By: Chad Meyer, CFA

As humidity takes hold and Fourth of July memories fade, there’s just no denying it. The dog days of summer have officially arrived. And while it’s no surprise for market activity to “cool off” around this time of year, one cannot help but suspect there’s more than the usual pre-Labor Day lull currently at work in the financial world. In this space roughly twelve months ago, I described the second quarter of 2021 as “frothy times,” characterized by the feeling that almost any stock was a winner. Looking back over the last six months, it’s clear that froth has given way to a drastically more cautious mood, due in no small part to a collective acknowledgement that uncertainty is the new normal. The view from the beach, it would seem, now includes whitecaps.

To that end, let me be clear – this was a very bad quarter in the stock market. Soaring inflation, rising interest rates and the specter of an economic downturn all contributed to declines in the Dow Jones Industrial Average, S&P 500 and Nasdaq of 11%, 16% and 23%, respectively. The damage is even more severe when looking at the year’s first half, with the S&P down 20%. Since 1960, this index has had just two first-half losses greater than this year’s drop, with the last coming more than half a century ago. Unsurprisingly, the records set by those figures are both disquieting and legion. In stark contrast to the last decade-plus of cocktail conversation, one is now apt to hear anxious talk of a “historically” bad market, in which even inversely correlated assets succumbed to the equity market’s doom and gloom.

Between inflationary concerns at home and volatility abroad, the market continues to keep investors on their toes. In the late days of this past June, even the most optimistic observer could be forgiven for believing that the sky was falling. And while investors seem to be seeing a bit of a reprieve as of this early July writing, a big question looms. With instability potentially lurking in the next news cycle, what should you do?

You should go on vacation and enjoy the summer months, even if the market refuses to act more favorably. In times like these, filled to the brim with short-term uncertainty, we believe that our firm’s careful, disciplined and emphatically long-term investment outlook is more important than ever. While all investors look at current events, great investors strive to look through them. So, whether this letter finds you at your desk or your dock, please rest assured that our team here at Tufton Capital remains hard at work on your behalf. Dog Days of Summer be darned!