The big money is not in the buying and the selling. But in the waiting

“The big money is not in the buying and the selling. But in the waiting”
(Charlie Munger)

  🔥 So November comes to an end and we edge our way out of 2020. The last month has certainly seen some positive developments in the markets. With the new US President decided and some light at the end of the tunnel re the pandemic and vaccine being main factors…results being:

Nov YTD

S&P 500 +10.8% +12.1%
Nikkei +16.5% +13.2%
FTSE +12.4% -16.9%
MSCI Wld +12.7% +9.5%
SSE +5.2% +11.2%
EM50 +5.9% +19.6%

  🔥 And on the currencies, the Greenback continues its slide…raw data being:
Nov YTD

GBP -3.1% -0.7%
EUR -2.3% -6.7%
JPY -0.4% -4.2%
AUD -5.2% -5.1%
CNY -1.7% -5.7%

  🔥 So what a month, the best November in history for the S&P, historically the best performing month.

  🔥 Sat here thinking about writing the last monthly market report and how uncertain things were with the US election a couple of days away. The Covid situation also had no indication of a solution so its not surprising that the markets have reacted positively to the recent news, especially in respect of the vaccine.

  🔥 Uncertainty is what markets dislike the most and whilst of course nothing is ever 100% certain, knowing we have a Biden / Harris administration from January and that a vaccine will allow people at some point soon to get back to their normal lives is great for all concerned.

  🔥 One landmark that was reached during the month was that the Dow Jones Industrial Index reached over 30,000 for the first time ever. Whilst the DJ is not as good an indicator of portfolio values as the S&P because of its higher weightings in companies with smaller market cap, a Dow Jones tracker is still a market play.

  🔥 Those invested in such a tracker would have seen their money double in seven and a half years, when the market was at 15,000. Compare this to other investments, such as UK property (using the HPI – Housing Price Index which looks at the average) doubling your money would have taken almost twice as long, as 2007 was when the index was half its current price. Investing in the Corporate Bond Market would have taken you further 5 years to get the 100% return on your investment. Of course my son will have told me that you could have got those returns by buying Tesla in just 3 months, but we’re looking for long term steady growth not the quick buck which I’ll leave to traders of this world.

  🔥 Most would take US$200,000 on US$100,000 deposited in May 2013 and be pleased with that return. However drill down and invest into sectors where growth potential is greater and performance significantly better (Boeing and Exxon for example are components of the Dow) then the returns over this period would be higher. Regular readers will know that Healthcare and more recently Sustainable Energy are sectors where I have been placing client monies.

  🔥 The 3 billion pre ordered vaccines from Pharma giant AstraZeneca certainly isn’t going to do their top line any harm, as the next stage of the fight in the pandemic hopefully swings in our favour.

  🔥 Last month’s report talked about a Sustainable Energy Fund and how it had out performed the traditional energy by 84%. My thoughts on investing in this sector were reinforced a week ago whilst watching the fantastic Sir David Attenborough’s documentary “My Life on this Planet”. Around a quarter of the current world’s energy is sustainable and as the great broadcaster points out, is there any reason why it can be 100%?

  🔥 I talk often of emotion in the markets and this causing volatility / buying and selling based on interpretation of news. Its been a while since the news has had this much real substance for the stock markets as we can look forward to a bounce in consumer spending as people look forward to their beach holidays, socialising etc as restrictions ease in 2021 once a vaccine has been rolled out.

  🔥 Certainty at the moment is therefore greater than it has been for some time which reminds me of the joke about the Irishman who always wore two condoms ….to be sure, to be sure!