A rally in global financial markets is expected in the coming months of November and December, according to Nigel Green, deVere Group CEO and financial advisor. This optimistic outlook persists in the face of recent stock market corrections and somewhat subdued investor sentiment.
Historical data suggests that November is the second-best month for market performance, just behind April. With some markets currently undergoing corrections of more than 10%, the potential for a significant move higher in November becomes more apparent.
Green points out that over the past 72 years, there have been 34 instances of market declines, with only 12 of them turning into bear markets. In general, a rally tends to occur about 96 days after the start of a correction, and we are currently at the 90-day mark.
If historical patterns hold, there are signs that we could see a year-end rally, which could present an attractive opportunity for investors.
Green also expects the Federal Reserve to keep US interest rates steady next week. The central bank of the world's largest economy is likely to leave interest rates unchanged, which should have a positive impact on the equity markets.
In preparation for the possible emergence from correction territory, investors are advised to consider several prudent strategies. First and foremost, maintaining a well-diversified portfolio will help spread risk and reduce exposure to sector-specific fluctuations. Reevaluating investment objectives, risk tolerance and time horizon is essential to ensure alignment with financial goals.
Sectors that may prove attractive to investors during the market recovery include technology and renewable energy, given their historical resilience and growth potential during market downturns.
In addition, allocating funds to undervalued industries such as travel and leisure, which could benefit from a surge in pent-up consumer demand during an economic recovery, is a viable strategy.
Finally, keeping a watchful eye on the broader economic and geopolitical landscape is critical to making informed decisions, as global events can have a significant impact on market dynamics. Diversification, thorough research, and a strategic perspective are critical as markets move out of correction territory.
Green concludes, "We expect a rally to begin in late 2023. Consider reviewing your investment portfolio to take advantage of potential opportunities in what we expect to be a new phase."
