Is the Santa Clause rally for real? Based on my sector and S&P 500 TR analysis
over the last twenty-five months of December the data suggests that it is
indeed for real. Over the last
twenty-five months of December the S&P 500 TR has finished in positive
territory twenty-two times. After
removing the high and low returns for statistical analysis the S&P 500 TR
has achieved a mean return of +2.31%.
The S&P 500 TR has provided a fairly consistent return over the last
twenty, fifteen and ten months of December as well. Again after removing the high and low returns
for these time periods, the mean return for the S&P 500 TR has been +1.78%,
+2.16% and +1.67%.
Performance and
Consistency
Three sectors have historically stood out in the month of December. These sectors have provided both consistency
and performance. The sectors are Real
Estate, Health Care and Telecom. All
three sectors have finished as a top three mean performer over the last
twenty-five, twenty, fifteen and ten months of December.
The Utility sector has been extremely efficient in the month
of December. The average utilities fund
has finished in positive territory twenty-four times over the last twenty-five
years in the month of December. The only
down year was a very small average loss of .08%. Though the total return and mean return of
utilities has not been as robust as the previously mentioned sectors, which
makes sense based on the sectors lower standard deviation, the historical
performance was worth noting.
Every sector I research and the S&P 500 have enjoyed the
month of December over the last twenty-five years. Unlike most months, not a
single sector experienced a negative mean return for the time periods
examined. Hopefully you can find
something useful in the data that you can apply to your own investment
strategy. Based on historical performance
for the month of November I allocated the AFL Cyclical Sector Folio I manage
evenly between the following sector ETFs:
Consumer Discretionary Select Spider ETF (XLY)
Industrial Select Sector Spider (XLI)
Technology Select Sector Spider (XLK)
SPDR S&P Telecom (XTL)
So far so good for the month of November. My AFL Cyclical Sector Portfolio is up .95%
as of the close on November 26th, while the S&P 500 TR is down
.18%. I will have the final monthly data
posted in early December when we examine how all of the sectors stood up to
their twenty-five year historical performance track record.
|
December
|
Cons Disc
|
Health Care
