified petrochemical company with a market capitalization of $343 billion. The company is split into three businesses: Upstream, Downstream, and Chemical. The Upstream segment engages in the exploration and production of crude oil and natural gas. Downstream refines the oil into liquids such as gasoline and markets the finished product at your nearby gas station. Finally, the Chemical business manufactures chemicals like ethylene, which is a basic petrochemical product that is the building block for many everyday products including packaging materials, storage containers, bottles, and toys.
by Scott Murphy
VF Corp. (Ticker: VFC) is one of the largest apparel and footwear companies in the world. VF has a diverse portfolio of brands, including five with revenue exceeding $1 billion: The North Face, Vans, Timberland, Wrangler, and Lee.
The stock has underperformed the market by (16%) in 2015 and (24%) in 2016. This 40% relative underperformance to the S&P 500 should prove to be a nice entry point. It seems Wall Street is questioning VFC’s ability to maintain its prior growth. Other issues potentially causing a drag on the stock include a strong dollar, which has impacted earnings growth over the past few years, and some downgrades by Wall Street analysts.
VF Corp is a pioneer in inventory management, enabling them to partner with their customers (retail stores) to effectively and efficiently get the right assortment of products that matches consumer demand in a real-time environment. Retailers value this “just in time” inventory replenishment system since it allows them to minimize inventory costs. Internally, VF is organized into four segments: Outdoor and Action Sports, Jeanswear, Imagewear, and Sportswear/Contemporary Brands. VF derives approximately 70% of revenues from the Americas, 20% from Europe and 10% from its Asia Pacific business.
Steven Rendle will become the new CEO in the first quarter of 2017. He is currently the President of VF and his tenure with the company began when VF purchased The North Face in 2000. This was a planned transition and he is succeeding current CEO, Eric Wiseman, who will continue as the Chairman of the Board. With an improvement in earnings slated for next year due to better internal performance coupled with a reinvigorated consumer, the stock is ripe for a recovery in 2017.
VF Corp. (Ticker: VFC)
If anyone could be considered the father of modern stock analysis, it would be Ben Graham. During the ‘30s, ‘40s and ‘50s, Graham pioneered the ideas of “value investing” and taught the next generation of investors to see the difference between stock evaluation and market speculation.
Ben Graham was born Benjamin Grossbaum in 1894. He was born in England, but his family emigrated to the United States when he was only a year old. His parents ran a reasonably successful importing business until his father died in 1903, at which point the business deteriorated. Ben was forced to begin working while still in school.
As a wealthy donor, the options available for charitable giving multiply.
You can have more control over how your donations will be spent, even potentially directing how each charitable dollar is allocated. While some of these options may require more planning and administrative work than direct giving, they also provide the potential for a deeper charitable impact and the chance to leave behind an enduring charitable legacy. Before deciding to use one of the following options in your charitable giving strategy, take time to learn about the obligations and resources each will require as well as the potential tax benefits each can offer.
Emotions substantially affect rational thinking; when you let certain emotions fuel your investment decisions, your portfolio could be in trouble. Understanding the psychological weaknesses that typically afflict investors will help you prevent them from damaging your own investment portfolio.
What’s Your Risk Tolerance?
Before identifying the emotions that typically affect investors, it’s first important to understand risk tolerance. Risk tolerance is how much unpredictability a person can financially—and especially “mentally”—handle in his or her investment portfolio.
Those with high risk tolerance—meaning they’re comfortable with investing in riskier markets—usually reap the highest long-term gains. But their chances of suffering short-term losses is just as high. Especially for retirement investments, investors in their 20s usually have a higher risk tolerance than investors in their 60s who are nearing retirement. Aging investors usually have a low risk tolerance; a short-term loss could deplete their portfolio and they don’t have time on their side to recoup what they’ve lost.
Risk tolerance and emotions go hand in hand; successful investors know their risk tolerance and how certain emotions can either increase or decrease the amount of risk they take.
