October was a disappointment for the UK stock market. The FTSE 100‘s down 0.21% over the last month, while the FTSE 250‘s fallen 2.04%.
I’m guessing this is a blip. It’s been a solid year for the FTSE 100 overall, which is up 6.45% so far. If we get a more upbeat November followed by the traditional Santa Rally, this could go down as a good year.
Investors will also get at least £78.6bn worth of dividends plus £49.9bn of share buybacks in 2024, and that’s just from the FTSE 100. This will lift the total cash yield to around 7.7%, with all growth on top, according to AJ Bell.
A good year for the FTSE 100 so far
Once again, this confirms my preference for shares over cash as they deliver a superior return over the long-term, albeit with more volatility along the way.
Quite a few portfolio holdings have had a rough ride in October. My favourite growth stock, JD Sports Fashion, is down 17.65%. Ultra-high yielding insurer Phoenix Group Holdings is down 11.48% while one of my biggest recent winners, Lloyds Banking Group, has slumped 8.18%. Diageo, GSK, M&G and Taylor Wimpey are all down around 5%.
My list of winners is threadbare by comparison, although at least Rolls-Royce grew another 5.64%. I’m still up more than 20% over the last 12 months, so who’s complaining?
I don’t hold supermarket chain Sainsbury’s (LSE: SBRY), so I dodged a bullet as it fell 10.67%. I think it looks like a bargain buy to consider as a result. The Sainsbury’s share price slumped on 11 October after its biggest shareholder, Qatar Investment Authority (QIA), placed 109m shares at 280p each, a discount of around 2.8% to its share price.
I don’t see that as a major concern. I’m sure QIA’s done pretty well out of Sainsbury’s. The stock’s up 40.61% over two years, although growth slowed to just 4.81% over one year.
The S&P often flies in November
The outlook’s brighter for Sainsbury’s as the cost-of-living crises eases and its food-first strategy pays off. This remains an intensely competitive market, of course. Also, Sainsbury’s has lost ground on Tesco, while Aldi and Lidl still menace.
But with an undemanding price-to-earnings ratio of 12.12 and tempting 4.89% trailing yield, I’d love to buy Sainsbury’s shares in November. I might have to sell something first though, because today I’m fully invested.
October’s dip doesn’t worry me. In fact, I think it sets us up nicely for November. It’ll be good to get the Budget and US presidential election out of the way.
I’ve no idea what impact those two events will have on stock market. As ever, there are too many variables. But the Bank of America points out that the S&P 500 climbed nearly 80% in the November-December period, with median returns of 4% and 4.27% respectively. It tends to fare even better in election years but, as ever, we’ll have to wait and see.
The bull market will come at some point. And when it does, I expect my short-term October losses will turn into gains, and the dividends will keep rolling in to make me even better off. Bring it on.
