The all-out bleeding ceased in November. Yes, it was still a painful month for some asset clases, but November offered a break from the across-the-board losses that humbled September and October. Bonds made all the difference.
With the exception of high yield debt, bonds generally staged a comeback in November, providing some respite from dramatic declines otherwise still in force. U.S. bonds led the bounce, with the Lehman US Aggregate Bond Index rising a robust 3.3% last month, as our table below shows. Foreign government bonds in developed markets were a close second, advancing 3.2%. Even the battered world of emerging market debt rallied, tacking on 1.7% in November. TIPS and of course cash were in the black as well.

Everything else, however, continued to suffer. REITs were especially hard hit–again–in November, crumbling by nearly 25%. That follows the even bigger loss in October, when REITs dropped more than 32%. Since the summer, REITs have been nearly cut in half.
Striking as the REIT losses are, they’re hardly out of character. As the chart above reminds, double digit losses have been the norm in the recent past. Nor is it obvious that the correction is over. The market will continue discounting the possibility of future economic and financial problems until investors are convinced they have a veneer of visibility about what’s coming. For the moment, confidence about anything is in short supply, and so sellers still have the upper hand.
But let’s be grateful for small miracles. The fact that November provided some relief, temporary thought it may be, from the onslaught of complete loss suggests that maybe, perhaps, the all-out carnage may be past. Valuations generally are somewhat attractive and so long-term investors are starting to consider the opportunity for the future rather than obsessing over the losses from the past.
Nonetheless, there’s still likely to be plenty of volatility in the future, along with some knuckle-gripping declines in asset classes. Confidence is shattered and the crowd is still sizing up the depth of the recession that’s only just begun. But for the moment, a small milestone arrived last month when some of the red ink was banished from the scorecard. Some might call that progress.