Emotions That Affect Investors
Emotions are the part of your psyche that influences your motivation and behavioral tendencies. In any area of our lives, when emotions run high, it causes our rational, commonsense brains to shut down and prevents us from making rational decisions. Euphoria, greed, fear and regret are just a few of the emotions that affect investors and the decisions they make for their portfolios.
Euphoria, optimism and overconfidence
Euphoria—the state of intense happiness and self-confidence—gives an investor that surge of adrenaline. Euphoria causes investors to be more optimistic about the stock market and certain stock picks. But the elation and pride from a gain can also prevent the investor from detecting risks. As their self-confidence increases, investors tend to view themselves as more competent to choose the right stock picks than they really are. Many times, overconfidence leads to greed.
Greed
Greed is the excessive desire that alters investors’ judgment, leading them to poor decisions and irrational actions. Most people want to make as much money as they can, in as little time and with as little effort as possible. Investors have the instinct to always try and get a little bit more; but this “get-rich-quick” mentality can cause a frenzy in their portfolios, not to mention, the overall stock market.
Greed is not an easy emotion to overcome, and it can be the foundation for reoccurring investment errors such as “following the herd” and jumping on the bandwagon of the latest investment fad, or hanging on to stocks too long.
Fear
On the opposite end of the spectrum from greed is fear, an emotion just as debilitating to both investors and potential investors. Fear is an instinctual reaction to what someone perceives as an anticipated or actual
threat. It can cause investors to do any of the following:
- Sit on cash that should be invested
- Sell winning stocks too soon or enter and exit the stock market too soon
- Hold on to losing stocks too long or stay in the stock market too long
Some people believe the stock market is too risky. They would be unable to stomach the ups and downs of their investment losing and gaining money. These individuals feel more comfortable protecting their money somewhere with very little risk, such as a savings account. Little do they know that stockpiling their cash in a savings account is a risk, too. While their money is safe in the short term, it’s not growing to meet the rate of inflation over time. Preparing for major life events, living expenses in retirement and major purchases, your money must grow to afford the higher price tag of these expenses in the future.
Those who actually do invest are also susceptible to fear. Paralyzed by the fear of making errors, some investors either sell winning stocks too soon or hold on to losing stock positions that should be sold out because they’re afraid of losing money. Some studies show that the pain of losing a certain amount of money is actually greater than the pleasure derived from winning the same amount.
Regret
Who likes to admit they’re wrong? No one. For investors, it’s difficult to admit they’re responsible for making poor decisions about stocks. The pain of regret can cause investors to hold on to losing stocks too long or sell winning stocks too soon. A loss of wealth can be so painful to your psyches that you want to make the pain go away quickly. Usually driven by fear, investors will make any decision possible—however irrational it may be—to avoid experiencing regret.
Put Your Emotions in Check
It’s easier said than done, but keeping your emotions in check will lead to personal investment success. So how can you accomplish this?
Know you’re in control. Only you can prevent your emotions from clouding your investment decisions. Understand that once the emotion is released, it’s difficult to contain. Identify your emotions before you act on them, and take time to think things through before jumping on an investment decision.
Educate yourself. Understanding how the stock market works will decrease much of the fear and anxiety that comes with investing. Thoroughly research your investment and examine the history of the stocks you’re interested in. Don’t simply look at how a company is performing now; analyze the history of the stock’s performance. When you finally decide to buy, select your investment based on facts, not on speculative forecasts or because everyone else is buying them.
Choose an asset allocation mix that’s right for you. This means diversifying your portfolio and finding that balance between riskier and conservative investments. Some investors build their portfolios largely out of stocks in order to have the best chance of providing a high return. Other investors buy mostly bonds and cash equivalents; these are low risk, but the returns are also very small. To combat the risk of huge losses for both those with high and low risk tolerance, investors diversify their portfolios by spreading their assets among different types of investments to minimize loss. Diversification is a reliable method to decrease risk while still getting solid returns.
Think long term. Avoid watching the day-to-day peaks and plummets of your stock. This can stress you out. Instead, concentrate on the long-term performance of your entire portfolio.
