The Factor Report

Market Wrap

For the week ended November 25, 2022, stocks were again mixed, but but this time headed higher globally. After starting off the week in a selling mood due to continued rate hike fears, investors began to show optimism. A slew of positive earnings reports from retailers on Tuesday encouraged buying. The main impetus, though, came on Wednesday when the Federal Reserve meeting minutes were released. Those showed that the central bank expects to slow its pace of interest rate hikes sooner than expected. On a quiet and mixed Friday after the Thanksgiving holiday, stocks wavered, but ultimately ended about flat. Bonds moved  higher as the yield on the 10-year US treasury fell again to 3.7%, according to MarketWatch.

Performance Summary

Geographically, it was Non-US Developed that carried global stocks higher, although the US fared well also. Emerging Markets finished just below flat as Covid fears in China resurfaced. Within the US, it was again the more traditional stocks of the Dow Jones Industrial Average that fared best as the technology-heavy Nasdaq lagged. From a factor perspective, Momentum, Value, and Low Volatility generated returns above the broader market. The long-term results continue to demonstrate factor efficacy, as shown in the table. As can be seen, for the 15-year periods 3 out of 5 factors beat the market with Size not far behind for a fourth.

In The News

An optimistic piece on what a "Santa Claus rally" might look like over the next month.

https://www.marketwatch.com/story/santa-claus-rally-for-stocks-is-likely-this-year-but-you-wont-be-opening-presents-until-after-christmas-11669365406?mod=home-page

A great piece that looks at 12 tax questions investors have about capital gains and losses.

https://www.thinkadvisor.com/2022/11/21/12-top-tax-questions-about-capital-gains-losses-and-worthless-securities/?kw=12%20Top%20Tax%20Questions%20About%20Capital%20Gains%2C%20Losses%20and%20Worthless%20Securities&utm_source=email&utm_medium=enl&utm_campaign=newsroomupdate&utm_content=20221121&utm_term=ta

An interesting look at how Wall Street's great tech darlings have fallen in 2022.

https://www.cnbc.com/2022/11/25/techs-reality-check-how-the-industry-lost-7point4-trillion-in-one-year.html

Disclosures

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s). Moreover, you should not assume that any of the above content serves as the receipt of, or as a substitute for, personalized investment advice from Metric Financial.

USA is the MSCI USA index, Non-US Developed is the MSCI EAFE index, Emerging Markets is the MSCI Emerging Markets index, and All Country World is the MSCI ACWI index. One cannot invest in an index. Because the factor indexes have varying inception dates, some of the returns provided are back-tested and do not represent actual performance. Inception dates are as follows:

Momentum = MSCI ACWI Momentum NR USD Index (Inception: 11/30/95)

Value = MSCI ACWI Enhanced Value NR USD Index (Inception: 5/29/15)

Quality = MSCI ACWI Quality NR USD Index (Inception: 5/29/92)

Low Volatility = MSCI ACWI Minimum Volatility (USD) NR USD Index (Inception: 5/28/93)

Size = MSCI ACWI Risk Weighted NR USD Index (Inception: 4/6/11)

Metric Financial, LLC (“Metric”) is a registered investment adviser offering advisory services in the State of Connecticut and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Follow-up or individualized responses to consumers in a particular state by Metric in the rendering of personalized investment advice for compensation shall not be made without our first complying with jurisdiction requirements or pursuant to an applicable state exemption.

All written content is for information purposes only. Opinions expressed herein are solely those of Metric, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.