Since 1970 the FTSE All Share Index has risen in 59% of years in November, with an average return over the period of 0.3%. This gives it a rank of 6th place for monthly performance. From 1980 its relative performance had been steadily increasing, but that trend reversed in 2006 – as can be seen in the accompanying chart, the market has risen only twice in November in the last eight years.
Although the performance of the market in November is only average, the significant feature of November is that it marks the start of the strong six-month period of the year (November to April). In other words, having reduced exposure to equities in May (”Sell in May and go away…”) investors should now be increasing exposure to the market this month (if they haven’t already done so in October).
On average the market tends to rise the first three days of the month, then to give up those gains over the following few days, rise again, fall back, until finally increasing quite strongly over the final seven trading days of the month.
In the last twenty years the sectors that have been strong in November have been: Beverages, Electronic & Electrical Equipment, Fixed Line Telecommunications, Food Producers, Life Insurance, Media, Mining, Technology Hardware & Equipment and Travel & Leisure. While the weak sectors have been: Aerospace & Defense, Banks, General Industrials, Oil & Gas Producers and Real Estate Investment Trusts.
For companies, the following FTSE 350 shares have performed best in November over the last ten years: Greene King, Babcock International, Shire, and Compass; the shares of these companies have all risen in November for nine of the past ten years. The shares that don’t seem to like November are: Tullett Prebon, Lloyds Banking, and CSR. And this is a busy month for interim results: 62 companies from the FTSE 350 make their announcements this month.
Elsewhere, November has been a strong month for gold and weak for GBPUSD
Dates to watch for this month are: 5 Nov – MPC interest rate announcement, 6 Nov – US Nonfarm payroll report, and 26 Nov – Thanksgiving Day (US), NYSE closed. And, finally, a couple of anniversaries: on 14 Nov 2007 Tesco hit its all time high (since when it has fallen 65% – at the time of writing), and 12 Nov will be the 30th anniversary of the replacement of one pound notes with coins.
Article first appeared in Money Observer
Further articles on the market in November.