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)