Monday, January 28, 2013

February Historical Sector Analysis: Energy Shines


Over the last twenty-five years the month of February has been fairly mundane for our domestic equity markets.  Perhaps February has represented a cooling down period after such strong historical performance in the previous month of January.  After removing the high and low returns for statistical analysis we see that the S&P 500 Total Return has had an average mean return of +.35% over the last twenty-five months of February.  Shorten the range to view the last twenty years and the S&P 500 TR mean performance drops to -.22% and worsens for the fifteen year period to a negative mean performance of -.63%.  The mean return for the S&P 500 TR has moved into positive territory for February over the last ten years where the mean performance is +.45%.

The strongest and most consistent performance for the month of February can be found in energy stocks and the natural resources sector.  The fact that the two sectors enjoy similar performance is simply because many of the stocks that make up these two sectors are the same names.  Nevertheless, over the last twenty-five, twenty, fifteen and ten months of February these two sectors finished as the top two performing sectors.  After viewing each of these sectors average mean performance you will see no other sector has been close to matching the energy sector and natural resources sectors performance.

The health care sector has clearly struggled during the month of February over the last twenty-five years.  In fact, it has experienced a negative mean performance for every time period examined.  Again, this may have something to do with health care’s historical strong performance in the month of January, which usually coincides with the major biotech and healthcare conferences the market enjoys at the beginning of the month.

February
Cons Disc
Health Care
Energy
Financials
Cons Staples
Technology
1988
9.44%
3.88%
5.70%
2.88%
4.95%
8.14%
1989
-0.41%
-0.66%
-0.19%
0.12%
-1.81%
-2.24%
1990
1.35%
0.52%
4.14%
2.61%
1.43%
4.42%
1991
8.58%
9.67%
12.51%
9.90%
7.53%
6.38%
1992
3.82%
-3.01%
0.71%
4.38%
-0.56%
1.98%
1993
-2.30%
-11.72%
9.36%
2.51%
-0.26%
-3.44%
1994
0.69%
-2.86%
-2.37%
-2.71%
-0.60%
1.13%
1995
3.20%
2.59%
3.74%
5.51%
2.01%
5.48%
1996
4.49%
2.08%
2.71%
2.14%
3.06%
4.45%
1997
1.04%
-0.12%
-8.37%
3.88%
3.08%
-7.55%
1998
7.79%
5.39%
4.54%
7.69%
5.77%
11.13%
1999
-1.02%
-4.39%
-4.66%
-0.63%
-0.35%
-8.97%
2000
-4.29%
20.57%
3.39%
-8.20%
-8.01%
27.17%
2001
-3.57%
-3.40%
0.46%
-3.40%
-0.09%
-26.06%
2002
0.60%
-2.97%
3.40%
-0.19%
3.35%
-13.70%
2003
-2.81%
-2.40%
2.71%
-2.69%
-3.50%
0.45%
2004
3.42%
1.66%
5.63%
2.66%
4.86%
-1.75%
2005
0.39%
-0.78%
13.54%
0.03%
0.58%
0.36%
2006
0.55%
1.48%
-10.11%
1.35%
0.91%
-1.35%
2007
-1.88%
-1.88%
-0.07%
-2.01%
-1.64%
-0.52%
2008
-4.47%
-2.38%
8.40%
-7.54%
0.18%
-2.69%
2009
-6.32%
-10.19%
-9.43%
-12.26%
-7.16%
-3.90%
2010
5.56%
1.25%
2.47%
2.01%
3.09%
4.13%
2011
4.68%
2.71%
5.45%
2.75%
3.22%
3.44%
2012
5.66%
1.83%
4.79%
5.09%
5.67%
6.56%
# of up Years
16
12
18
16
15
14
Mean
1.35%
-0.09%
2.39%
0.79%
1.14%
0.52%
Standard Deviation
3.65
3.86
5.03
3.82
3.03
5.67
Trailing 10yr Mean
0.68%
-0.15%
2.49%
-0.43%
0.96%
0.26%
Trailing 15 yr Mean
0.22%
-0.30%
2.08%
-0.83%
0.70%
-0.52%
Trailing 20 Yr Mean
0.55%
-0.69%
1.79%
0.03%
0.91%
-0.37%
February
Telecom
Natural Respurces
Real Estate
Utilities
Industrials
S&P 500
1988
2.49%
4.41%
1.45%
-1.20%
7.93%
4.66%
1989
-0.88%
-1.21%
-0.37%
-1.41%
-0.38%
-2.49%
1990
-0.59%
1.13%
-0.10%
0.50%
3.56%
1.29%
1991
5.22%
8.86%
3.21%
4.04%
8.06%
7.15%
1992
1.93%
0.82%
-1.30%
-0.29%
4.63%
1.30%
1993
3.16%
5.76%
3.32%
4.56%
1.86%
1.36%
1994
-3.12%
-2.56%
4.59%
-3.99%
-0.19%
-2.71%
1995
2.37%
3.94%
1.32%
0.80%
6.49%
3.90%
1996
1.20%
1.78%
1.10%
-1.39%
6.20%
0.93%
1997
-2.09%
-2.50%
0.19%
0.23%
-0.56%
0.78%
1998
8.31%
2.86%
-1.01%
3.45%
7.92%
7.21%
1999
-4.84%
-3.27%
-1.39%
-3.00%
-1.74%
-3.11%
2000
12.11%
0.22%
-1.48%
-0.35%
-3.95%
-1.89%
2001
-21.01%
0.73%
-1.45%
-2.08%
-3.18%
-9.12%
2002
-8.58%
4.98%
1.90%
-2.27%
2.01%
-1.93%
2003
-2.55%
2.68%
1.59%
-3.30%
-3.77%
-1.50%
2004
2.39%
5.76%
2.20%
1.98%
0.52%
1.39%
2005
1.01%
11.66%
2.60%
2.52%
2.83%
2.10%
2006
1.11%
-8.58%
1.82%
0.49%
1.94%
0.27%
2007
-0.67%
1.10%
-1.40%
2.40%
-0.71%
-1.96%
2008
-5.71%
8.38%
-3.37%
-2.60%
-3.15%
-3.25%
2009
-3.66%
-7.76%
-19.65%
-10.54%
-15.59%
-10.65%
2010
2.83%
2.94%
5.43%
-0.06%
5.86%
3.10%
2011
3.54%
4.50%
4.36%
2.38%
2.05%
3.43%
2012
4.16%
3.39%
-0.74%
2.23%
2.97%
4.32%
# of up Years
14.00
19.00
14.00
12.00
15.00
15.00
Mean
0.31%
2.04%
0.74%
-0.04%
1.70%
0.35%
Standard Deviation
3.80
3.77
2.06
2.22
3.58
3.42
Trailing 10yr Mean
0.50%
2.62%
0.88%
0.44%
0.34%
0.45%
Trailing 15 yr Mean
-0.20%
1.04%
0.28%
-0.13%
0.13%
-0.63%
Trailing 20 Yr Mean
-0.06%
1.83%
0.79%
-0.14%
0.86%
-0.22%

 

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

 

Hopefully you can find something useful in the data.  I have notified my AFL Newsletter subscribers how I will be allocating the AFL Cyclical Sector Folio to begin the month of February.  As always, returns for the AFL Cyclical Sector Folio are updated daily and can be found here: http://www.allocationforlife.com/aflmodels.php

Thank you.

 

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.