Stocks took a breather in November after their best one month market cap gain on record in October. The MSCI World Index lost 1.0% which leaves this benchmark index of global stocks down 2.4% in 2015. Small cap stocks outpaced large caps in November as the looming threat of the first Fed rate hike since June 2006 bodes better for small companies than their larger counterparts.
Notably, retail investors continue to sell stocks at a heavy rate in 2015. Total flows out of US equity funds have totaled more than $118 billion through the end of October, putting 2015 on pace to be the worst year ever, including the financial crisis years of 2007-2009, for net equity redemptions. It is a conundrum to market observers why retail investors are still running, not walking, away from stocks following 6 consecutive years of market gains totalling more than 200%.
The bond market also modestly sold off during November in anticipation of a December Fed rate hike. The 2-year Treasury closed most recently at 0.94%, it's highest level since May 2010. Longer-term bonds, which are more sensitive to inflation and domestic growth expectations than to Fed moves, are still trading at lower yields than they traded for most of 2014.
We encourage you to call or email us if you have any questions about the markets or your portfolio. As always, you can reference the RPG Monthly Market Snapshot by clicking here for some key economic data points and index returns.