Imagine for a moment I’m writing to you from 30 days in the future. I will tell you some of the most important headlines over the forthcoming thirty days. You must use that information to make one decision – are you investing in the stock market over the next month or staying on the sidelines? Here’s your peek into the next thirty days:
- The largest public company in the world – one of the greatest performing stocks in the history of the stock market that has been the vanguard of the bull market that began in October of 2022 – will be down over 12%.
- The CEO of the largest private company in the world, which served as the proximate catalyst of the aforementioned bull market, will give a disastrous interview leading to questions about the viability of the company’s business model percolating in the investing community.
- The US government will break the record for the longest shutdown in history.
- Five of the seven “Magnificent Seven” stocks will have negative returns.
- Bitcoin will fall over 20%.
- The VIX – a popular measure of market volatility – will spike to its highest levels since the tariff tantrum in April of this year.
Do you want to be in or out of the market?
The above is, of course, a sampling of the stories that were endlessly discussed in November. Nvidia, the largest stock in the world that currently accounts for over 7% of the S&P 500 index, fell over 12%. Sam Altman, the CEO of OpenAI, gave a disastrous interview to Brad Gerstner, losing his temper after Gerstner reasonably pointed out Altman’s company does $13 billion in annual revenues and has committed to spend over $1.4 trillion. The US government eventually reopened in November after eclipsing the previous record for the longest shutdown in history. Of the “Magnificent Seven” stocks, only Google and Apple had positive returns for the month. Bitcoin fell from over $100,000 to $84,000, wiping out all its gains for the year. The VIX spiked to its highest levels since the tariff tantrum earlier this year.
So how did the S&P 500 fare the month of November?
+0.25%
Sure, not a huge return. But given those headlines, most would have expected a down month for the market. Importantly, the diversified investor did better. The midcap index returned +2.05% for the month. Small caps led the pack returning +2.65%. That number may still seem small but remember it’s a one-month return. 2.65%/month annualized is 36.9%
The economy cannot be forecast, and the market cannot be timed. Fortunately, neither are needed for a sound long-term investing strategy.
Sean Cawley, CFP®
Sources:
YCharts
Neither asset allocation nor diversification guarantee against investment loss. All investments and investment strategies involve risk, including loss of principal.
Content here is for illustrative and educational purposes only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.
This commentary reflects the personal opinions, viewpoints, and analyses of Resolute Wealth Management. It does not necessarily represent those of RFG Advisory, clients, or employees. This commentary should be regarded as a description of advisory services provided by Resolute Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.