“Women need to be building their own wealth. And that means investing early and regularly – and not just for retirement.”
- Jennifer Barrett, Chief Education Officer at Acorns
Happy Monday,
The S&P, Dow, and Nasdaq were all up significantly in October. That followed a very dour September where the market was down broadly across that board. In October, the S&P was up 6.9%, the Dow was up 5.9% and the Nasdaq increased 7.3%.
In our view, the markets continue to be driven by the Covid-19 recovery phases, government support payments, and the unyielding support of the Federal Reserve. There continues to be an optimistic feeling regarding the re-opening of the economy, even though 25% of the population refuses to get the vaccine. The new Biden Administration vaccine mandate for firms with more than one hundred staff, when the DLO guidelines are released, will help to push the unvaccinated percent down, hopefully into the 10-15% range. Also, the recent approval and authorization of the Pfizer vaccine for children 5-12 is another welcome milestone.
In addition, the probability of a modest tax reform later this year is adding to that uncertainty. Countering that is the real probability that a finalized $1.2T Infrastructure Plan will become law in November and the larger and broader bill of economic reform will be trimmed from the current $3.5T amount to something closer to $1.5T. Therefore, we believe the markets will remain a bit uncertain, with small pull-backs becoming a regular event for the rest of Q4 ’21.
That said, October was an excellent month and a great start to Q4 ’21. Our public equities portfolio, which includes a significant amount of hedging, is up more than 12% YTD, up more than 15% on a one-year basis, and up more than 12% on a ten-year basis. In our view, growth and value are both helping to propel the market higher, but at a much slower pace which is more consistent with history.
The S&P went up 6.9% to 4,605 in October, as the markets focused on the positive Q3 earnings reports and the positive aspects of recent Covid and political developments.
The Dow was up 5.9% to 35,820 in October, as the markets continued the un-even rotation into value investments, especially industrial and consumer staples.
Nasdaq increased 7.3% to 15,498 in October, as Tech stocks recovered from a drop in September.
In October, Covid-19 infections, hospitalizations, and deaths in the U.S. continued to trend lower, but the Delta variant continues to take a toll in select low-vaccine areas of the country. Additionally, M&A transaction volume continued to be robust, and the Fed continued its unprecedented support of the economy. The Housing sector also continues to be a bright spot with strong consumer demand thanks to low-interest rates.
In November, we believe the public markets will continue the slow rotation to value and industrial stocks and that overall returns will be positive, but mixed. That is not to say that growth stocks do not have a place in this robust economy. They do, but they will have to share the limelight with value stocks. We maintained the cash/bond portion of our public equities’ portfolio at 6.5% in October and expect it to remain the same in November.
We especially like the Financial and Industrial sectors where values are more reasonable, and growth should increase as the country opens back up for business. Morgan Stanley, B. Riley, JP Morgan, Microsoft, Berkshire, J&J, United Health Care, BofA, Microsoft, and Honeywell all continue to be top selections as we view them as stronger and more nimble competitors in their respective sectors. Please go to our website for our latest TOP 10 investments.
Thanks again for your consideration & for sharing your thoughts and ideas with us. Have a wonderful November, Thanksgiving, and Q4 ’21 ahead!
Best regards,
Marlene
Marlene Oddo
Partner
PointFour Capital, LLC