Talk to Tufton Capital Management. We are here to discuss your personal financial goals and educate you on investment strategies to meet those goals.
by John Kernan
Diversifying a portfolio is a relatively simple concept. If you have more securities and one goes bad, it won’t sink your whole ship. Diversification is often called investing’s “free lunch” for good reason. You get the benefit of lower risk with little extra cost to you as the investor.
Proper diversification isn’t always as straightforward, and investors can get themselves into a mess while thinking they’re doing the right thing by holding lots of funds. For example, any investor choosing a mix of assets has certainly heard of diversification, but while looking at a menu of 50+ mutual funds, how to diversify might not be so clear. He or she might “wisely” choose several funds that look to be different. Looking at Vanguard’s “Stock Funds” menu, it would be easy to pick the following list of funds: (more…)
by John Kernan
Many of our clients have been asking questions about the (real or imagined) “peaking” of the market. They have seen one of the longest continuous bull markets in history and are telling themselves that the party must end sometime. One of the more confusing pieces of this puzzle is the role of the Federal Reserve and its interest rate policy. The Fed plays a delicate game with interest rates. It seems like the markets live or die by the Fed’s moves, and what the Fed does with rates has real consequences for all kinds of investors and businesses.
What is the “game,” exactly? What makes an interest rate “too low”? Wouldn’t we want the economy to grow as much as possible, all the time?
by John Kernan
We believe automation in factories, self-driving big rigs, self-driving cars, drones, automated warehouses, and countless more are going to reshape retail and the economy of this and every country in the world. This is a long-term view, but we believe it is not as long-term as one might think. The ripple effects will be profound. For example, the occupation of “truck driver” holds a plurality in every or almost every state in this country. Entire towns have sprung up and have economies based on truck stops (think Breezewood, PA). What’s more, artificial intelligence has advanced to a point where the technologies that IBM and Google have right now would have been science fiction just a decade ago. We at Tufton Capital tend to believe that the pace of this change is going to take large swathes of the population by surprise (including the government).
However, the interplay and timing of these factors are impossible to predict. We have seen the rise of populism and a leader who may not consider the long-term economic consequences of legislation and executive orders. For instance, say that Amazon and Uber are successful in driving truck drivers out of the supply chain. There are an estimated 3.5 million professional truck drivers in the country, and 8.7 million employed in the trucking industry. Suddenly we would have millions of former truck drivers who focus their blame on Amazon for “taking their jobs.” Amazon might be broken up, or a restriction or onerous tax on self-driving technologies could be levied. None of this would ultimately prevent the march of technology, of course, but it would be very bad for Amazon, or whatever player finds itself at the receiving end of displaced workers’ ire.
We are not saying any of the above will happen to Amazon or Uber. In fact, those two companies have teams of the brightest innovators in their respective spaces (the other standout being Google). But these are examples of what could happen to any given company.
As it is right now, we can’t say who the winners and losers will be. In Tech, it seems that any company that has any modicum of proven “cloud” or “hyperscale data technology” gets immediately launched into the stratosphere of valuation by West Coast investors who also see these trends coming.
Our last caveat is timing. We are confident these changes are coming, but do not know when they will take hold.
A final macroeconomic point is that the Roald Dahl-inspired idea that these workers can “get new jobs programming the trucks” is misguided. First, it will take only a handful of programmers to maintain the code on an entire fleet of trucks. Second, those who are losing the trucking jobs are far from qualified to transition into advanced computer science applications. This shift in job requirements will create a massive amount of friction in the labor market, and unemployment will be inevitable.
So, what is the investment strategy? A general overweighting in the Tech sector might be warranted, but even something as broad as that would be exposed to political moves. We expect the digital revolution to be bumpy.
Greetings from Tufton Capital, where the summer heat is finally abating, the leaves are quickly changing, and—in keeping with Baltimore business etiquette—Fridays around the office are taking on a distinctly purple hue.
