Monday, September 24, 2012

October Historical Sector Analysis


This month’s historical sector analysis for the upcoming month of October shows pretty good strength across the board for the market.  After removing the high and low returns for statistical analysis, the S&P 500 TR (SPY) has been able to achieve a positive mean return for the trailing 25, 20, 15 and 10 years in the month of October.  One clear standout is the technology sector.  The tech sector has achieved the highest mean return in October over the last 25, 20, 15 and 10 years.  With much anticipated initial sales numbers for the iPhone 5 expected in October, we could see this historical trend continue.

Any sector that was able to post a positive mean return for the trailing twenty-five year period is impressive.  The markets have experience two vicious downturns in the month of October and only one could be removed for analysis.  The first was the October crash of 1987 and the second was the credit crash of October 2008.  Real estate securities have really struggled in the month of October.  They have finished with a negative mean return in three of the four time periods examined, and next to last in the trailing ten year period.  One thing I have been discussing this year in my monthly newsletter is that we have been noticing a trend between the technology sector and consumer discretionary stocks.  Over the last twenty years you will notice as the technology sector has led the way, consumer discretionary stocks have been right near the top as one of the best sector performers.  I believe this illustrates the consumers desire to spend their discretionary income on technological advances.  We’ve all seen this trend.  How many times have we known someone that has trouble paying their bills, yet owns the latest smartphone or a mammoth sized new television?  We expect this trend to continue as we enter the holiday shopping season.

Oct
Consum Discr
Health Care
Energy
Financials
Consum Staples
Technology
1987
-27.44%
-23.43%
-24.81%
-18.53%
-22.56%
-23.77%
1988
1.07%
0.79%
0.68%
0.86%
4.65%
-3.08%
1989
-5.08%
-0.67%
-2.94%
-5.90%
-1.01%
-2.81%
1990
-1.25%
4.39%
-8.82%
-4.58%
2.37%
-1.31%
1991
2.26%
6.25%
2.27%
2.94%
0.03%
4.89%
1992
3.06%
2.32%
-2.13%
3.25%
1.08%
5.18%
1993
3.46%
4.36%
-0.86%
-2.51%
3.77%
-0.86%
1994
0.75%
0.00%
2.77%
-1.63%
1.88%
5.95%
1995
-2.05%
-0.15%
-5.71%
-1.49%
0.16%
-0.66%
1996
-0.19%
-3.95%
6.18%
5.02%
1.85%
-1.00%
1997
-1.97%
-3.13%
-3.37%
-1.07%
-2.26%
-8.94%
1998
10.45%
4.32%
3.79%
7.32%
10.56%
7.47%
1999
4.89%
3.97%
-4.92%
10.56%
3.18%
11.31%
2000
0.31%
-2.05%
-7.38%
0.17%
6.21%
-10.83%
2001
2.35%
4.42%
9.61%
-2.14%
1.37%
15.99%
2002
3.77%
4.55%
3.69%
6.52%
4.72%
16.52%
2003
7.37%
1.18%
3.41%
7.25%
4.25%
10.34%
2004
3.27%
-1.87%
-0.19%
1.46%
1.24%
5.91%
2005
-1.22%
-2.39%
-8.06%
1.06%
-2.50%
-2.06%
2006
5.79%
2.72%
4.75%
2.46%
2.15%
2.68%
2007
1.06%
2.84%
6.20%
0.53%
2.93%
6.08%
2008
-20.46%
-14.44%
-22.09%
-16.86%
-15.54%
-18.21%
2009
-3.46%
-4.81%
-1.43%
-4.92%
0.09%
-3.44%
2010
5.07%
2.08%
4.45%
2.30%
3.87%
5.78%
2011
12.13%
6.42%
16.45%
12.49%
6.94%
12.36%
# Of Up Years
16
15
12
15
20
13
Mean
0.84%
0.47%
-0.87%
0.46%
1.37%
1.77%
Standard Deviation
5.87
4.50
6.80
5.63
4.42
7.95
Trailing 10yr Mean
2.71%
0.54%
1.60%
2.08%
2.09%
4.71%
Trailing 15 yr Mean
2.90%
0.91%
0.81%
2.42%
2.48%
4.05%
Trailing 20 Yr Mean
2.37%
0.80%
0.60%
1.90%
2.27%
3.40%
Oct
Telecom
Nat Resources
Real Estate
Utilities
Industrials
S&P 500
1987
-13.44%
-25.51%
-4.36%
-8.70%
-29.28%
-21.54%
1988
2.00%
1.46%
0.81%
2.30%
0.84%
2.78%
1989
-3.15%
-3.45%
-1.62%
0.23%
-6.63%
-2.32%
1990
0.77%
-6.27%
-1.03%
4.80%
-0.07%
-0.43%
1991
4.33%
2.31%
-0.81%
1.12%
4.11%
1.34%
1992
1.53%
-2.06%
0.67%
-0.48%
2.07%
0.06%
1993
3.35%
1.09%
-0.40%
-0.28%
3.80%
2.07%
1994
2.33%
0.55%
-3.45%
0.88%
1.52%
0.94%
1995
-2.54%
-4.94%
-2.76%
0.62%
-1.55%
-0.36%
1996
-1.28%
4.45%
2.40%
3.41%
0.93%
2.76%
1997
-3.94%
-5.20%
-2.67%
-0.95%
-5.82%
-3.34%
1998
7.79%
3.23%
-1.80%
2.21%
9.53%
8.13%
1999
11.99%
-4.21%
-2.26%
5.20%
2.18%
6.33%
2000
-4.96%
-5.10%
-4.38%
-2.35%
6.12%
-0.42%
2001
0.04%
6.57%
-3.09%
-0.77%
4.23%
1.91%
2002
17.68%
2.06%
-4.18%
4.57%
2.44%
8.80%
2003
8.28%
4.17%
1.86%
2.59%
8.46%
5.66%
2004
6.05%
0.52%
4.97%
4.08%
3.22%
1.53%
2005
-2.89%
-7.42%
-2.30%
-5.53%
-0.89%
-1.67%
2006
4.84%
4.74%
5.73%
5.08%
4.45%
3.26%
2007
1.95%
6.35%
1.82%
6.23%
1.92%
1.59%
2008
-21.21%
-22.77%
-29.72%
-13.33%
-18.02%
-16.79%
2009
-5.97%
-0.56%
-4.28%
-3.50%
-5.96%
-1.86%
2010
2.98%
4.74%
4.16%
2.95%
4.93%
3.80%
2011
6.54%
16.97%
13.71%
6.14%
15.44%
10.93%
# Of Up Years
16
14
9
16
17
16
Mean
1.16%
-0.86%
-0.74%
1.03%
0.95%
1.03%
Standard Deviation
5.57
6.39
3.05
3.65
5.83
5.01
Trailing 10yr Mean
2.72%
1.83%
0.97%
2.05%
2.32%
2.64%
Trailing 15 yr Mean
2.52%
0.77%
-0.49%
1.52%
2.68%
2.59%
Trailing 20 Yr Mean
2.01%
0.50%
-0.55%
1.33%
2.31%
2.18%

