Equities generally edged higher in December as the seasonally strong period of the year prevented a correction of the markets’ overbought condition. Sector rotation was active throughout the month as market participants adjusted positions after a tumultuous year.
Equity markets surged in November on positive vaccine news. Cyclical sectors were the biggest gainers while the pandemic stocks corrected sharply. Of note, our most heavily weighted sector, Financials, made spectacular gains. This is exactly the situation we have been waiting for, and our patience is paying off. We are well positioned, and we expect this uptrend to continue.
The pandemic remains the biggest concern for the markets as the number of cases continue to sharply increase globally. While this is a major bearish factor for the global economy and equities in general, it is one that is temporary; at any time, a solution on the vaccine front could remove this bearish factor right away. Economies and businesses have begun to adapt to the current situation as well, and there has been and will continue to be fiscal stimulus to combat the negative effects on a global scale.
As anticipated, equity markets started a corrective phase in September. While this phase may still have another month or so to go, there may not be much downside in October. The election is at the forefront of the markets’ concern at the moment and, until the outcome is known, the markets are unlikely to move significantly either way.
Equity markets on the whole trended higher in August with the S&P 500 setting all-time highs again. While the equity indices are still being led by a handful of stocks, there have been signs that the downtrodden general market is starting to trend up as well.
Equity markets were slightly higher this month but remain in a consolidative phase. The restless rotation among sectors continued as investors vacillated between optimism and pessimism over the pandemic situation and its impact on the global economy.
Equity markets started the month strong as economies around the world started to re-open. However, as COVID-19 cases in the U.S. started to rise, volatility in the markets also spiked.
Equity markets were choppy and uncertain throughout the month but trended slightly higher. While there is no shortage of bears, pessimists and doomsday prophets, optimism is gaining ground as countries around the world start re-opening their economies. Encouraging news on the vaccine front also provided much needed boosts.
Equity markets somewhat recovered in April from the extreme selling pressure last month. One thing to note is that the indices can be misleading in regards to the extent of the rebound. A large portion of the gains in indices have come from “pandemic stocks,” i.e. sectors and companies which benefit from the crisis.
During periods of extreme turmoil in the financial markets, there is always fear and worry over investment losses in the midst of downturns. While that is understandable, we investors can assuage these emotions by reminding ourselves that we are investing for a time horizon that is longer than just a few months, a year, or even two.