With the tumult of this summer’s “Brexit” ordeal now firmly in the rear view, market commentators are busy parading new boogeymen through the headlines. And in case you haven’t heard: there’s an election going on.
As a quick glance at the morning newspaper (or five minutes in front of the television) suggests, uncertainty over our country’s next president has crept into the financial sector. From corporate taxation, to industry regulation, to international trade policy and everything in between, the implications of the outcome on November 8th are keeping plenty of capital stuck on the sidelines.
To an extent, this “wait and see” approach is appropriate: as the Brexit episode adequately illustrated, divisive macro-economic events can prove troublesome to captains of industry and individual investors alike. Yet, to paraphrase the Brits themselves, our team here at Tufton Capital is taking a more measured approach to election jitters—by keeping calm, and by carrying on.
As strident fans of hard data, as opposed to political hysteria, we are encouraged by the fact that the current bout of hand-wringing in the marketplace is, from a historical perspective, entirely unremarkable. In fact, one could even go so far as to argue that 2016 is going well. Since 1928, the S&P 500 has dropped an average of 2.8% in election years such as this one, in which an incumbent does not seek re-election. So far this year, that same index is up over 6%—not too shabby, considering the sky is meant to be falling any day now!
Of course, that’s not the sort of information you’re likely to read with the mornings news. After all, positive thinking does not sell papers. But as faithful stewards of your hard-earned capital, we encourage you to remain calm, and perhaps even cautiously optimistic, as the din grows louder in the weeks ahead. No matter what happens on November 8th, we are confident that our thoughtful, time-tested, and emphatically long-term investment approach will prove fruitful through this election cycle…and through many more to come.
by Eric Schopf
The third quarter proved to be somewhat docile for the stock market when compared to the first and second quarters. There was no interest rate increase hangover like we experienced in January, and no Brexit panic that rocked the market in June. A total return of 3.85% for the three months leaves the S&P 500 up 7.84% for the year. The bond market was much more volatile. The 10-year U.S. Treasury started the quarter with a yield of 1.47%. Interest rates steadily climbed during the quarter and peaked at 1.69% on September 21st, the day the Federal Reserve released its meeting minutes. To put the increase in interest rates into perspective, investors buying the 10-year note at a yield of 1.47% at the beginning of the quarter would have lost 3.8% of their principal when rates reached their intra-quarter peak. This 3.8% is the equivalent of over two and one half years of interest income. With only ten years to collect interest payments, there is little margin for error. Interest rates have retraced some of their gains, and the 10-year Treasury closed the quarter at 1.58%. The Fed’s dovish stance, reflective of the low growth and low inflation environment, continues to keep interest rates low and stock prices high. The S&P 500 reached all-time highs through July and August.
Although the market was more placid during the third quarter, we continue to remain on high alert. S&P 500 earnings will likely fall for a sixth consecutive quarter as we close the books in September. Corporations have responded by reducing fixed investment and slowing the rate of hiring. Productivity has slipped when comparing wage growth to the growth in GDP. If the situation does not improve, we may see a shift from slow hiring, to no hiring, to outright layoffs as corporations take measures to maintain profitability. Despite the difficult earnings environment, the S&P 500 is down only 2% from the all-time high reached in August. Equity valuations, a function of earnings and prices, are stretched. Many corporations have supported the cause by leveraging their balance sheets to repurchase shares. For the first time since before the market correction of 2000, the market capitalization of U.S. stocks is close to 150% of GDP.
Accommodative monetary policy is having a profound impact on global bond and stock markets. However, alternative views are beginning to emerge on the usefulness of ultra-low, and in some cases, negative interest rates. Rather than spurring demand, we are finding that low interest rates lead to greater savings rates as rational individuals act to offset their drops in investment income. The Bank of Japan has shifted its monetary policy to move closer to a zero interest rate instead of a negative rate. The U.S., in a position to learn from Japan’s experience, is less likely to travel down the same negative interest rate path.
