In a market that can be difficult to anticipate, there’s a simple pleasure in seeing spring arrive right on time. And if the April showers outside our office are any indication, it would seem that May is planning to make a colorful entrance, indeed.

Let me once again begin with what matters most – your family’s health. In these humbling and unprecedented times, one cannot help but be reminded of life’s true priorities. As vaccines become widely available and a true “reopening” is around the corner, it is my sincere hope that this letter finds you and your loved ones in good stead.

Now, with that bit of sentiment out of the way – onto the market! Even with the stormy seas we faced in 2020, equities continued to sail higher in the first quarter and surmounted Wall Street’s “wall of worry” as investors focused on the brightening light at the end of the tunnel. January, February and March offered the kind of across-the-board gains to which American investors have, by this point, become accustomed. The S&P 500 posted a solid 6.2% gain (total return), and the NASDAQ clocked in at a not too shabby 3% rise. Not to be outdone, the Dow Jones Industrial Average rallied 8.3%, closing just shy of 33,000 on March 31st. Driven in large part by a continued rebound in earnings growth, a sharp spike in GDP and ongoing stimulus from the Federal Reserve, each index closed out the quarter near record highs. But even as market participants rejoiced at these outstanding returns, anxious questions continued to rise to the fore. How long will the good times last? And perhaps most vexingly, what “shape” will the recovery ultimately take? 

We think about these questions often and address them in the pages that follow with our firm’s outlook for both the economy and financial markets. Please see our article beginning on page two entitled “The First Quarter of 2021: A Glimpse of Things to Come”. This quarter’s Tufton Viewpoint also includes an article discussing and analyzing one of our favorite stock ideas – Wells Fargo & Company (ticker: WFC). We feel that this diversified, community-based financial services company is well positioned in an environment where fiscal stimulus has allowed its customers to solidify their balance sheets, leading to strong credit metrics. With higher interest rates, a steepening yield curve and a compelling valuation of WFC shares, we are buyers!

In closing, with all due apologies to my high school science teacher, I cannot count myself among those who fully grasp exactly what it is a vaccine “does”. Nor, for that matter, can I hazard a guess as to when the folks who do have that knowledge will finish the work that, by all accounts, is being injected into arms at a furious clip. Rather than stabbing blindly at the “big question” of the day, I’ll simply make a promise. Here at Tufton Capital, we honor the trust you’ve placed in us by working with the knowledge we have – not the knowledge we wish we had. As value investors, we believe in leveraging a disciplined, bottoms-up approach to find great companies trading at a fair price. And while we certainly aren’t blind to the need to stay abreast of Covid-19 news, we take comfort in the fact that for over two decades, our conservative approach has excelled amidst “macro” crises of every ilk. With so much uncertainty in the world, I hope you will take comfort in the same. From all of us at Tufton Capital, here’s to your continued health, wealth and happiness.

Chad Meyer, CFA

President