By: Chad Meyer, CFA

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 all of the talk of possible stormy seas on the horizon due to lofty valuations and decades-high interest rates, the story of 2024 has turned out to be one of decidedly smooth sailing. In the first six months of the year, both the Dow Jones Industrial Average and the S&P 500 rose handsomely on the heels of last year’s solid returns. Over on the NASDAQ, where Artificial Intelligence (AI) and high-publicity business models reign supreme, the good fortune rolled in as well. Up over 18% since this year began, the index continued to chug along as AI fever once again led the charge. With all three indices continuing to breach or skirt all-time highs, the VIX – which measures fear in the market – has approached multi-year lows. Just like those 4th of July fireworks, the year has certainly begun with a “bang”.

In frothy times like these, you may notice that the notion of all investments being good investments tends to gain traction. As the saying goes: “A rising tide lifts all boats.” And yet, digging into the data, we find that the case for careful asset selection – as opposed to “spraying and praying” – remains more compelling than ever. As some cracks may begin to show on the vaunted “AI gang”, we believe investor attention will continue to drift towards our more value-oriented neck of the woods. As it does, we are uniquely well positioned on your behalf to capture the upside of a “sector shift”.

Let’s also consider the aforementioned S&P 500. Of the 500 stocks tracked in this flagship index, a mere twenty-five accounted for nearly two-thirds of this past quarter’s gains, or put simply, a minority of stocks created the majority of returns. To your dedicated team of investment professionals, this phenomenon is a stark reminder that even when “all boats” are rising, some certainly rise higher than others. Which is why, even as we happily report that many of those top twenty-five companies are Tufton holdings, we remain hard at work on your behalf, in diligent search of the tugboats that will pull next quarter’s barges.

In the pages ahead, you’ll find an overview and our most current market insights about one company that we believe fits that bill – Carrier Global Corporation (CARR). In an effort to more deeply articulate the thinking behind those insights, we’ve also included our firm’s outlook for both the economy and financial markets (please see our article beginning on page two entitled “The Second Quarter of 2024: Back to the Future”). It’s our hope that you’ll read them at your leisure and give us a call should anything catch your eye. Because no matter where the summer takes you – and we do hope it’s somewhere relaxing – you can rest assured that we’ll be here, carefully guarding the trust you’ve placed in us.