The third quarter may have been the calm before the fourth quarter storm. The presidential election has the potential to be the eye of that storm. If nothing else, the rise in Mr. Trump’s popularity is an indication that fiscal austerity has lost its punch. Many members of the electorate feel disenfranchised and are ready for change. Regardless of who wins, deficit control may give way to tax cuts and expanded benefits. The Federal Reserve would then have to reassess its accommodative position in the face of fiscal policy actually being expansionary instead of neutral or negative. Higher interest rates would shift the current tailwind into a headwind for richly valued stocks.
The changing economic and political landscape has kept us busy this year. As you have noticed in your portfolio, we have sold or reduced numerous stocks over the past nine months. As always, we have been cautious and selective when buying new positions and adding to existing names. We took the opportunity in mid-September to increase bond positions in balanced portfolios when interest rates moved higher leading up to the Federal Reserve Open Market Committee meeting. Given the uncertainty that prevails and the solid equity returns, our focus has been to maintain asset allocation targets in the face of risk.
by John Kernan
We have held shares of Intel (Ticker: INTC) for many years at Tufton Capital. Intel has undergone fundamental changes and continues to adapt to the future of computing. We think that these changes merit a closer look at what is a trophy company.
Intel is the leader in its field, has a strong balance sheet, and carries an above-market yield. Furthermore, Intel is the greatest second-party beneficiary to the automation as well as the “Internet of Things” (having many types of devices connected to the Internet), trends that are coming more quickly than many realize.
We believe that the addition of more high-performance computers in daily life (e.g., cars and trucks) and the exponentially expanding need to process all of this data in large datacenters will create a huge market opportunity for Intel.
While the excitement around self-driving cars seems like a lot of hype, Intel has put down some convincing numbers for us to consider. In ten years, Intel estimates cars will need to process 250 gigabytes (GB) per second of data. For scale, an iPad holds in total 32-128 gigabytes of data. Other areas, such as manufacturing, will also adopt large-scale processing and automation. Furthermore, by 2020, Intel estimates each self-driving car will generate 4000 GB of data per day. All together, it believes that self-driving technology will require $2000-3000 worth of silicon in every car. How many cars will get this amount of silicon? The low end of Intel’s estimate for 2020 is 100 million cars in the total addressable market. That sounds like a lot, but we must remember that there are ~1.3 billion vehicles on the road today.
Some of the growth in these segments is likely priced in to the stock, especially vis-à-vis the declining PC market. However, the current valuation does not look stretched by any means, and the PC market’s decline seems to be slowing. We believe that this decline of Intel’s legacy market has led to a severe depression in the valuation given to the Client Computing segment. While the segment’s current customer base (Dell, HP, etc.) is in decline, the same infrastructure can be used for Intel’s growth markets. We believe that the stock, while not depressed to the point we would recommend buying more, is at least in part undervalued.
We are recommending that clients continue to hold Intel. It is already a significant holding in our accounts. We will continue to watch valuation and developments in the semiconductor chip industry, but we do not anticipate recommending a sale of the stock in the near future.
by Rick Rubin
The U.S. economy has grown for seven consecutive years since the Great Recession ended in 2009, marking one of our country’s longest economic expansions ever. It’s reasonable to conclude that this level of growth would have satisfied investors, workers, retirees and politicians alike. Unfortunately it hasn’t, due to factors like record low interest rates weighing on savers and retirees, as well as growing income and wealth inequality. In general, individuals at the top of the income scale have enjoyed higher real wage growth as compared to the rest of workers. In fact, real median U.S. household income peaked in 1999 and remains well below that level today. The struggle of the middle class has given rise to populist messengers… enter Donald Trump and Bernie Sanders.
We believe that U.S. investors have fared well given the challenges of uneven global growth, a strong U.S. dollar, and declining corporate profits. After all, investment returns have been strong since the financial crisis ended, with the S&P 500 and Dow Jones Industrial Average Indexes reaching all-time record highs in August. What accounted for the disparity between positive investment returns and consistently sub par economic growth? In our opinion, corporate capital allocation decisions have been, and may continue to be, a significant driver of both.
