HPWG Podcast November 2026: Navigating October's Market Volatility

JENNA: 

Welcome to the November edition of the Hoffman Private Wealth Group Podcast. I am Jenna Makras, Wealth Advisor with Hoffman Private Wealth Group, and I’m joined by Todd Hoffman, our Founding Partner and Portfolio Manager. 

TODD: 

Before we get into the markets, congratulations to the Milwaukee Brewers on winning the World Series over our local Tampa Bay Rays. It was an exciting series and a tremendous run by the Rays. It was great to see Tampa Bay back on baseball’s biggest stage, even though the series did not end the way local fans had hoped. 

JENNA: 

It certainly was an exciting series. Now, turning to the markets, can you start with a quick recap of October? 

TODD: 

Absolutely. October was constructive overall, but there was meaningful volatility beneath the surface. Based on FactSet market data through the October 28 close, the S&P 500 and Nasdaq composite are up around 12%, and the Dow is up around 8%.  

According to U.S. Treasury market data, yields remained elevated throughout October. The 10-year Treasury yield was approximately 5.24% on October 1 and finished October 28 at 5.05%. The Federal Reserve held the federal funds target range steady at 3.75% to 4.00% at this week’s Fed meeting after increasing rates in September. My takeaway is that October was a give and take month around inflation and geopolitical news in front of a Fed Meeting and the Mid Term elections. Earnings reports so far this quarter have been widely favorable but any company reporting short of blowout earnings and jump up and down forward guidance has been punished, even when they have good earnings and beat expectations. It is my opinion this is a sign of market fatigue caused by the prolonged war in Iran and Ukraine, the related high Energy cost and concerns about the upcoming Midterm elections.  Further, since I believe this is not caused by significant weakness in the Economy, I expect as we get through the midterm elections and possibly make progress with the War in Iran and with their Proxies we should see the market rebound, but we will dig deeper into these points throughout this Podcast. 

JENNA: 

Before we turn to the Federal Reserve’s October decision, the midterm elections are right around the corner. What should investors be watching out for regarding the election? 

TODD: 

Many clients have expressed concern about what the election could mean for the market, usually these concerns are based on which party they prefer to control Congress. At this point, several of the most important races are too close to call and I don’t think the polls, and certainly not me, can call the winners. I can tell you what I believe the market impact is likely to be, regardless of which party ultimately controls Congress. 

History suggests investors should be careful about allowing those political preferences to drive portfolio decisions. Under the congressional outcomes shown, the historical average 12-month returns were positive, whether control was Democratic, Republican, or divided. MFS provided us with two slides that offer useful historical perspective on election outcomes and the past impact on the markets. 

[MFS SLIDE 1: Historical returns by presidential party and congressional control] 

The first MFS slide, based on Morningstar and FactSet data, shows the S&P 500’s average return during the 12 months following elections since 1933, organized by both the president’s party and the balance of power in Congress. The important point is that the market has historically produced positive average returns under both a Democratic president and under a Republican president, whether Congress was controlled by Democrats, or controlled by Republicans, or divided between the two parties. 

With a Republican president, like we have today, the historical averages were positive in all three congressional outcomes. When Democrats controlled Congress, the average 12-month return following the election was 8.6%. With a divided Congress, the average return was 13.6% and when Republicans controlled Congress, the average return was 13.7%. Based on this, investors should be careful not to make assumptions about the market based on election control of the house outcome. 

[MFS SLIDE 2: S&P 500 12-month returns following midterm elections] 

The second MFS slide, also based on Morningstar and FactSet data, looks at the individual 12-month total returns following midterm elections since 1938.  What this slide shows is the market has produced a positive return in 21 of the 22 periods following the midterm elections with an average return of 19.4%. Past performance does not guarantee future results, but history suggests that the market has generally moved higher after midterm elections despite who wins control over congress. 

My view is that the election could create short-term volatility; however, longer term, corporate earnings, inflation, Federal Reserve policy, and economic growth matter more and my job is to evaluate the policy changes that occur, rather than repositioning portfolios based on political predictions. 

JENNA: 

So, you’re saying, don’t let election result override a disciplined investment plan? 

TODD: 

Exactly. We will monitor the markets and continue to focus on fundamentals, diversification, valuation, and risk management. The goal is not to invest based on politics. It is to understand the investment consequences of policy while keeping clients focused on their long-term objectives. 

