Monthly Market Update:
Recap of November 2021
It’s holiday season and even with the holiday hustle and bustle, the stock market must continue.
If this is your first time tuning in, I’m Eric W Powell. Please put on your snow boots and let’s get ready to hike through what the stock market did in November and take a look at what is expected as we trek through December. Be prepared, this is not your typical monthly market update.
Let’s start with what has shaken the markets over the past few days. The new variant has created a rapid concern and the stock market has not responded well. Now, I’m not here to debate opinions or even science on the virus, but I am here to tell you the news loves to create headlines that will cause commotion. If we go back to July 19th of 2021, theguardian.com released an article whose headline read, “US Stock Markets Tumble As Investors Fret About Delta Variant Spread”. Being the numbers guy that I am, I took a look at that tumble. What I found was during 3 stock trading days, the market fell 3.17%. Now I know that you never want to see money go down, but we have to be realistic. When the S&P 500 fell 3.17%, it had already provided a 16.46% return in only 7 months.
Let me explain a bit more. The S&P 500 was up over 25% this year on November 24th. The S&P 500 average, year over year from 1926 through 2018 is approximately 10% according to Investopedia.com. So, if we try to look at our accounts daily when the market is up over 25% and really the average is 10 percent, we are getting a false picture. Instead, this is where I explain the most important part of investing and that is that you must not focus on your daily balance and instead focus on the average returns necessary to meet your financial goals.
What I am sharing may be a bit of tough love, but I want to educate you and never sell you a false narrative based on fear or pleasure. My job is to build financial plans and portfolios that take market fluctuations into consideration and to make sure you stay on track for your financial goals.
Moving on now to something that we have all been impacted by and that is inflation. Originally, the Fed shared that inflation was temporary and now they have changed their tune a bit, saying inflation may be here a little while longer. So just get ready, the dollar menu at McDonalds may become the $1.25 menu, just as the Dollar Tree recently announced not everything in the store will remain $1.
To fight inflation, cash is not the answer, even with the turbulent stock market we have seen over the past few days. Instead, I know, I already mentioned it, but stick to your financial plan.
For the November numbers, the S&P 500 finished down .69%, the Dow - 3.5%, Nasdaq + .33%, and the Barclays Aggregate Bond Index + .30%.
I appreciate you taking the time to watch. If you have any questions please reach out. Have a safe holiday season and I’ll see you next year for the next market update.