Public companies have a fiduciary responsibility to maximize shareholder returns. The management team decides how to allocate profits and what level to reinvest back into the business. For example, companies may increase capital spending (plants and equipment), raise workers’ wages, and step up hiring. Such investments should boost future profit growth and the economy over time. Unfortunately, many companies are holding off on long-term investments because of deep scars from the financial crisis. Instead, managements have increasingly selected a “safe path” by returning profits to shareholders through stock buybacks and dividends. Stock buybacks rose to $561 billion in 2015, a 40% increase from the prior year and the highest since 2007’s $721 billion.
At Tufton Capital Management, we are value investors, and we believe dividends and share buybacks are crucial to an investor’s returns. However, we believe many companies have relied too heavily on buybacks and dividends and have underinvested in their businesses, reducing growth prospects. How did we get here? Stock buybacks reduce the number of shares on the market and increase a company’s earnings per share (EPS) without the risk inherent in a new project. Further, companies are happy to leverage the balance sheet with cheap debt used to buy back more stock. Buybacks were a great use of cash when stock prices traded at a discount coming out of the financial crisis. But the market appears fully valued now, and there should be better uses of capital available to many companies.
In our view, company buybacks are a main source of the current demand for U.S. stocks. Buybacks have provided support for stock prices in the face of weak global growth and five consecutive quarters of year-over-year EPS declines for S&P 500 companies. Fortunately, stock buybacks have started to slow. Quarterly buybacks declined nearly 7% in 2Q 2016– the smallest quarterly buyback amount since 3Q 2013. We believe it’s time for companies to move away from stock buybacks and to start reinvesting in their business for long-term growth!
Before cashing out a profitable investment, consider making efficient use of its full value by donating it directly to charity.
Charitable giving provides donors with tax relief every tax season in the form of deductions. In an effort to encourage positive social action, the IRS provides incentives for all kinds of charitable contributions, from monetary donations to used cars. You can even donate your appreciated securities (stocks, bonds, mutual funds, etc. that have risen in value) to the charity of your choice. Long-term appreciated securities are the most common non-cash donations, and they can be the best way for donors to give more to their chosen charities. The tax advantages to donating stocks are such that both the donor and the charity benefit.
What are the benefits?
Donating appreciated securities yields two tax benefits for the donor. The first tax benefit is the elimination of capital gains tax. Normally when you sell an appreciated stock, you pay capital gains tax on the amount your securities have increased in value since being purchased. For example, if you bought stocks for a total of $1,000 and then sold them years later for $5,000, you would owe capital gains tax on $4,000 of income from the sale. This tax can add up significantly depending on what tax bracket you fall under, how many stocks you sell and how much they’ve appreciated over time. When you donate appreciated securities, however, you don’t owe any capital gains tax, no matter how much they’ve increased in value. The charity receiving your donation is free from capital gains tax on your contribution as well.
Tax Deductions
The second tax benefit is writing off the donation on your tax return. As long as you itemize, you can deduct charitable contributions on your return, and the more you donate, the more you can deduct. In this case, you’ll be donating more since you can donate the entire value of the asset, not the value minus taxes. Thus, your tax write-off will be greater. In other words, you can take a charitable deduction on money that hasn’t been taxed. This also benefits the charity, because they’ll get a larger donation than they’d otherwise receive.
There is a limit to how much you can deduct for charitable contributions, which varies depending on what you’re giving and what organization you’re donating to. Most organizations are subject to a 50 percent limit, meaning your charitable tax deduction cannot exceed 50 percent of your adjusted gross income. Other organizations have a 30 percent limit. You can check with the IRS or ask the organization themselves to be sure. These limits apply to monetary charitable donations. If you’re donating appreciated securities, the limits change; a 50 percent organization’s limit becomes 30 percent for appreciated securities, and a 30 percent organization’s limit moves to 20 percent.