JENNA: 

With that in mind, let’s turn to the Federal Reserve. The Fed raised rates in September and then held them steady in October. How are you thinking about the path from here? 

TODD: 

Rates were raised by 25 basis points in September, and the Federal Reserve held the federal funds target range at 3.75% to 4.00% at this week’s October meeting. The Fed described economic activity as expanding at a strong pace, with resilient domestic spending, strong productivity growth, robust capital investment, and inflation that remains elevated. I would add that we are not seeing pressure from Unemployment, or increased Wage Pressure in the last quarter.   

JENNA: 

What should investors watch before the Fed’s December meeting? 

TODD: 

Based on futures markets, the market is now expecting a 25-basis-point increase at the December meeting and likely another 25-basis-point increase during the first quarter of 2027. I agree with this forecast based on the information we have today, but it is subject to change based on what happens with Iran and the price of oil. Further, we should treat this rate path as a current forecast, not a certainty. 

JENNA: 

How has that affected the bond market? 

TODD: 

Based on U.S. Treasury data, Treasury yields remain attractive, but the curve has moved higher and steepened. At the October 28 close, the 2-year Treasury yield was approximately 4.67%, the 10-year was about 5.05%, and the 30-year was roughly 5.37%. 

I believe we are getting close to having meaningful income opportunities. It also means investors need to be selective, as we have about duration. We continue to favor short and intermediate maturities.  

JENNA: 

The economy has remained resilient. Is that good news for stocks, or does it create a problem because rates may stay go higher? 

TODD: 

It is both. Strong growth supports corporate earnings and reduces near-term recession risk. At the same time, strong demand and heavy capital spending can keep inflation and long-term yields elevated. 

That is why the market has become more selective. Investors are rewarding companies that can turn spending into earnings and free cash flow. They are less forgiving when valuations are high and the path to returns is unclear, or further down the road.  

JENNA: 

So, the broad markets have been far less volatile than individual stocks, I know most of the Defense related stocks are trading near lows for the year, Industrials, Utilities and Technology stocks have also been under pressure and in particularly anything AI Stocks seems like it has been the most volatile the second half of the year, through now, can you comment on this?  

TODD: 

Sure, but I think you must separate what the indexes are telling you from what is actually happening underneath the surface. 

Technology and Energy have been two of the strongest areas of the market this year, but for completely different reasons. Technology had such an extraordinary run earlier in the year that even after the recent correction, it can still look strong on a year-to-date basis. Energy, meanwhile, has benefited from geopolitical concerns surrounding Iran and the potential impact on the global energy markets. 

Put those two together, and I think they can make the overall market look healthier than a lot of the individual stocks feel. There has been considerably more volatility and pressure underneath the surface. 

Defense is a good example. I believe some of the weakness there reflects concerns that Congress may have difficulty agreeing on future spending. Industrials have also been affected by worries surrounding Defense and Technology and whether future orders will ultimately live up to expectations. 

And frankly, this is where I disagree with some of the market’s thinking. 

I believe concerns about a meaningful slowdown in future demand for Defense and AI are misguided. 

The world isn’t becoming less dependent on technology, computing power, data centers or AI. And looking at the geopolitical environment, I certainly don’t believe the long-term need for defense investment is going away either. 

Markets tend to take a legitimate short-term concern and extrapolate it too far into the future. And when that happens to high-quality companies whose long-term fundamentals remain intact, that’s when we start getting interested. 

Could these areas go lower before they go higher? Absolutely. But if the long-term demand remains intact, I would rather be evaluating quality companies when investors are worried about them than chasing those same companies after the concerns have disappeared and the stocks have already recovered. 

I have been using this example of why I think concerns of overbuilding AI are nonsense. I like to compare it to the evolution of the mobile phone. Nobody was sitting around before the iPhone saying they needed texting, a high-quality camera, email, maps, and the internet in their pocket. Technology arrived, people discovered what they could do with it, and before long it became indispensable. I was recently in NYC, and I had a few 20-minute subway rides, and I remember looking around and being genuinely astonished by the sheer number of iPhones and iPads and how completely absorbed everyone was using them. I imagined how it should be turned into a movie scene. 

I think AI will follow a similar path, and the biggest applications may not even be obvious yet, but as technology improves and people discover more ways to incorporate it into their businesses and everyday lives, I believe it will become essential. Further, the companies that can provide the hardware and software infrastructure are going to do very well and the current gyrations are nothing more than growing pains in an immature and very cost-intensive industry.

