November 2023 Market Update

Excluding the stocks of a few very large U.S. companies, the global stock market has delivered little in the way of net gains since the beginning of 2022. The global bond market has been slightly worse. One explanation for this lackluster performance is the built-in narrative that rising interest rates would push the global economy into recession. When investors are driven by fear to pull money out of stocks, they pull the market down regardless of the underlying strength of the economy.

When we look at the historical data, it doesn’t support the need for fear. Whether it be Gross Domestic Product (GDP) growth or annual stock returns, there is no correlation between U.S. Treasury yields and lower growth or lower stock returns. Stocks can deliver great returns or suffer from losses in both high and low interest rate environments. Unfortunately, trying to use rates or any other measure to predict future stock returns has not been shown to add value.

What we do know is that missing out on the few best days in the market, which come without warning, has a significantly negative effect. So, while it can be tempting to park money in cash right now, as the oft quoted English proverb says, “Good things come to those who wait.” And that is rarely truer than waiting in the market. The low returns we have experienced recently are a frustrating but common part of investing and we still have confidence that the rewards will come.

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.