By: Chad Meyer, CFA

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.”

If there’s any truth in numbers, it appears Mr. Twain was at least partially mistaken. Rather than unleashing “peculiar” peril, October (as of this writing) has offered the kind of across-the-board gains to which American investors have, by this point, become accustomed. This follows a very healthy third quarter where the S&P 500, Dow Jones and NASDAQ notched gains of 6%, 9% and 3%, respectively. Driven in large part by continued robust earnings growth and Federal Reserve support, each index closed out September at or near record highs, with heavy lifting occurring in each of the three months. From a macroeconomic perspective, the story stays much the same since real GDP growth remains healthy, the Federal Reserve continues its accommodative stance, and consumer and executive confidence remain high.

Yet (to invoke the spirit of Huck Finn) there’s always the prospect of mischief hiding in the rafters, and in case you haven’t heard, there’s a fairly heated presidential election underway. Here’s a proposition that you won’t see aired in too many headlines. No matter how feverish the partisanship gets, our country, by design, will be just fine. Since its framing, this republic has operated under the principle that no single government actor can truly rock the boat on his or her own. Though this concept is a mainstay in the context of schoolchildren learning about “checks and balances,” one often finds it conspicuously absent in election-season cocktail conversation. In that setting, America’s fortunes always seem to turn exclusively on the next president. With all due apologies to the next alarmist you encounter, this is simply not the case. As James Madison observed in 1788, our constitutional framework consists of “several constituent parts,” which, “by their mutual relations,” are “the means of keeping each other in their proper places.” So too, I’d humbly posit, in 2024—no matter if it is him or her entering office come November.

Granted, investor anxiety is inevitable in the context of any historic bull market run. There is, one might say, an intuitive logic to looking for one’s chair once the record starts playing on repeat. But setting that generalized anxiety to the side, it is also clear that a new consensus is forming around the market’s former “can’t miss” stocks. While the Magnificent Seven will almost certainly turn in respectable year-over-year growth, their status as the horses pulling the cart appears shakier by the day. So with all manner of portends, both favorable and fearsome, swirling around the marketplace, where exactly is your team of investment professionals turning its attention? Put briefly, towards opportunity—the sort that the “can’t miss” crowd often overlooks. As some cracks may begin to show on some of the higher-valued equities, 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”.

From all of your advisors here at Tufton Capital, we thank you for the trust you have placed in us, and we remain committed to the steadfast pursuit of your interest, all twelve months of the year.