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.
By Eric Schopf
Stock market strength continued in the second quarter with the Standard & Poor’s 500 delivering a total return of 3.11%. The bond market was even stronger as interest rates fell across the yield curve. The yield on the 10-Year U.S. Treasury fell from 2.42% to 2.00%. The increase in 10-Year Treasury bond prices corresponds with a total return of over 4.0% in the quarter. Although the numbers look solid in retrospect, the quarter was filled with drama. The stock market climbed over 4.0% in the month of April, only to fall 6.6% in May. The market rallied once again and advanced 7.3% in June.
By Rick Rubin, CFA
Eleuthère Irénée du Pont de Nemours (E. I. du Pont) was a chemist born in Paris in 1771. From a young age, du Pont was interested in explosives. In 1802, he founded DuPont de Nemours (legacy DuPont) in Wilmington, Delaware to manufacture high quality gunpowder. The company expanded rapidly and became a key specialty chemicals producer. Their research efforts led to the development of nylon, Lycra/spandex, Tyvek and Kevlar. In 2015, DuPont completed the spin-off of its Performance Chemicals division as a public company named Chemours. Chemours assumed certain liabilities from DuPont including litigation related to the Teflon product.
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By Ted Hart
You may have heard this old Wall Street maxim that warns against greed and impatience, but have you followed it? Without a doubt, the stock market can be an exciting place, and it’s easy to get roped into the allure of finding the next home run or timing a trade just right. For instance, a friend at a cocktail party may tell you about the killing he made off that ABC trade, and you may think, heck, why can’t I do that? Then there’s your inner trader who may get the best of you and get you thinking that you too can perfectly time your entry and exit points. If you have ever found yourself directing trades based on your emotions or you have attempted to time the market, are you really investing for the long haul? Or are you looking to make a quick buck? At Tufton, we may even suggest that you are gambling, not investing, with your retirement savings.
by Chad Meyer, CFA
Among nature’s many virtues is the simple logic of its progression. The fervor of one season will feed, with some reliability, into the fruits of the next. At Tufton Capital you would be hard-pressed to find a voice in rave review of last winter’s interminable rain and snow. But as the warm weather finally takes hold, we cannot help but look forward to the lushness of spring. There is solace in the knowledge that all those gray, rainy yesterdays will make for green afternoons in the months to come.
Of course, while nature is permitted to repeat itself—turning bloomy, gloomy, and then bloomy again with calendar precision—we expect a bit more from the market. In the first quarter of 2019, the stock market made good on last year’s choppy finish, with the S&P 500 besting a decades’ worth of quarterly growth records in one heady 14% swoop. Not to be outdone, the NASDAQ climbed nearly 17%, bringing that index (like the S&P) well above its 52-week low and well within range of its 52-week high. Needless to say, this is all welcome news. But as investors consider their next move, the questions are inescapable. Are the good times on good footing, or should one expect the market to change with the weather?
By Eric Schopf
The first quarter delivered a reversal of fortune for equity investors as the Standard & Poor’s 500 provided a total return of 13.65%. The dismal fourth quarter of 2018 is now in the rear-view mirror and almost completely out of sight. The market is just slightly below its all-time high reached in September. Fixed income investors were also rewarded this quarter when the 10-Year U.S. Treasury yield fell from 2.68% to 2.42%.
The strong gains in the securities markets followed the abrupt pivot executed by the Federal Reserve. Our concern entering 2019 was that monetary policy was too restrictive. The Fed instituted their fourth interest rate hike of 2018 in December. At the time they also signaled the possibility of two additional rate increases in 2019. Following a slew of weak economic data and the stock market selloff in December, the Fed quickly changed course. They became far more dovish and began preaching patience. The Fed clearly signaled that further interest rate increases would be put on hold. To show that they really meant business, the Fed also announced that quantitative tightening would end and that quantitative easing would return. Quantitative easing is the strategy of purchasing fixed income assets in the market place to help control interest rates. Quantitative tightening is the process of allowing those purchased securities to mature without reinvesting all of the proceeds. Maturities, net of reinvestment, were reducing the Fed’s portfolio by $30 billion per month. Portfolio shrinkage will drop to $15 billion per month in May, and all maturity proceeds will be reinvested beginning in September.
By Randy McMenamin, CFA
An informal survey asked people what is the first image they associate with the word Disney. The overwhelming response was Mickey Mouse. However, there is a lot more to Disney than the famous mouse. There is a new Disney on the horizon, brimming with major organizational changes.
Disney is a diversified worldwide entertainment company, which consists of four operating segments: Media Networks (41% of revenue), Parks and Resorts (34% of revenue), Studio Entertainment (17% of revenue), and Consumer Products & Interactive Media (8% of revenue).
By Rick Rubin, CFA
Many financial advisors build a book of business using mutual funds for their affluent clients. Is it because funds have favorable characteristics and offer stronger investment returns? Absolutely not. Mutual funds have many drawbacks!! First, they limit an advisor’s ability to customize a portfolio and manage risk effectively. Second, they add an additional layer of fees, which reduces an investor’s returns. Third, they are inefficient for investors who want to manage their tax bills. Small retail investors have few options and mutual funds may make sense for them. Fortunately, our clients enjoy a customized approach to managing their money. We invest in a diversified portfolio of individual stocks and bonds to meet their goals.
