By Eric Schopf
The stock market posted strong returns in the fourth quarter. The Standard and Poor’s 500 reached record levels in December and finished the year with a total return of 18.4%. The recovery from the March 20 low was a robust 65.2%. The 10-year U.S. Treasury yield continued to march higher with a year-end yield of 0.92%. The yield is up from a low-water mark of 0.50% in March and 0.68% at the beginning of the quarter. We are, however, still a long way from the 1.92% yields offered at the beginning of the year.
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.
Let me begin with what matters most – your family’s health. In these humbling times – times in which young couples are married on the front lawn, and new fathers are locked out of the delivery room – one cannot help but be reminded of life’s true priorities. As the pandemic continues to visit disquiet and disruption upon families around the world, it is my sincere hope that this letter finds you and your loved ones in good stead.
By Eric Schopf
“There are three kinds of lies: lies, damned lies and statistics.” This phrase, popularized by Mark Twain, was right on point during the second quarter. Unbiased and accurate information regarding the coronavirus has been diluted by myriad sources tainted by political, economic or self-interest motives. The confusion sowed by half-truths and lies has resulted in uncertainty and false starts in objectively moving from economic lockdown to open-for-business. COVID-19’s source, transmission, treatment and morbidity patterns have been just one aspect of this disinformation flow. A dearth of testing and the stealth nature of the virus have created an environment ripe for deceit. True infection rates remain unknown. Even unemployment data, gathered and disseminated by the United States Bureau of Labor Statistics, a unit of the U.S. Department of Labor, was corrupted when it classified many people as employed but absent from work when in fact they were actually unemployed. This misclassification resulted in a reported unemployment rate of 14.7%, although it actually reached 19.5% during the quarter.
By Rick Rubin
In response to the COVID-19 pandemic that spread across the U.S., the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law by President Trump on March 27, 2020. The CARES Act is a $2 trillion emergency fiscal stimulus package designed to help battle the disruptive economic effects of COVID-19 for individuals, businesses, healthcare providers and state and local governments.
By Barbara Rishel
Corning’s fascinating history as a specialty glass manufacturer goes back 170 years. It was the partner of choice for Thomas Edison to manufacture the bulb-shaped glass encasement for his NEW incandescent lamp in 1879. Headquartered in Corning, NY, Corning’s products and innovations touch many different aspects of our lives; some in ways you might not expect. Some of the earlier inventions include cathode ray tubes (CRTs) for TVs in the early days of television in the 1950s, PYREX, Corning Ware and Corelle cookware, Steuben Art Glass and windows on the Hubble Space Telescope. Corning’s glass has been on every manned U.S. space flight since 1962. More recent inventions include flat screen TV glass, fiber optics, bendable glass for watches/wearables, antimicrobial glass for touch screens and high-quality vials for vaccines and healthcare.
More so than ever before, the times in which we now live call for clarity of thought. As this letter “goes to press,” government officials are tasked with frankly weighing public health against economic strength; business leaders are struggling to responsibly balance the wellbeing of their employees with the newly-heightened challenges of remaining a going concern; and families the world over are called to remember, and to rally around, that which they truly hold dear. With the forces of history so plainly at work, there is scant use for distraction or spin.
By Eric Schopf
The first quarter will be long remembered as the coronavirus of 2019 that developed into a full-blown pandemic. Measures to slow the virus’s spread have thrown the economy into recession and securities markets into collapse. Fear has replaced greed and investors headed for the exits. On February 20th, the Standard & Poor’s 500 was up 4.7% for the year and stood at an all-time high. The stock market needed just 22 trading days to shed 33.5%, and seven of those 22 trading days resulted in losses in excess of 4%. The single worst day was March 16th when the stock market fell 12%. The 325-point drop in the S&P 500 is the single largest point decline and the third largest percentage decline in the history of the index. For the quarter, the loss was a more modest 19.6% due to a rally into the end of the quarter.
By Ted Hart
NXP Semiconductors NV (NXPI) is a semiconductor company based in the Netherlands. It operates in the business of producing High-Performance Mixed Signals (HPMS) in four distinct lines. These lines include Automotive, Industrial & Internet of Things and Mobile and Communication Infrastructure. The company holds market leading positions within each of these business lines, and despite softer sales guidance due to the coronavirus, future growth for their products is still expected to outpace their respective markets. During the 1950s until 2006, the company was the semiconductor segment of Philips before it was sold to a private equity group. Though the spread of the coronavirus may temporarily slow growth, we believe there is a buying opportunity while we wait for sales to rebound. Recently, we have initiated positions in NXPI with the intention of achieving a full size position of 2% of equities.
By Barbara Rishel
“May you live in interesting times” is an English expression often mistakenly associated with the Chinese philosopher Confucius that seems truly appropriate in today’s world. We are all overwhelmed by the deluge of negative news headlines about the impacts of the COVID-19 pandemic and the changes to our daily routines and lifestyles. We wonder if these changes are just temporary adjustments, or will they become a permanent and integral part of our lives? What are the impacts on the financial markets, and specifically, on our portfolios?