 

Trailing period performance:

25 Year
20 Year
15 Year
10 Year
1
Technology
Technology
Technology
Technology
2
Consum Staples
Consum Discret
Consum Discret
Telecom
3
Telecom
Industrials
Industrials
Consum Discret
4
Utilities
Consum Staples
S&P 500 Index TR
S&P 500 Index TR
5
S&P 500 Index TR
S&P 500 Index TR
Telecom
Industrials
6
Industrials
Telecom
Consum Staples
Consum Staples
7
Consum Discret
Financials
Financials
Financials
8
Health Care
Utilities
Utilities
Utilities
9
Financials
Health Care
Health Care
Natural Resources
10
Real Estate
Energy
Energy
Energy
11
Natural Resources
Natural Resources
Natural Resources
Real Estate
12
Energy
Real Estate
Real Estate
Health Care

 

ETF ideas for each sector:

Consumer Discretionary Select Sector SPDR (XLY)

Vanguard Health Care ETF (VHT)

Financial Select Sector SPDR (XLF)

Technology Select Sector SPDR (XLK)

SPDR S&P Telecom (XTL)

iShares Cohen & Steers Realty Majors (ICF)

Consumer Staples Select Sector SPDR (XLP)

Energy Select Sector SPDR (XLE)

Utilities Select Sector SPDR (XLU)

SPDR S&P Global Nat Resources (GNR)

Industrial Select Sector SPDR (XLI)

S&P 500 Index (SPY)