There are no “sure things” in the financial markets. But there sure are “things”. Two of those “things” are:
1. With the exception of the Nasdaq Index, and for whatever reason, the month of June is often (though not always) unkind to the stock market.
2. Certain sectors have shown a definite tendency to under perform during the sixth month of the year.
So when it comes to investing during the month of June, consider this as the “How Not To” lesson.
Five Sectors to Avoid during June
Figure 1 displays the results generated by investing in 5 Fidelity Select Sector funds ONLY during the month of June each year since fund inception.
Figure 1 – 5 Funds to Avoid in June
It is important to note that it is not like any of these funds are “guaranteed” to decline in value simply because it happens to be the month of June. But the long-term results argue strongly in terms of steering clear.
Figure 2 displays the annual June results achieved by trading all of the funds listed in Figure 1.
Figure 2 – June %+(-) for all 5 funds combined
Figure 3 displays the cumulative growth of $1,000 invested in these funds ONLY during the month of June every year.
Figure 3 – Growth of $1,000 invested in 5 Sector funds from Figure 1 ONLY during the month of July
Summary
How will the funds listed in Figure 1 perform in the month ahead? The truth is that there is no way to know in advance. Remember that in 1999 these 5 funds combined roared ahead +9.9% during the month of June, so like I said at the outset, there are no “sure things”. Also, given that 8 of the last 10 June’s have seen this combined Gang of 5 decline it might be argued that they are “due” for an “Up June.”
Still, the real question is this: based on the results displayed in Figures 1 through 3, does it make sense to find out with real money on the line?
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.