|
Energy
|
Financials
|
Cons Staples
|
Technology
|
|
1987
|
11.05%
|
8.89%
|
6.95%
|
4.73%
|
2.18%
|
14.85%
|
|
1988
|
3.39%
|
2.01%
|
3.35%
|
0.24%
|
2.56%
|
6.25%
|
|
1989
|
-0.31%
|
1.34%
|
8.06%
|
-2.05%
|
2.28%
|
1.16%
|
|
1990
|
5.08%
|
2.96%
|
-4.03%
|
6.63%
|
4.67%
|
4.87%
|
|
1991
|
11.10%
|
15.58%
|
-2.83%
|
11.27%
|
11.68%
|
12.69%
|
|
1992
|
1.81%
|
0.90%
|
-1.07%
|
4.93%
|
1.69%
|
3.75%
|
|
1993
|
2.21%
|
4.59%
|
0.08%
|
3.07%
|
2.24%
|
4.76%
|
|
1994
|
0.59%
|
0.12%
|
-2.08%
|
0.88%
|
0.34%
|
1.91%
|
|
1995
|
-0.88%
|
6.33%
|
7.60%
|
1.36%
|
2.34%
|
-4.04%
|
|
1996
|
-2.18%
|
2.16%
|
0.73%
|
-1.06%
|
-0.18%
|
-1.74%
|
|
1997
|
2.20%
|
-0.18%
|
-1.12%
|
5.54%
|
2.70%
|
-2.91%
|
|
1998
|
8.90%
|
8.02%
|
-1.60%
|
3.01%
|
4.59%
|
15.91%
|
|
1999
|
7.37%
|
9.17%
|
5.31%
|
-2.33%
|
-0.31%
|
24.74%
|
|
2000
|
3.71%
|
5.21%
|
20.64%
|
10.72%
|
4.44%
|
-1.15%
|
|
2001
|
3.72%
|
-0.55%
|
7.38%
|
2.91%
|
1.57%
|
0.86%
|
|
2002
|
-6.36%
|
-4.17%
|
1.29%
|
-4.06%
|
-1.95%
|
-13.63%
|
|
2003
|
2.12%
|
4.26%
|
12.01%
|
4.40%
|
1.68%
|
0.29%
|
|
2004
|
5.18%
|
6.39%
|
-2.41%
|
3.88%
|
4.81%
|
3.47%
|
|
2005
|
0.06%
|
1.82%
|
3.24%
|
0.83%
|
0.36%
|
0.27%
|
|
2006
|
1.59%
|
0.06%
|
-4.05%
|
2.99%
|
2.37%
|
-0.99%
|
|
2007
|
-4.19%
|
-2.48%
|
7.36%
|
-3.61%
|
-1.21%
|
0.23%
|
|
2008
|
7.20%
|
6.92%
|
-3.61%
|
1.56%
|
2.00%
|
3.69%
|
|
2009
|
4.03%
|
3.70%
|
4.07%
|
1.04%
|
1.54%
|
6.74%
|
|
2010
|
3.63%
|
5.54%
|
8.15%
|
9.61%
|
4.92%
|
5.46%
|
|
2011
|
0.30%
|
1.94%
|
-2.29%
|
1.02%
|
1.02%
|
-2.51%
|
|
# Of Up Years
|
20
|
21
|
15
|
20
|
21
|
18
|
|
Mean
|
2.89%
|
3.44%
|
2.37%
|
2.62%
|
2.11%
|
3.21%
|
|
Standard Deviation
|
3.56
|
3.22
|
4.71
|
3.52
|
1.71
|
5.40
|
|
Trailing 10yr Mean
|
1.59%
|
2.65%
|
1.98%
|
1.51%
|
1.57%
|
1.24%
|
|
Trailing 15 yr Mean
|
2.84%
|
3.13%
|
2.91%
|
2.37%
|
1.97%
|
2.26%
|
|
Trailing 20 Yr Mean
|
2.14%
|
3.04%
|
2.39%
|
2.22%
|
1.78%
|
1.89%
|
|
December
|
Telecom
|
Nat Resources
|
Real Estate
|
Utilities
|
Industrials
|
S&P 500
|
|
1987
|
6.12%
|
7.73%
|
1.56%
|
0.87%
|
6.59%
|
7.61%
|
|
1988
|
2.49%
|
2.84%
|
0.55%
|
0.64%
|
2.85%
|
1.74%
|
|
1989
|
4.41%
|
4.85%
|
0.08%
|
3.94%
|
1.44%
|
2.40%
|
|
1990
|
4.17%
|
-0.76%
|
0.86%
|
1.39%
|
4.40%
|
2.79%
|
|
1991
|
9.54%
|
1.01%
|
8.19%
|
4.95%
|
9.68%
|
11.44%
|
|
1992
|
3.77%
|
0.83%
|
4.54%
|
2.75%
|
4.19%
|
1.23%
|
|
1993
|
3.22%
|
2.53%
|
3.03%
|
1.83%
|
3.63%
|
1.21%
|
|
1994
|
0.56%
|
-0.03%
|
8.45%
|
-0.08%
|
1.84%
|
1.48%
|
|
1995
|
2.06%
|
