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Fenimore Portfolio Manager, Will Preston, CFA®, shares his thoughts on investing at market highs.

The stock market has hit 14 “all-time” highs in the first two months of 2024. While this is great for portfolios, we understand it can also raise concerns about investing at market highs, particularly given the 9-month, -25% bear market that followed the last peak in early 2022. I’d like to reassure you that a long-term view is what matters most.

Compared to the last peak in January 2022, today’s investing backdrop is very different. In January 2022, inflation was +7.6% and rising, along with growing expectations that the Federal Reserve would have to raise interest rates to combat the persistent inflation. This of course turned out to be true with interest rates increasing 11 times in 16 months.

In February 2024, inflation, as measured by the Consumer Price Index, increased 3.2% year-over-year and has been trending down, supporting investor expectations that the Fed will not need to hike rates again this cycle. While some focus will remain on when the Fed will begin cutting interest rates, long-term company value creation continues to come from businesses growing earnings and cash flow.

Andrew Boord, Portfolio Manager - Fenimore Small Cap Strategy

Another contrast to the previous market peak was the speculative investments that drove a lot of the returns. The IPO market set a record in 2021 and we saw wild returns in meme stocks, SPACs (special purpose acquisition companies), and crypto. We do not see this speculative behavior today. 

Comparing trailing multi-year returns for these market indices as of the end of February 2024 against the same trailing multi-year periods at the end of 2021 illustrates the exuberance that existed in 2021.

2/29/2024 3-YR TR
S&P 500 11.91%
Russell Mid Cap 5.51%
Russell 2000 -0.94%
NASDAQ Composite 7.69%
12/31/2021 3-YR TR
S&P 500 26.07%
Russell Mid Cap 23.29%
Russell 2000 20.02%
NASDAQ Composite 34.26%

Performance data quoted above is historical. Past performance is not indicative of future results, current performance may be higher or lower than the performance data quoted. Investment returns may fluctuate; the value of your investment upon redemption may be more or less than the initial amount invested.

As you can see, trailing returns are closer to long-term US equity return averages compared to 2021, which should bode well for future return prospects. 

In summary, the current market environment has notable distinctions from that of 2021 and early 2022. Despite potential reservations about investing at market peaks, it’s important to remember that the stock market regularly achieves all-time highs, and today’s “peak” will inevitably be surpassed by a new market high in the future.

S&P 500 New all-time highs by year

Ultimately, when your objective, like ours, is to preserve and compound capital over the long term, it necessitates investors to stay invested irrespective of market conditions. This has been our philosophy for the last 50 years and will continue for the next 50.

Thank you for allowing us to be your trusted investment partner.

Will Preston, CFA®
Portfolio Manager, FAM Dividend Focus Fund

Securities offered through Fenimore Securities, Inc. Member FINRA/SIPC, and advisory services offered through Fenimore Asset Management, Inc.

Important Disclosures
Performance data quoted above is historical. Past performance is not indicative of future results, current performance may be higher or lower than the performance data quoted. Investment returns may fluctuate; the value of your investment upon redemption may be more or less than the initial amount invested. All returns are net of expenses. To obtain performance data that is current to the most recent month-end for each fund as well as other information on the FAM Funds, please go to or call (800) 932-3271.

Please consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. The FAM Funds prospectus or summary prospectus contains this and other important information about each Fund and should be read carefully before you invest or send money. To obtain a prospectus or summary prospectus for each fund as well as other information on the FAM Funds, please go to or call (800) 932-3271.

This presentation was prepared exclusively for the benefit and use of Fenimore Asset Management, Inc. (“Fenimore”) and FAM Funds clients to whom it is directly addressed and delivered and does not carry any right of publication or disclosure, in whole or in part, to any other party. Neither this presentation nor any of its contents may be distributed or used for any other purpose without the prior written consent of Fenimore.

In part, the purpose of this presentation is to provide investors with an update on financial market conditions. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds.

These materials contain the views and opinions of Fenimore. Additionally, the information herein is subject to change and is not intended to be complete or to constitute all of the information necessary to evaluate adequately the consequences of investing in any securities or other financial instruments or strategies described herein. These materials also include information obtained from other sources believed to be reliable, but Fenimore does not warrant its completeness or accuracy. In no event shall Fenimore be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction.

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