November has been good to U.S. equity investors
Source: FactSet, as of 10/29/2021
Some investors may be apprehensive about putting money to work in U.S. equities given the strong performance in large-, mid-, and small-caps year to date. Valuations remain elevated relative to historical averages and are another reason investors may be hesitant, but we don’t believe high valuations alone should be a deterrent — a topic we discussed in a recent Investor Insights: Are U.S. stocks too expensive? Though these concerns should not be dismissed, history favors staying the course.
As shown in the chart, November has been the best month for all three U.S. equity segments over the past 10 years. Moreover, the average return of small- and mid-cap stocks in November handily outperformed all other months. To be fair, all three asset groups posted returns in excess of 10% last November in anticipation of a COVID-19 vaccine approval. Still, November remains the second-best month of the year after removing that outlier.
Though we do not advocate market timing, and historical performance is no guarantee of future returns, seasonal trends can be your friend. So, don’t let recent strong performance in U.S. equity markets deter you from allocating capital to the space if it aligns with your long-term investment objectives.
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