It is pretty well established that the month of September can be – shall we say, “dicey” for stock market investors. In addition, just generally speaking, when and where one chooses to allocate one’s investment capital is one of the two most critical decisions most investors face (the other being when to cut a loss).
Putting these two thoughts together let’s look at some good places NOT to allocate capital to in the month of September.
See also The Post-Election/Year ‘7’ Bermuda Triangle
The Ugly Five
The following Fidelity Select sector funds have historically performed poorly overall – individually and in combination – during the month of September.
FSAIX – Select Airline
FSAVX – Select Auto
FSCHX – Select Chemicals
FSDPX – Select Industrial Materials
FSHOX – Select Housing
It should not be assumed that these sectors are doomed to decline and/or underlperform the S&P 500 each and every year during the month of September. The only point being made is that these have shown to be poor places to allocate capital during September. Figure 1 displays the summary for each.
Figure 1 – The Ugly Five for September
Note that each fund has been down more often than up during September and that each has a negative average and median monthly return during September.
Figure 2 displays the growth of $1,000 invested in these 5 funds only during the month of September versus $1,000 invested in ticker VFINX (an S&P 500 index fund). Notice that while the performance of the S&P 500 is subpar the performance of the Ugly Five is much worse.
Figure 2 – Growth of $1,000 invested in Ugly Five (blue) versus S&P 500 Index fund (red) ONLY during September (1987-2016)
For the record, the Ugly Five during September have:
*Been UP 13 times (42% of the time)
*Been Down 18 times (58% of the time)
*Average UP = +3.4%
*Average DOWN = -5.3%
*Cumulative = -44% (versus -17% for the S&P 500)
Summary
Will the Ugly Five show a combined net gain or loss during September 2017? It beats me. It also doesn’t really concern me one way or another – because the only thing I know for sure is that I won’t be invested there.
The primary point is NOT: These five sectors are doomed to decline in the month ahead.
The primary point to ponder is: Why bother investing there?
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.
