A well-known old adage states that “Every Dog Has It’s Day”. The much lesser known stock market corollary is “Every Sector has it’s Month (or two, or three, or sometimes more)”. Take February for example.
(See also When to Buy Energy Stocks)
Sectors for February
Before I blurt out my favorite sectors for February let’s add a dose of reality. Here is what you need to know:
*These sectors (using Fidelity Select Sector funds as proxy’s) have performed well during the month of February over time (Hint: that’s the Good News)
*At the same time, no one should make the false assumption that any or all of them are destined to perform well THIS February (2019)
*There have been some serious “clunker” months of February along the way
The thought is captured nicely in:
Jay’s Trading Maxim #177: Investing is about playing the odds and managing risk, NOT about finding “sure things” (although sure things would be nice).
The “Feb Four” are:
FSCHX – Chemicals (ETF alternative ticker XLB)
FSELX – Electronics (ETF alternative – ticker SMH)
FSESX – Energy Services (ETF alternative – ticker OIH)
FSRPX – Retailing (ETF alternative – ticker XLY)
The Results
The following results assume one bought all four Fidelity sector funds and held during February each year starting in 1986 (when all four funds were first available). Figure 1 displays the cumulative % growth for the “Feb Four” versus the cumulative % growth for the S&P 500 Index during the month of February during the same time. The results use monthly total return data from the PEP database from Callan Associates.
Figure 1 – % cumulative growth for “Feb Four” versus cumulative % growth for the S&P 500 Index (Data source: monthly total return data from PEP database from Callan Associates)
Please note in Figure 1 that the blue line is not a straight line advance and that from year-to-year
Figure 2 displays a few comparative “facts and figures”
Figure 2 – Comparative results for “Feb Four” versus S&P 500 Index during February; 1986-2018 (Data source: monthly total return data from PEP database from Callan Associates)
Summary
So, is the “Feb Four” fabulous? And are they sure to turn in a sizzling performance in February 2019? Uh, the answers are “occasionally” and “not at all.” Remember the four sectors combined lost -7.9% in the month of February 2001 and lost -5.6% in February 2018.
As always, I don’t make “recommendations”. Still, for an investor looking for a possible “edge” the material above may be food for thought.
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.
