It’s the Most Wonderful Time of the Year

Finally, Christmas music is legal…and so are outdoor Christmas lights and decorating Christmas trees.  The rules of the holiday season dictate no signs of Christmas until after Thanksgiving, and all Christmas artifacts must be removed by January 2nd.  😊

At the Yakel household, we have fully complied and are now enjoying the glow of the Christmas tree (and the snoring dog) as I write this…

For investors, we’ve also entered the most wonderful time of the year for stock market returns.  November kicks off the historical best 3 month stretch for market returns—historically returning about 3.3% from November to January:

And, November 2020 did not disappoint.  The Dow had its best monthly return since 1987, and the Russell 3000 had its best month ever:

In fact, nearly every market—from small cap stocks to international stocks–had a pretty amazing November, spreading holiday cheer early this year:

While these returns are encouraging, with investors appearing to cheer the light at the end of the virus tunnel and some potential political certainty, the grinches are starting to grumble with market crash predictions.

And the naysayers have been busy all year, proclaiming the market corrections consistently.  In a great article by JP Morgan’s Michael Cembalest, the effect of shifting assets from the stock market to cash whenever a fund manager or analyst called for a correction was explored…and the end results ranged from -30% to -65% cumulative performance over the past decade:

And 2020 was no different—if an investor had sold at any one of the moments indicated below, they would have missed the market recovery in the second half of the year:

Market crashes do happen—but they are very difficult to predict with any certainty.  Much like a white Christmas in Virginia…entirely possible, but not a very frequent occurrence.

So, as we exit the season of thanksgiving, we remain thankful for the recovery in the market and the progress in returning to full economic activity.  And we look forward to celebrating the end of a very eventful year!

But for now, we are enjoying the start of Christmas~~

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It’s the Most Wonderful Time of the Year

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