4.71%
|
6.66%
|
4.06%
|
-1.61%
|
1.93%
|
|
1996
|
-0.29%
|
0.45%
|
10.20%
|
0.82%
|
0.06%
|
-1.98%
|
|
1997
|
3.70%
|
-0.99%
|
2.60%
|
5.02%
|
0.63%
|
1.72%
|
|
1998
|
14.98%
|
-1.93%
|
-0.61%
|
5.65%
|
3.87%
|
5.76%
|
|
1999
|
14.49%
|
5.99%
|
4.03%
|
4.48%
|
6.01%
|
5.89%
|
|
2000
|
-2.64%
|
16.14%
|
6.48%
|
5.39%
|
5.90%
|
0.49%
|
|
2001
|
1.20%
|
5.95%
|
2.77%
|
2.18%
|
4.34%
|
0.88%
|
|
2002
|
-9.57%
|
3.09%
|
1.24%
|
0.65%
|
-2.52%
|
-5.87%
|
|
2003
|
5.21%
|
10.68%
|
3.34%
|
5.94%
|
5.19%
|
5.24%
|
|
2004
|
3.91%
|
-2.33%
|
5.37%
|
3.08%
|
2.65%
|
3.40%
|
|
2005
|
-0.10%
|
3.46%
|
0.90%
|
0.96%
|
1.61%
|
0.03%
|
|
2006
|
2.49%
|
-3.62%
|
-0.38%
|
1.23%
|
-0.21%
|
1.40%
|
|
2007
|
-1.80%
|
5.63%
|
-5.30%
|
0.60%
|
-2.45%
|
-0.69%
|
|
2008
|
4.16%
|
-1.46%
|
15.56%
|
0.02%
|
4.06%
|
1.06%
|
|
2009
|
4.24%
|
3.17%
|
6.56%
|
5.17%
|
5.11%
|
1.93%
|
|
2010
|
6.31%
|
9.35%
|
4.44%
|
4.35%
|
6.81%
|
6.68%
|
|
2011
|
-0.01%
|
-4.93%
|
4.38%
|
1.86%
|
-0.75%
|
1.02%
|
|
# Of Up Years
|
19
|
17
|
22
|
24
|
20
|
22
|
|
Mean
|
3.36%
|
2.66%
|
3.71%
|
2.69%
|
2.88%
|
2.31%
|
|
Standard Deviation
|
3.70
|
3.82
|
3.03
|
1.88
|
2.67
|
2.41
|
|
Trailing 10yr Mean
|
2.26%
|
2.16%
|
3.23%
|
2.24%
|
1.90%
|
1.67%
|
|
Trailing 15 yr Mean
|
3.17%
|
2.85%
|
3.16%
|
3.12%
|
2.77%
|
2.16%
|
|
Trailing 20 Yr Mean
|
2.80%
|
2.53%
|
4.11%
|
2.78%
|
2.45%
|
1.78%
|
|
Rank
|
25 Year
|
20 Year
|
15 Year
|
10 Year
|
||
|
1
|
Real Estate
|
Real Estate
|
Telecom
|
Real Estate
|
||
|
2
|
Health Care
|
Health Care
|
Real Estate
|
Health Care
|
||
|
3
|
Telecom
|
Telecom
|
Health Care
|
Telecom
|
||
|
4
|
Technology
|
Utilities
|
Utilities
|
Utilities
|
||
|
5
|
Cons Disc
|
Nat Resources
|
Energy
|
Nat Resources
|
||
|
6
|
Industrials
|
Industrials
|
Nat Resources
|
Energy
|
||
|
7
|
Utilities
|
Energy
|
Cons Disc
|
Industrials
|
||
|
8
|
Nat Resources
|
Financials
|
Industrials
|
S&P
500 TR
|
||
|
9
|
Financials
|
Cons Disc
|
Financials
|
Cons
Disc
|
||
|
10
|
Energy
|
Technology
|
Technology
|
Cons
Staples
|
||
|
11
|
S&P
500 TR
|
Cons
Staples
|
S&P
500 TR
|
Financials
|
||
|
12
|
Cons
Staples
|
S&P
500 TR
|
Cons
Staples
|
Technology
|
Jon R. Orcutt is the founder of Allocation For Life, Author of The Allocation For Life Investment Newsletter, Author of "Master The Markets With Mutual Funds: A Common Sense Guide To Investing Success" and manager/creator of the AFL Models available to Allocation For Life subscribers at Folio Investing.
www.allocationforlife.com
