In this article I highlighted the potential benefit of focusing on biotech and real estate during a particular favorable seasonal period during June and July. Today we are going to extend the “summer fun” out a little longer.
(Be sure to see Three Timely Articles Worth Reading)
(See also Summer Leisure = Fun (and Dead Money))
The Extended Summer Fun Strategy
The rules are pretty simple:
*Hold biotech (FBIOX) and real estate (FRESX) – split 50/50 – from the close on June trading day number 17 through the close on July trading day #21
*Also hold biotech only (100%) from the close on August trading day #7 through the close on September trading day #9.
The results of this “strategy” (If one can call it that) appear in Figure 1.
Figure 1 – Growth of $1,000 invested in FBIOX and FRESX using Jay’s “Extended Summer Fun” Strategy
For the record:
| Measure | Result |
| # Years UP | 24 (86%) |
| # Years DOWN | 4 (14%) |
| Average All Years | +8.3% |
| Average UP Year | +10.1% |
| Average DOWN Year | (-2.5%) |
| Best UP Year | +22.7% (1999) |
| Worst DOWN Year | (-7.7%) (2002) |
Figure 2 – Summary Results
Year-by-Year Results Appear in Figure 3.
| Year | % +(-) |
| 1989 | 12.4 |
| 1990 | 7.9 |
| 1991 | 15.2 |
| 1992 | 7.4 |
| 1993 | 6.3 |
| 1994 | 7.4 |
| 1995 | 8.1 |
| 1996 | 0.4 |
| 1997 | 13.5 |
| 1998 | (0.8) |
| 1999 | 22.7 |
| 2000 | 7.6 |
| 2001 | (0.5) |
| 2002 | (7.7) |
| 2003 | 18.1 |
| 2004 | 9.9 |
| 2005 | 12.3 |
| 2006 | 7.8 |
| 2007 | 2.4 |
| 2008 | 0.3 |
| 2009 | 21.0 |
| 2010 | 1.8 |
| 2011 | 10.5 |
| 2012 | 13.5 |
| 2013 | 19.5 |
| 2014 | 9.9 |
| 2015 | (1.2) |
| 2016 | 7.6 |
Figure 3 – Year-by-Year Results
(See also A Really (Really) Long-Term Perspective on Interest Rates)
Summary
So is this “Summer Fun Strategy” really a strategy? That’s not for me to say. As always, the stuff I write about here is presented as “information” and not as a “recommendation”.
The competing factors are:
*The long-term results have been pretty consistently good (86% winners)
*However, there is never any guarantee “this time around” AND biotech and real estate can be extremely volatile sectors.
So DO NOT think of this as a “low risk” strategy.
Still, given that the overall stock market often does little during the summer months, we investors have to look for “fun” wherever we can find it.
Jay Kaeppel
Disclaimer: The data presented herein were obtained from various third-party sources. While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information. The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.
