STOCK MARKET RECAP NOVEMBER 2025

After a steady climb higher, stocks have declined over the last few weeks.  The Nasdaq has declined about 4% and the S&P 500 has declined about 3%.  

In the chart below you can see the significant gains since the low point in April following Liberation Day and the slight decline over the last few weeks.

On a year-to-date basis, the S&P 500 is up about 14% and the Nasdaq is up about 18% (not including dividends).

The recent pullback is being driven by a few things:

• Anxiety over a potential AI bubble

• Anxiety over the next Fed moves on interest rates

• A big increase in interest rates in Japan

AI’s impact on the stock market is extremely volatile of late.  One day the AI excitement drives the market higher and the next day AI fears drive the market lower. 

We are still not receiving timely inflation or jobs data due to the government shutdown.  The most recent jobs report was decent even though unemployment ticked up to 4.4%.  All eyes will be on the next inflation update which will determine the Fed’s position on interest rates. At this point, it looks like even odds on whether the Fed cuts rates by another quarter of a percent or whether they hold steady.

Many stock market analysts believe that the low interest rates in Japan over the last decade have been a catalyst behind the long and powerful bull market of the last ten years.  With rates rising in Japan, this source of cheap money will dry up and no longer be available to drive US stock prices higher.

My valuation gauge indicates that the stock market (S&P 500) is now about 24% above its fair market value in late November.  At the beginning of November this guage was at 27% over fair market value. Both readings (+24% currently and +27% at the beginning of the month) are a cause for some concern. 

I do not trade based on market valuation levels and you should not either.  It is just a reminder that you need a strategy in place to protect your savings in case we experience a bear market. Older investors in particular need loss protection.

My investing system comes with built-in loss protection.  It is designed to avoid most of the losses in bear market meltdowns.  But it also produces big gains in bull markets.  You can now invest in my system directly from your brokerage account.  Click on this link to get on my calendar to learn how to start using my smarter way to invest.

Meeting

Stay Disciplined My Friends,

Phil

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