“Although it’s easy to forget sometimes, a share is not a lottery ticket. It’s part ownership of a business.”
- Peter Lynch, investor & philanthropist

I’m thrilled to be bringing you this month’s market update! Happy Tuesday to you all - let’s get into our report:

Overall, the S&P, Dow, and Nasdaq all increased in November. After a soft October, the S&P went up 10.8%, the Dow increased 11.8% and the Nasdaq accelerated 11.8%. This is certainly evidence of the expected “movement higher” that we mentioned in our last Market Update. It is also an optimistic response to the rapid vaccine development and testing that is driving the potential for a quick recovery from Covid-19 in early/mid-2021.

The Presidential election season came to an end in November and as predicted Biden carried the popular vote by almost 6 million and easily won the Electoral College vote. As we mentioned in the past several Market Updates, reasonable men and women seem to agree that Biden is a man of decent character and exemplary leadership, which could not be said about Trump.

The S&P went up 10.8% in November, as the markets focused both on value investments and the hope for fast approval of a vaccine or vaccines to address the Covid-19 pandemic.
The Dow increased 11.8% in November, as the markets continued the rotation into lower PE value investments, especially industrial and consumer staples.
The Nasdaq accelerated 11.8% in November, as Tech stocks recovered from the pullback over the past couple of months and value stocks continued their rotation back into the limelight.

In November, the growing number of coronavirus cases in the world, and specifically in the US, along with the associated constraint on full-scale business re-opening in the US continued to stress investors’ minds.

Countering this negative news, M&A transaction volume increased, and the Fed continued its unprecedented support of the economy. In addition, progress on Covid-19 vaccines has been very positive and the Housing sector has been a bright spot with strong consumer demand thanks to low-interest rates.

In December we believe the public markets will continue the rotation to lower PE industrial stocks and returns will move higher, although not by much as they have gotten a bit ahead of themselves in November. We believe that out-of-favor lower-PE Dow companies still represent a continued buying opportunity during the rest of Q4 ‘20. I especially like the Industrial sector where PE ratios are very reasonable, and growth in this sector should increase as the country opens back up for business. Verizon, Morgan Stanley, P&G, Walmart & Amazon all continue to be top selections as we view them as stronger and more nimble competitors in their respective sectors.

In our public portfolio in December, we plan to continue migrating our cash position (now standing at 20%) into more quality equity investments at superior values. Take a look at our Top 10 investments list here for more info.

Thanks again for your consideration & for sharing your thoughts and ideas with us. Have a wonderful December and Holiday Season ahead!

With gratitude,
Marlene

Marlene Oddo
Partner
PointFour Capital, LLC