“It’s not that I’m so smart. But I stay with the questions much longer.” – Albert Einstein
Where are we, at the end of November 2021?
The months seem to be alternating up and down and the questions persist about future developments. I’m accustomed to seeing divergences, but in November it seemed ridiculous. The vast majority of the stock market by number of companies (see NYSE composite and Russell index) was down around 4% in November, due to concerns largely about Federal Reserve policy and Covid. The Federal Reserve chairman made some statements about possibly raising interest rates sooner than later. Raising interest rates would be a painful way to kill inflation (remember the early 1980s?) but inflation serves an indispensable purpose – it makes it easier to pay off government debt with cheaper dollars. I believe personally that the low interest rates stick around along with the inflation. This would bode well for the stock market since it tends to hedge against inflation, but the market is still not totally in concert – small companies will always lead the way in a healthy market. In November, a very few large companies led the way to a small loss for the S&P and marginal gain for the Nasdaq.
How Did the Markets and Our Funds Do in November 2021?