Accretive November 2021 Market Recap

December 6, 2021

If you just looked at the S&P 500, you would think November was an uneventful month as it was down less than 1%.  However, the Russell 2000 and the MSCI international indices were all down more than 4%.  In the bond market, prices on investment grade bonds rose some due to falling yields.  Capital markets tightened with yields rising for riskier borrowers.  

A look under the hood of the market at market internals is even more enlightening.  The chart below is through 11/29/2021, and does not incorporate the continued sell off the market experienced over the last few days.

Our takeaway is that the vast majority of stocks are already in a correction, defined as a decline of 10% or more.  Based on the last few days it seems safe to say that the average stock is already in a bear market, defined as a decline of 20% or more. With the major indices still holding onto healthy gains on the year, this may be surprising.  Many investors are wondering what’s going on and how can this be?

Large cap US indices, like the S&P 500 and the more tech focused Nasdaq, have become more top heavy.  The largest companies, all tech focused in one way or another, are comprising a larger and larger share of these indices.  So far, these companies have held up, or even increased in value, as other constituents have declined.  We think investors are increasingly hiding out in the largest of the large companies for the time being.  

There are a variety of potential reasons for the recent volatility and concentrated strength.  In our opinion, general volatility has come from two places:  the prospect of Fed tapering its bond buying program sooner rather than later and the Omicron variant recently discovered in South Africa.  We think some additional volatility is seasonal due to tax-loss selling and decreased risk appetite heading into year end.  Anecdotally, we have observed that this seasonal effect looks most pronounced in companies that peaked earlier in the year.  

We believe most of what is driving volatility and the disparity between the largest tech companies and the vast majority of companies is shorter-term in nature.  We note that 2021 has a definitive end date on the horizon, and 2022 is a new year.  The Fed’s plans are heavily caveated and subject to change.  The Omicron variant complicates the picture further, but we expect to have a lot more clarity and information in the coming weeks.  While this has been a challenging period in certain respects, and could remain so for some time, we remain focused on the long term.

Market Insights

Other related articles

Read other related articles from this category.

Important Information

Accretive Wealth Partners, LLC (“Accretive Wealth”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Accretive Wealth and its representatives are properly licensed or exempt from licensure.This commentary is a general communication and the information contained herein is being provided for educational and informational purposes only. This commentary does not constitute investment advice and it should not be relied on as such. It is not intended to be and should not be considered a solicitation to buy or an offer to sell a security or a recommendation for any specific investment product, strategy, security or any other purpose. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. Any examples used are generic, hypothetical and for illustration purposes only. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor’s own situation.Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions that are solely the opinion of Accretive Wealth and should not be construed as indicative of actual events that will occur.Any performance presented herein is for illustrative purposes only. Past performance shown is not indicative of future results, which could differ substantially.  Current data may differ from data quoted.The views and strategies described herein may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities or gain exposure to such asset classes and financial markets.Information contained herein that is not proprietary to Accretive Wealth has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Accretive Wealth.For additional information, please visit our website at