SECURE Act 2.0: Retirement Bill Passes the House and Moves to the Senate

By: Rick Rubin, CFA

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 was enacted in March 2020 that delayed many of the SECURE Act’s provisions for 2020.

Notwithstanding the massive government stimulus provided during the first year of the pandemic, many individuals continued to have weak finances and less savings for retirement. U.S. lawmakers decided to take on the challenge of improving retirement outcomes for Americans and to build upon the SECURE Act. In May 2021, the House Ways and Means Committee unanimously passed the Securing a Strong Retirement Act of 2021. We wrote extensively about the bill’s provisions in Tufton’s Summer 2021 newsletter. The bill enjoyed strong bipartisan support, but unfortunately, it did not move forward in Congress last year.

(more…)

Continue reading →

The Tufton Viewpoint, Winter 2022

In this space, a bit over twelve months ago, I admitted that I didn’t have a clue what sort of market 2021 would bring. “Perhaps the economy will thrive…buoyed by the message that America is now ‘open for business’,” I wrote. “Or perhaps…historically low interest rates coupled with strong corporate earnings and healthy balance sheets may lead to another strong year for the equity markets.”

(more…)

Continue reading →

The Fourth Quarter of 2021: The Great Unwind Begins

By Eric Schopf

After limping to a close in the third quarter, the stock market came roaring back in the fourth. The Standard and Poor’s 500 provided a total return of 9.8% and closed the year with a gain of 28.7%. The ten-year U.S. Treasury yield treaded water during the quarter with a move from 1.53% to 1.51%. Stock market returns were buoyed by low interest rates courtesy of the Federal Reserve’s accommodative monetary policy.

(more…)

Continue reading →

How Spin-Offs Can Increase Shareholder Value

By Scott Murphy

The global economy dictates that successful companies compete daily for their own survival in a corporate sense and also in the minds of their customers. Wall Street is only happy to oblige by coming up with innovative and often replicated strategies from their collective corporate toolboxes. In some ways, you could view this symbiosis as the world’s greatest financial construction firm. They build it up to break it down, often repeating the process as decades pass and memories of the individual participants fade.

(more…)

Continue reading →

This Time It Is Different

By Randy McMenamin, CFA

The five most dangerous words to a portfolio manager are “This time it is different”.

Inflation is a hidden tax which only stays hidden for so long. When inflation rears its ugly head and is visible to consumers, business people and politicians, there is a problem.

What causes inflation? Today’s inflation is caused by too much money chasing too few goods and services. The annualized CPI (Consumer Price Index) for December 2021 was up 7% from a year earlier – the fastest increase since June 1982. This time was different because very strong money supply growth and generous government stimulus gave rise to this high level of inflation.

(more…)

Continue reading →

The Tufton Viewpoint, Fall 2021

With class officially back in session, it is perhaps fitting to greet fall with the words of an author familiar to most every American student. “October,” wrote Mark Twain, “is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”

(more…)

Continue reading →

The Third Quarter of 2021: In Like a Lion, Out Like a Lamb

By Eric Schopf

The Standard & Poor’s 500 carried strong momentum from the first half of the year into the third quarter. After setting fifteen new closing highs during the first quarter and nineteen during the second, twenty new all-time highs were recorded in the third quarter. A pullback of over 5% during the final weeks of September, however, all but erased these gains. For the quarter, the S&P 500 registered a total return of just 0.58%, but this year-to-date total return is still an impressive 15.92%. Interest rates moved higher during the quarter, with yields on the ten-year United States Treasury bond rising from 1.45% to 1.53%.

(more…)

Continue reading →

Company Spotlight: Cisco Systems (Ticker: CSCO)

By Ted Hart

Cisco Systems (Ticker: CSCO) was once a tech darling. During the Tech Bubble of the late 1990s, Cisco quickly climbed to become the most valuable company in the world. As the market leader in internet routers and network switches, investors believed that the company “that powered the internet” had growth as far as the eye could see. Shortly after the millennium, and as the economy went into a recession, the growth of the internet faltered and left Cisco’s growth prospects dim. Since then, the company has increased sales at about 5% per year. However, during the same period, the stock has languished due to its lackluster growth relative to its technology peers. All the while, Cisco kept one of the cleanest balance sheets in the industry and rewarded shareholders with above-average dividend growth. And next, hybrid work (a mix of working from home and in the office) landed right in their laps! Cisco may not regain the crown as the world’s most valuable company, but their prospects are stronger than they have been in over twenty years.

(more…)

Continue reading →

Bottleneck in the Supply Chain

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?

(more…)

Continue reading →

The Tufton Viewpoint, Summer 2021

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.

(more…)

Continue reading →

The Second Quarter of 2021: Open For Business

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.

(more…)

Continue reading →

Company Spotlight: Amazon.com (Ticker: AMZN)

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.

(more…)

Continue reading →

SECURE Act 2.0: A Step Forward for the SECURE Act

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.

(more…)

Continue reading →

The Tufton Viewpoint, Spring 2021

In a market that can be difficult to anticipate, there’s a simple pleasure in seeing spring arrive right on time. And if the April showers outside our office are any indication, it would seem that May is planning to make a colorful entrance, indeed.

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 become widely available and a true “reopening” is around the corner, it is my sincere hope that this letter finds you and your loved ones in good stead. (more…)

Continue reading →

The First Quarter of 2021: A Glimpse of Things to Come

By Eric Schopf

The first quarter of 2021 gave investors a little bit of everything. We saw a second impeachment of Donald Trump, the inauguration of Joe Biden, two more shots of fiscal stimulus, multiple Covid-19 vaccines, the rise of retail investors and meme stocks, unseasonable weather patterns and the collapse of a hedge fund masquerading as a family investment office. Through it all, the stock market maintained a bullish stance with the Standard & Poor’s 500 delivering a total return of 6.2%. The improving outlook for the economy was confirmed by the bond market as interest rates rose sharply. The yield on the 10-Year U.S. Treasury note spiked to 1.74% from 0.92% at year end.

(more…)

Continue reading →