November Recap, Ukraine War, Global Business Strength

Transcript

Jessica Breiland:

Hello and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments you may have missed this week, what they may mean for markets, and most importantly, the potential impact for investors.

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Now, let’s review what happened this shortened holiday week.

First, a November recap.

While October saw records stock market highs, November was a bit of a rollercoaster for global stocks: with rallies, drops and everything in between—netting out to flattish returns for the month, as we record. Many fear that choppy markets and the lack of new record highs in November might mean an AI bubble is about to burst, with more trouble ahead. But we’re not alarmed by November’s moves.

Ironically, just last month, some were pointing to record highs as a sign of trouble. Now, headlines point to the lack of record highs as a red flag. But months with flat returns, pullbacks and even corrections are completely normal—and even healthy—in a bull market.

Yes, stocks deliver an annualized average of 8-10% over the long term, but they don’t rise in a straight line. But when you look at annual stock returns going all the way back to 1924, stocks have been positive about 74% of the time—with 21% of those years seeing returns from 10 to 20%, and 40% of those years seeing returns over 20%. For long-term investors, it’s important to stay on an even keel and remember that volatility is a normal price investors pay for strong long-term returns.

Negative volatility can be tough to endure, but it’s a normal part of investing through a full market cycle. In fact, during this bull market, global stocks have already seen 12 pullbacks—declines of 2% to 10%—and 2 corrections, which are declines of 10% to 20%. Each time, those dips likely rattled some investors, but global stocks eventually bounced back and hit new record highs.

This year, despite November’s chop, we believe markets remain poised to end the year with the strong returns we’ve expected since the beginning of this year.

Next, the war in Ukraine.

This week, headlines focused on Ukraine’s response to President Trump’s proposed 28-point peace plan, and investors might wonder what implications this could have for stocks.

Wars carry immense humanitarian consequences. But when it comes to the stock market, we don’t think a peace deal necessarily moves the needle as much as some might assume. First of all, regional conflicts tend to occur in areas that make up small portions of the global economy, with little direct impact on global production. For Russia and Ukraine, global markets and supply chains have already adapted over the course of this multi-year conflict, reducing the economic ripple effects from both countries.

And what about sanctions? They often sound more impactful than they actually are. Take Russia, for example. While Western sanctions have been in place, countries like China and India have stepped in as major buyers of Russian oil, minerals, and other goods. This doesn’t mean sanctions are meaningless, but it does highlight how modern global trade and financial networks are incredibly adaptive. Businesses are quick to find loopholes and workarounds—because, let’s face it, profit motive is a powerful driver. So, the next time you see headlines predicting a major economic hit tied to sanctions, it’s worth remembering markets and businesses are remarkably resilient and resourceful.

While geopolitical conflicts have a very real impact, we’d encourage long-term investors not to let short-term geopolitical headlines derail your strategy. Markets have a way of adapting and moving forward, and staying disciplined and focused on your long-term goals can help you navigate ongoing regional developments.

Finally, Signs of Strength in Global Business

With the holiday season in full force, we’ve found something additional to appreciate: the latest flash purchasing managers’ indexes, or PMIs, from S&P Global. Despite all the noise and fearful headlines, these surveys show private sector activity in major developed economies is holding steady—an underappreciated positive.

Take the UK, for example. Budget fears have dominated headlines, and November’s PMIs reflect that uncertainty, with the composite reading dipping slightly to 50.5. But here’s the thing: similar fears last year didn’t derail growth, and once clarity arrives, businesses tend to adapt quickly.

In France, political uncertainty hasn’t stopped progress either. November’s PMIs hit a 15-month high, with services back in expansion. And in the US? Despite a record-long government shutdown, private sector activity kept growing, with services PMIs climbing to 55.0.

The key takeaway? Businesses are more resilient than they often get credit for, and remain a strong support for this ongoing bull market.

That’s it for this holiday week!

Thanks for tuning into This Week in Review.

If you’re looking for more insights, then don’t miss our other series, 3 Things You Need to Know This Week, released every Monday.

You can also visit FisherInvestments.com anytime for our latest thoughts on markets.

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