Stableford Capital Insights

Stableford Market Commentary: November 2020

Stableford Capital—Monthly Market Review: A November to Remember

If someone told you in March that the S&P 500 would be hitting all-time highs in late 2020 while Covid-19 cases surged and offices and restaurants remained vacant, how would you have responded? Crazy person, don’t engage! Well, here we are. The S&P 500 increased 10.8% in November (Figure 1), an enormous move after 2 consecutive negative months.

Market Commentary November 2020 Figure 1—November +10.8% SPX
Market Commentary November 2020 Figure 1—November +10.8% SPX

Stepping back, it makes sense: Equity markets are forward-looking, as we’ve noted previously. Four straight weeks of positive vaccine news, the elimination of election uncertainty (and more importantly, a divided government), and relatively reasonable cabinet choices make for a positive outlook. Add to that the most dovish Fed (possibly ever), and voila, up we go!

While we had been somewhat risk-averse prior to the election given the downside risk from a potential corporate tax increase, the areas where we have the largest exposures—value, small-cap and cyclicals—have outperformed during November. The Russell 2000 (small caps) was up over 18% in November, while the S&P Transportation index was up 13.5% (Figure 2).

Market Commentary November 2020 Figure 2—Russell 2000 and Transports Outperformance
Market Commentary November 2020 Figure 2—Russell 2000 and Transports Outperformance

Where do we go from here? Most likely a continued climb of “the wall of worry,” but perhaps not at the same rate. On the plus side we have increasing vaccine availability and Fed accommodation. Negatives include the likelihood of increased regulations for certain industries, high unemployment, and questions around the vaccine’s length of efficacy.

Fixed Income

Yields on the US Treasury 10 Yr were basically flat during November, though with some volatility around the election. Rates ran up in anticipation of higher fiscal spending after a “blue wave” election, only to come back in. However, through the beginning of December rates have resumed their ascent, reaching the highs of November. We believe the trend is still likely up for a while, as the economy gains its footing and resumes growth. We don’t view this with much alarm though, as a slow and steady increase in rates from these levels is unlikely to weigh on equity market.

Market Commentary November 2020 Figure 3—Rates Mostly Flat in November
Market Commentary November 2020 Figure 3—Rates Mostly Flat in November

Enjoy the Holiday Season! As always, contact us with any questions.

Be Well!

Are you interested in making portfolio changes or getting a more in-depth analysis? Contact Stableford today by calling 480.493.2300 or simply request a copy of our Market Blast.


This market commentary was written and produced by Stableford Capital, LLC. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. The views stated in this letter are not necessarily the opinion of any other named entity and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

S&P 500 INDEX: The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Justin Thomas
Justin C. Thomas has worked for over 15 years as a portfolio manager and analyst managing institutional assets for hedge funds and large financial institutions. Career highlights include 8 years as an equity analyst and portfolio manager at PartnerRe Asset Management, a global reinsurance company with $17 billion in assets under management, and prior to that managing a long-short equity portfolio for Citigroup’s proprietary account. Justin has also worked as an analyst at long-short hedge funds and in research for Montgomery Securities (Bank of America Securities). In addition, Justin Thomas gained operational experience while working in finance and operations at E-Stamp, a start-up in Silicon Valley. He began his career working as a CPA at KPMG. Justin has an MBA and Masters in Accounting from Northeastern University and an undergraduate degree in Economics from Tufts University.