JENNA: 

Because of the volatility, have you become more cautious about AI spending? 

TODD: 

We’ve reduced some positions and added new holdings outside of AI, so we are continuing to diversify. But make no mistake, we remain very constructive on AI and technology in general. 

Recent earnings reports have only reinforced our belief in the long-term AI opportunity. And frankly, I think the recent pullback is exactly the kind of environment where long-term investors should be looking to lean in, not back away. 

I understand that’s easier said than done. Having a disciplined investment process is hardest when the market is making you uncomfortable. But historically, substantial wealth isn’t created by buying great companies when everyone feels good and prices are at their highs. It’s created by having the discipline to buy quality growth companies when they’re on sale. 

Buying at the top feels easy. Buying during a pullback feels hard. But very often, doing what feels hard is exactly where the opportunity is. 

JENNA: 

What are you seeing with the consumer? 

TODD: 

The consumer picture remains divided. Overall domestic spending has been resilient, which the Fed highlighted in October. But higher energy, housing, insurance, and borrowing costs do not affect every household equally. 

Higher-income consumers generally have more support from employment, financial assets, and home equity. More price-sensitive households have less room to absorb higher recurring costs. That means we continue to be selective in consumer discretionary companies and focus on balance-sheet strength, margins, and the durability of demand. 

JENNA: 

How are you positioning portfolios into year-end? 

TODD: 

We are maintaining exposure to the strongest long-term themes while managing concentration and downside risk. We have trimmed selected positions after large gains, raised cash selectively, and exited companies when fundamentals or price action no longer supported the original thesis. 

We continue to diversify across market capitalizations, sectors, and international markets. In fixed income, we favor income and active duration management. We have also been using hedging strategies to help mitigate downside exposure. 

The objective is not to predict every short-term move. It is to participate in durable earnings growth while having a plan if inflation, rates, energy, or geopolitical risks move against the market. 

JENNA: 

What would make you more cautious in November? 

TODD: 

I will become more cautious if inflation reaccelerates, long-term Treasury yields move materially higher, oil prices surge, earnings estimates weaken, or credit conditions tighten quickly.  

Those risks do not mean investors should abandon the market. They mean valuation, quality, diversification, and risk management matter more. 

JENNA: 

What is the constructive case for the final two months of the year? 

TODD: 

The constructive case is that economic growth remains solid, corporate earnings continue to broaden, inflation gradually improves, and the Fed can remain patient. Strong productivity and business investment could allow the economy to grow without creating the same degree of inflation pressure over time. 

Also, if there is improvement in Iran and their proxies, I believe this would create a huge pop in the markets. I think this prolonged confrontation pulls the markets down more everyday like compressing a spring and if, or when we see a resolution the snap back will be swift and investors not already in the markets, and in the right areas will miss it.   

JENNA: 

What is the main message you want clients to take away this month? 

TODD: 

The market remains constructive, but complicated. Growth is strong, earnings remain supportive, and investing today is creating real long-term opportunities. At the same time, inflation remains elevated, Treasury yields are high, energy prices matter, and geopolitical uncertainty has not gone away. 

Our job is to identify businesses producing durable earnings and cash flow, manage concentration and interest-rate risk, and help clients avoid being whipsawed by short-term headlines. We take that responsibility very seriously. 

As we approach year-end, our team will be reaching out to clients who have not yet completed their IRA required minimum distributions. Clients should also maximize their retirement contributions and now is a good time to look at Roth conversions.  If you are interested in exploring if this makes sense for you, call us and we will run the numbers. We will also proactively be reviewing portfolios for year-end tax-loss harvesting opportunities.  

JENNA: 

Thank you for listening to the November edition of the Hoffman Private Wealth Group Podcast. If you found this conversation helpful, please consider forwarding the podcast to a friend, colleague, or family member who may benefit from a thoughtful, research-driven perspective on today’s markets. We are continuing to welcome new clients, and we are always grateful when our clients and friends introduce us to someone we may be able to help. If you have questions about your required minimum distribution, Roth Conversions, Contributions, or year-end tax planning, or anything else we discussed today, please reach out to our team. Thank you! 

TODD: 

We wish you and your families a Happy and Safe Thanksgiving! Bye for now. See you next month.