The month of August is sometimes referred to as the “Dog Days of Summer”. Speaking of dogs, let’s look at transportation stocks during the month of August.
The Test
For our purposes we will look at the monthly total return for Fidelity Select Transports (ticker FSRFX) ONLY during the month of August every year since FSRFX started trading (in October of 1986).
The Results
Figure 1 displays the cumulative growth (decline?) of $1,000 invested in FSRFX only during the month of August for the years 1987 through 2017.
Figure 1 – Growth of $1,000 invested in Fidelity Select Transports (FSRFX) only during the month of August; 1987-2017
A couple of things to note:
*On one hand the cumulative result is a decline of -44%
*On the other hand, it is not like transports decline every year during August
Some numbers:
*FSRFX was UP in August 14 times (45% of the time)
*FSRFX was DOWN in August 17 times (55% of the time)
*The Average UP August showed a gain of +2.5%
*The Average DOWN August showed a loss of (-5.1%)
*FSRFX gained more than 5% during August two times:
2009 +7.3%
1989 +6.5%
*FSRFX lost more than 5% during August six times:
1999 (-6.2%)
2015 (-6.3%)
2011 (-6.7%)
2010 (-7.3%)
1990 (-14.7%)
1998 (-17.6%)
In a nutshell, when transports are “good” in August they are “OK”. When transports are “bad” in August they are “very bad”. To get a sense of this, see Figure 2.
Figure 2 – August Total % Return for FSRFX during the month of August; 1987-2017
Summary
Does any of this mean that transports are certain to head lower in the month ahead? Not at all. Remember in 2009 transports soared over 7% in the month of August. No reason that can’t happen again.
Still, if you are thinking that now is exactly the right moment to pile heavily into transportation stocks then, well, history suggests otherwise.
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.