Reducing Risk
Another benefit to donating your appreciated securities is reducing risk in your portfolio. If too much of your portfolio is dedicated to a certain kind of investment, your risk increases because your portfolio is less diversified, so your assets are all relying on that one kind of investment to succeed. To decrease that risk, you’d normally have to sell the stocks and pay capital gains taxes. Donating them, on the other hand, is a tax-free way to rebalance your portfolio.
The Details
To make this type of donation, it’s important to examine the details and learn the nuances that apply to these particular tax benefits:
• In order for a security to apply, you must have owned it for at least one year prior to donating. If not, your charitable deduction would be limited to the security’s original cost.
• If your stock is worth less now than when you bought it, donating it directly to charity won’t help you or the charity—you’d be better off selling it first, deducting the loss and gifting your charity with a cash donation.
• Not all charities can and will accept stock donations, especially small ones. Make sure your chosen charity can accept your donation ahead of time.
If you have applicable stocks, bonds or mutual fund shares and want to maximize your tax benefits, donating them to a charitable organization is one of the best things you can do. You’ll save money in taxes, the charity will receive more in donations and it’s all completely legal. The IRS creates these incentives to encourage charitable contributions, so consider taking advantage by including appreciated securities in your charitable giving strategy. n
This article was written by Advicent Solutions, an entity unrelated to Tufton Capital Management. The information contained in this article is not intended for the purposes of avoiding any tax penalties. Tufton Capital Management does not provide tax or legal advice. You are encouraged by your tax advisor or attorney regarding any specific tax issues. Copyright 2013 Advicent Solutions. All rights reserved.
Last Week’s Highlights:
Wall Street closed out a tough week, as fear returned to the markets, fed by rising Covid-19 cases, no relief bill and the upcoming election. Third quarter earnings season continued with mixed results. On the economic front, gross domestic product (GDP) rose 7.4% in the third quarter. While this is a strong number, the result followed a 9% plunge in GDP in the previous quarter. For the week, the Dow Jones Industrial Average (DJIA) lost 1,844 points, or 6.5%, to 26,502, while the S&P 500 fell 5.6% to 327. The tech-heavy NASDAQ tanked 5.5%, closing at 10,012. Merger mania continued with numerous acquisitions and mergers announced. Chip maker Advanced Micro Devices (AMD) agreed to pay $35 billion in stock for Xilinx (XLNX). In a second chip deal, Marvell Technology Group (MRVL) announced that it would pay $10 billion for Inphi (IPHI). LVMH Moet Hennessy Louis Vuitton and Tiffany (TIF) neared an agreement on a price reduction for their contentious $16.6 deal.
Looking Ahead:
Third-quarter earnings season continues with a number of S&P 500 components releasing results this week, including Clorox (CLX), Ingersoll-Rand (IR), Mondelez International (MDLZ) and SBA Communications (SBAC) on Monday. The Institute for Supply Management announces its Manufacturing Purchasing Managers’ Index for October – consensus estimates call for a 56 reading, just above September’s print. Eaton (ETN), Emerson Electric (EMR) and McKesson (MCK) report financial results on Tuesday. Americans head to the voting booths on Election Day – the latest polls lean towards a Biden presidency, a Democratic House of Representatives and a close-call for control of the Senate. Wednesday brings earnings reports from MetLife (MET), Qualcomm (QCOM), Expedia Group (EXPE) and Public Storage (PSA). ADP releases its National Employment Report for October – economists forecast an increase of 875,000 in private-sector employment, up from September’s 749,000 increase. Thursday is the busiest day of the week for earnings reports, including results from Alibaba Group Holding (BABA), Cardinal Health (CAH), Uber Technologies (UBER), Zoetis (ZTS), and many more. The Federal Open Market Committee (FOMC) announces its monetary-policy decision – the central bank is expected to keep the federal-funds rate near zero until at least 2023 to boost the economy. American International Group (AIG), CVS Health (CVS) and Marriott International (MAR) release financials on Friday.
All of us at Tufton Capital wish you a safe and healthy week.
