In this article I wrote the fact that real estate stocks are soon to enter an “unfavorable” seasonal period. While you’re at it, you might want to keep a close eye on transportation stocks.
Let’s take a closer look.
Favorable Period
We are going to paint with the broadest stroke possible and aver that the “seasonally” favorable period for transportation stocks is any month NOT named August or September.
Figure 1 below displays the growth of $1,000 invested in ticker FSRFX (Fidelity Select Transportation) during ALL months EXCEPT August and September starting in 1987, as well as the growth of $1,000 invested in FSRFX on a buy-and-hold basis. 
Figure 1 – Growth of $1,000 invested in ticker FSRFX during all months other than August and September (blue) versus Buy-and-Hold (red); 12/31/1986- 6/30/2019
Unfavorable Period
Figure 2 below displays the growth of $1,000 invested in ticker FSRFX (Fidelity Select Transportation) only during the months of August and September since 1987.
Figure 2 – Growth of $1,000 invested in ticker FSRFX ONLY during August and September; 12/31/1986- 6/30/2019
Here is something important to note: Despite the fact that the August/September period has seen FSRFX lose -59%, the period has showed a gain slightly more often than a loss. The problem is that when it loses, it tends to lose big. To wit:
Aug/Sept in FSRFX
# times UP = 18 (56%)
# times DOWN = 14 (44%)
Average % gain = +3.3%
Average % loss = (-9.9%)
Figure 3 displays the annual August/September cumulative % +(-) since 1987.
Figure 3 – FSRFX August/September Cumulative Annual % +(-)
Figure 4 displays some more comparative data.
Figure 4 – All Month (other than Aug/Sep) versus Aug/Sep and Buy-and-Hold; 1987-2018
Summary
So, the takeaway is pretty simple. The takeaway is NOT that transport stocks are doomed to decline in August/September of 2019. The takeaway IS that if trouble starts to unfold in the transports in the days and weeks ahead, “sitting and taking it” is probably not the proper response.
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.
