Last week proved to be a positive one for investors, with all major asset classes posting gains. Growth stocks and small caps led the way, and commodities also delivered strong performance.
One of the week’s highlights was Nvidia’s earnings report, which exceeded Wall Street’s high expectations. Revenue nearly doubled year-over-year, coming in 5% above already optimistic estimates, while earnings more than doubled from the prior year and beat lofty projections by 10%. Nvidia’s strong earnings underscore continued momentum in the tech sector, a key driver of this year’s market gains. Nvidia shares gained 2% for the week, extending their impressive run—up nearly 40% over the last six months and almost 200% year-to-date.
Bitcoin was another standout, pushing to new all-time highs and approaching the $100,000 mark. However, recent headlines, such as the sale of a banana duct-taped to a wall for $6.2 million at Sotheby’s, have sparked some concerns about potential “irrational exuberance” in markets. While Bitcoin’s rise highlights investor enthusiasm, it is essential to stay grounded and stay focused on long-term goals and ensure portfolios remain aligned with their risk tolerance.
Looking Ahead, this week is a shortened trading week due to Thanksgiving on Thursday and an early market close on Friday. Key events to watch include the Federal Reserve's comments on Tuesday and Wednesday’s release of the latest update on the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index. Current expectations are for PCE to show 2.3% year-over-year growth, while the core measure (excluding food and energy) is projected at 2.8%.
Closing out the year, as we head into its final month, there is much for investors to appreciate. Markets have rewarded patient, long-term investors in diversified portfolios, and the economy continues to surprise positively. Bullish trends remain in place as we look toward 2025.
That said, managing expectations is crucial. A recent 2024 Global Survey of Financial Advisors from Natixis Investment Managers revealed a significant gap between individual investors' return expectations—nearly 13% above inflation—and advisors' more tempered forecast of around 8%. For perspective, the inflation-adjusted return for the stock market over the last 50 years has averaged just under 8%. With valuations near historic highs, achieving even that level could be more challenging in the years ahead.
While individual investor sentiment has been bullish recently, corporate insiders—considered "smart money"—are notably bearish. In fact, their investing decisions in their own company stocks is the most bearish in decades. This is reflected in their elevated ratio of stock sales to purchases, a sentiment measure that historically offers valuable insights into future market movements. When corporate insiders are bearish, it often signals caution. This may be an opportunity to review portfolio allocations.
Bottom line, stay invested, stay diversified, and stay disciplined. If you have any questions or comments, please let us know at strategists@brinkercapital.com or at rusty@orion.com. Thank you for your time and trust. See you next week!