Back in February, the Dow Jones Industrial Average crossed and maintained the psychological 20,000 level milestone. In November the index broke 24,000 and shows no sign of slowing. The Dow ended November with a gain of 3.2%, an eighth consecutive monthly gain – the longest streak in more than 20 years. The S&P 500 rose 2.6%, another 8-month streak, the longest since 2007. The Nasdaq added 2.4% in November, a fifth monthly rise, and the Russell 2000 posted a 3.2% gain. The markets’ rise is attributed to economic expansion, positive corporate earnings, and optimism for tax reform.

Real Estate was the best-performing sector for the month, rising 4.3%. It was followed by Consumer Discretionary, up 4%, and Consumer Staples’ 3.2% gain. Financials were the worst-performing sector, falling -2.2%, followed by Industrials and Materials, which both lost about 1%. For the year, Technology still leads all sectors, with a more than 30% rise. Technology suffered a large loss on the second to last trading day, with the FANG (Facebook, Amazon, Netflix, Google) index losing 3.7%. That decline equated to a $60 billion loss – the largest single daily loss recorded. Energy remains the only sector in the red for the year to date, having lost close to -10% this year.

During November Treasury yields crept up to 2.428% during the least turbulent month in nearly 40 years. Bank stocks benefit from a rise in yields, which increases lending profitability. Early in the month, the Federal Open Market Committee concluded its two-day policy meeting, voting unanimously to hold its benchmark federal funds rate between 1.00% and 1.25% and to continue the process of balance sheet normalization. The Fed delivered a positive, yet cautious view of the economy that casts a bit of doubt on another interest rate hike in December.

West Texas Intermediate for January rose over 5% for the month, as OPEC members agreed in principle to keep production cuts in place through the end of next year. Oil has risen more than 17% since producers met back in May.

Yet again, economic indicators showed mostly positive monthly results. The Chicago PMI fell from 66.2 in October to 63.9 in November, showing a slight decrease in private sector activity. However, any reading above 50 indicates improving conditions. The Consumer Confidence Index rose to 129.5, the highest mark since the index hit 132.6 in November 2000. This was a 5th consecutive monthly gain, and a 17-year high. GDP grew at a 3.3% annualized rate in the 3rd quarter, the fastest in three years. Consumer spending rose 0.3% in October, slightly above the 0.2% forecast. Incomes grew 0.4% for a second month, jobless claims were less than

anticipated, and unemployment remained near 45-year lows. The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1% in October on a seasonally adjusted basis. Over the last 12 months, the all-items index rose 2.0 percent.

As we enter the final month of the year, it seems that nothing can derail the markets. The economy appears healthy and geopolitical concerns seem to have little impact on the market’s momentum. Tax reform seems attainable. But investors should be wary as it has been over 500 days since the last 5% sell-off, and the last correction of 10% was nearly two years ago. The VIX has been well below its average, and recently reached its lowest reading in existence. Investors are unlikely to complain, given the market’s nearly 20% rise this year. However, low volatility can create complacency that can cause investors to over-react when a downturn occurs. As a result, it is prudent to re-evaluate risk and reasonable market expectations for the new year.