Dow 30,000

November 30, 2020

November through January is traditionally the best time of the year for the stock market, with 60% of all gains for the year being logged in those 3 months.  However, spiking virus cases and a toss-up Presidential election made this November more unpredictable that most.  One of the biggest concerns for market participants was a contested election that would drag on for months, ultimately being decided by the Supreme Court.  While there were concerns about the results it appeared to most that Biden had won the election, but the “Blue Wave” did not develop.  The best outcome for the market was a divided Congress and it appears that is where we are headed.  The 30 stock Dow Industrial average had been lagging the other indices this year but rallied to its best monthly gain in 33 years, hitting 30,000 for the first time ever.  At the end of the month the S&P 500 had gained another 10.8% and is now 12.1% higher for the year. 

Despite a new “stay at home” order from England and the looming uncertainty of the election, the month began with a strong rally on the belief the election would not be “contested”.  As the election results began to come in and it appeared the “Blue Wave” was not going to develop, the market moved sharply higher.  At the end of the first week the S&P 500 had gained an impressive 7.3%, about the average annual return over the last 20 years.  The second week our attention turned to COVID with a surge in the number of new cases being largely ignored by the market as investors focused instead on promising progress on a vaccine from several major drug companies.  At the end of the week the S&P 500 had gained another 2.2%.  After gaining 11% in 11 trading days some profit taking was to be expected and the third week saw the S&P 500 edge lower by .7%.  Thanksgiving week is traditionally a positive week with the market closed for the holiday and a half day of trading on Friday.  This year once again saw nice gains during the holiday shortened week as vaccine news continued to be promising and the transition from Trump to Biden began.  The week ended with the S&P 500 gaining another 2.3%.  

December is traditionally one of the best months of the year for the stock market, closing with a gain 73% of the time, more than any other month.  There are clearly reasons to be optimistic with the election mostly behind us, economic stimulus in some form likely coming our way, an accommodative Federal Reserve and, perhaps mostly importantly, vaccines coming that appear ready to help end this nightmare.  With that said, the S&P 500 has rallied 65% off the March low and equity valuations, as measured by their price to earnings ratio, are more than double the norm, but not extraordinary for a period of recovery.  We have a “COVID air pocket” between now and widely available vaccines and a lot will depend on how governments react to the inevitable Thanksgiving, Black Friday, Christmas, New Year spike.  We believe the market will continue to have an upward bias and we will be buyers of tradeable dips. 

If you know someone who would be interested in learning more about Greenberg Financial Group, or who is retired or thinking about retiring, or would simply like us to review their current portfolio, please contact us at 520-544-4909, or visit our NEW website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio. You can follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group. 

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