Happy Halloween! – Foy Financial Services, Inc.

“Good investors gather information, put that information into current and historical context, then make sound decisions.”

In the 30+ years that I have been writing the SELECTOR Monthly Commentary, I do not recall ever posting a Commentary on Halloween. This is actually a testament to the technological efficiencies in the investment advisory business over the past three decades. Financial data was retrieved manually back then. It was personnel intensive, and time consuming. Today financial data is available daily and carefully scrutinized for accuracy. Posting used to mean printing and prepping for mailing. Today it means the correct person pushing the correct buttons on the correct day, although we also mail paper Monthly Commentaries every month, and that’s just fine, too.

It is very important to remember that U.S. equity markets, as well as global equity markets, are still in long-term Bull Markets. This U.S. Bull Market started back on October 12, 2022, so it just turned 3 years old. That’s not too old, with the average bull market since 1950 lasting for 4.6 years. In addition, the average gain for the S&P 500 in those bull markets has been 160%, and the S&P 500 is only up about 90% since our current one started on October 12, 2022. So historically, there would appear to be room time-wise and price-wise. There is also the capacity for high volatility, as we saw on October 10^th when the S&P 500 Index declined by -2.71% in a single day, fully recovering in eight days then trending higher.

The leading equity sectors in October have seen amazing moves. The S&P Oil & Gas Equipment Index is up +13.14% MTD, although it is only up +4.85% YTD, clawing its way back from a 3-day decline of -27.5% the first week of April. The S&P Biotechnology Index is up + 11.77% MTD, and up +24.39% YTD, with most of that move in the last three months. This sector has seen a number of buy-outs within the industry this year, and is richly priced at current levels. The S&P Semiconductors Index is up +9.11% MTD and up +40.60% YTD. This sector is being driven by Nvidia Corp., which recently became the first company valued at over five trillion dollars. October has not been kind to all. The S&P Financials Index is down -3.24% MTD, up +8.51% YTD, while the S&P Basic Materials Index is down -4.43% MTD, up +3.60% YTD.

Emerging markets are once again the top performers among the international equity universe. The MSCI Emerging Markets Index is up +4.93% MTD, following a +5% September, and is up +33.82% YTD. The MSCI Europe Index is up a more modest +1.45% MTD, and up a very respectable +29.35% YTD. The MSCI EAFE Index is up +1.38% MTD and up +26.87% YTD. All of these indexes started their current long-term bull market in October of 2022, coincident with the U.S. bull market.

Bond markets are positive in October. The Bloomberg US Aggregate Bond Index, a.k.a. the AGG, is the granddaddy of all the bond indexes. The AGG measures the performance of the total U.S. investment-grade bond market, has an average maturity of 8.14 years and an average current yield of 3.73%. The AGG is up +0.70% MTD, and is up +6.88% YTD. The Bloomberg US Corporate High Yield Bond Index is up +0.22% MTD, and is up +7.45% YTD.The Bloomberg Municipal Bond Index up +1.24% MTD, and up +3.92% YTD. This past week the Federal Reserve lowered their interest rate by one quarter of one percent, which was highly expected.

Equity markets have acted a little spooky the past few days. We are seeing institutional adjustments as they reposition the under achievers, while taking profits on over achievers. The good news is that this global bull market has been so steady and so broad that even the under achievers are profitable. Happy Halloween!

Edward D. Foy, Manager, SELECTOR^® Money Management, Chief Investment Officer, Foy Financial Services, Inc.

Sources: StockCharts, Morningstar, Stock Trader’s Almanac.