November Monthly Review

A Look Back

The above title was an Alanis Morissette song released in 1998. It reached #1 on the charts in Canada, and the top ten here in the U.S. Morissette wrote the song after coming back from a trip to India…and you hear the reference when you listen to the lyrics. She later said in interviews that it was a way for her to express her “immense amount of gratitude, and inspiration, and love, and bliss.” After the recent Thanksgiving holiday, and the extremely positive U.S. stock performance in November, it seemed like an appropriate title. As we all digest, not just a Turkey-Day meal, but the political and geo-political changes that have or are happening all around us, it’s worth taking a step back, taking stock…and being thankful. Indeed, there was much to be thankful for in the financial markets over the last month. The U.S. continues to be the place to be when looking at overall stock performance. The large-cap S&P 500 was up nearly 6% in the month, and over 28% YTD. Small-cap stocks fared even better, with an eye-popping performance of almost 11%...in one month! International stocks took a step back, while doing their own digesting of the landscape in America. Core bonds delivered a solid 1.06% as yields across the curve stabilized for the most part in the month. Over the last year, the Bloomberg Agg has returned 6.88%, which is a percent or so better than the long-term average. We mentioned last month, but it is worth mentioning again…the S&P 500 five year annualized return is 15.77%. That is around 6% higher than the long-term average. Thank U!

A Look Ahead

We have also talked often about the resiliency of our markets. When you look back over the last 20, 50, and 100 years of history, it is truly amazing how stocks, and particularly U.S. stocks have done. If you would have invested $10,000 in the S&P 500 30 years ago and left it alone, your account balance today would be $221,845! That represents a total return of 2,118% or an annualized performance of 10.9%. (This really shows the beauty…and importance of compounding returns) Sometimes we can get lost when just talking about percentage returns, but looking at it in dollar terms can really paint a picture. It is also why we talk about the importance of having a consistent asset allocation strategy for longer-term money. The Fed has lowered the Fed Funds rate by .75% over the last three months, bringing the effective rate down to 4.64% today. They are expected to lower rates again by another .25% when they meet later in December. They continue to walk the tightrope of navigating their stated dual mandate of price stability and maximum sustainable employment…and, objectively, we believe you have to say, so far, so good. Although, much of the damage of higher inflation has been done over the last four years, the more recent numbers are lower. After peaking at 9.1% in June of 2022, the 12-month percentage change in CPI showed an increase of 3.3% in October. It is not the 2% that the Fed would like to see, but the trend has been positive. Likewise, the unemployment numbers have been stable. The latest October report showed the overall unemployment rate at 4.1%, up from 3.8% a year ago. Historically, that is still a low number, and would represent a healthy working environment. The details matter, and we have seen a slowdown, but not to a point that is problematic just yet. We also continue to keep our blinders off and recognize that it has been a particularly positive run in stocks…so, taking a little risk off the table as we get ready to move into 2025 makes some sense. We wish all the Happiest Holidays and Merriest Christmas!