With November drawing to a close, global stock markets are on a tear. If Monday’s stock market sustains the gains, it looks set to be the best month for shares globally, ever.
It is easy to look back and wish that one had known at the start of November what is common knowledge now, from the vaccine news to the US presidential election outcome. But I think it’s more useful to look forward and think about what to do next as an investor.
Look at what made November the best month for shares
Some of the stock market risers in November didn’t surprise me at all. For example, retailers like Greggs bounced sharply higher with the anticipation that a vaccine would help high street customer levels return closer to normal. Business hasn’t recovered and the current lockdown will surely weight on the company’s next results. But I never doubted that there would be good news in the end about a return to more normal life – the question was just one of when. Looking back, many of the shares which jumped in November look like they were hiding in plain sight before.
That makes me wonder – what else is likely to happen in the coming months, the only question being one of timing? For example, it’s hard to imagine that offices will be empty this time next year. That could be positive for shares in landlords like Land Securities, which still look beaten down.
Think about the drivers for November’s market performance
Stocks surged globally in November because of improved sentiment. There were some very clear drivers for that sentiment. For example, the release of the positive news about the Pfizer vaccine caused the London market to leap immediately. No wonder November is set to be the best month for shares ever.
That makes me consider what drivers will affect sentiment in the coming months, positively or negatively? At the end of December, the transition period for Brexit will end. I think the pandemic has distracted markets and the impact of Brexit is not yet fully priced into all shares. The post-transitional trade regime looks far from ready. That could add extra costs onto heavy exporters like Victrex. Looking ahead to likely drivers for market sentiment can help me consider what to do next. I like Victrex as a share but I don’t like the short-term international trading outlook for UK exporters.
What I’ll do next
The stock market globally looks set to record the best month for shares ever in November. But December is a different month. I expect that it will bring new opportunities.
I will consider my portfolio in the light of November’s strong run. But rather than reflect on past success, I will focus my attention on practical steps I can take to improve my likelihood of continued success, in December and beyond.