Thursday, March 28, 2013

April Historical Sector Analysis


Over the last twenty-five years, the month of April has been fairly consistent for the equity markets.  After removing the high and low returns for statistical analysis the S&P 500 (Total Return) has achieved a mean return of 1.96% over the last twenty-five months of April.  The strength for the S&P 500 continues across the trailing twenty, fifteen and ten years for the month of April.  The average mean returns for the S&P 500 TR over these periods of time were 2.12%, 2.23% and 2.65%.

Energy stocks have clearly led the way in April over the last twenty-five years.  They have finished as the top performing sector for every trailing time period examined.  Consistency can also be found in financials and industrials.  In April, both of these sectors have finished as top half performers versus the other sectors and the S&P 500 TR over the last twenty-five, twenty, fifteen and ten year time periods.  With the exception of health care stocks (their 25 year mean return of .71%), not a single sector has a mean return below 1% for any of the trailing time periods. 

As always, the past does not predict the future.  However, I have found it useful to understand the historical strengths and weaknesses of each particular sector when entering a new calendar month.  Is it surprising to me that energy stocks have so clearly led the way in April?  No.  Common sense should tell us that it makes sense.  Almost every major energy company, such as Exxon Mobil (XOM), announces earnings in the month of April.  Revenue for these companies should historically be strong being that the reports cover earnings for the heart of the winter months and that is why they usually deliver.  Add in higher than usual gasoline prices throughout much of the first quarter this year and we may see the strong trend continue. 

April
Cons Discr
Health Care
Energy
Financials
Cons Staples
Technology
1988
1.79%
-1.17%
2.58%
-0.16%
0.31%
2.60%
1989
6.56%
5.43%
4.12%
3.70%
5.17%
7.36%
1990
-1.79%
0.09%
-5.95%
-3.80%
-0.39%
-2.08%
1991
0.07%
-2.01%
0.45%
0.48%
-1.52%
-1.68%
1992
-1.42%
-5.36%
5.08%
2.47%
-1.15%
-2.45%
1993
-2.75%
1.28%
4.63%
-3.84%
-3.88%
-2.67%
1994
0.86%
0.46%
5.25%
2.71%
-1.12%
-0.68%
1995
-0.51%
-0.97%
6.28%
3.08%
2.18%
5.25%
1996
4.41%
2.06%
7.90%
0.38%
-1.83%
10.41%
1997
1.46%
-0.16%
-1.18%
4.82%
3.94%
3.80%
1998
-0.33%
0.81%
2.73%
1.62%
-1.85%
4.07%
1999
1.29%
-4.00%
16.44%
6.80%
1.21%
2.70%
2000
-3.99%
-1.37%
0.32%
-2.70%
2.72%
-11.48%
2001
6.26%
7.73%
12.08%
3.38%
1.01%
19.74%
2002
-0.17%
-6.73%
0.60%
0.10%
2.46%
-12.17%
2003
8.17%
5.66%
1.50%
11.30%
5.08%
10.05%
2004
-2.51%
1.85%
-0.43%
-5.17%
1.44%
-7.29%
2005
-5.27%
2.80%
-6.43%
-1.46%
-3.06%
-4.30%
2006
1.16%
-3.43%
6.53%
2.83%
0.70%
0.32%
2007
1.63%
6.03%
6.11%
2.99%
3.58%
3.47%
2008
3.30%
2.57%
11.31%
4.82%
-0.18%
7.48%
2009
16.14%
0.51%
14.00%
16.49%
7.86%
13.14%
2010
5.23%
-1.65%
2.72%
2.27%
-0.44%
2.43%
2011
3.99%
6.86%
0.32%
1.72%
5.80%
3.12%
2012
0.95%
-0.06%
-0.90%
-1.86%
0.20%
-2.85%
# Of Up Years
16
14
20
18
15
15
25 Year Mean
1.46%
0.71%
3.74%
1.81%
1.05%
1.77%
Standard Deviation
3.1
3.13
4.59
3.38
2.41
5.72
Trailing 10yr Mean
2.74%
2.21%
3.40%
2.83%
2.02%
2.47%
Trailing 15 yr Mean
1.92%
1.28%
4.38%
2.45%
1.67%
1.60%
Trailing 20 Yr Mean
1.58%
1.07%
4.43%
2.16%
1.21%
2.05%
April
Telecom
Nat Resources
Real Estate
Utilities
Industrials
S&P 500 TR
1988
1.54%
2.21%
-0.20%
0.10%
0.37%
1.11%
1989
7.08%
3.04%
1.53%
3.60%
4.52%
5.19%
1990
-4.20%
-6.08%
-1.19%
-4.19%
-3.09%
-2.49%
1991
1.31%
0.98%
1.17%
0.23%
-1.34%
0.24%
1992
2.79%
4.17%
-0.99%
2.15%
-1.10%
2.94%
1993
-1.54%
2.94%
-3.35%
-0.48%
1.46%
-2.42%
1994
0.34%
2.91%
0.67%
1.67%
0.22%
1.28%
1995
1.74%
3.73%
-0.91%
2.30%
4.93%
2.94%
1996
4.23%
5.48%
-0.03%
0.27%
1.41%
1.47%
1997
2.44%
-0.50%
-3.48%
0.86%
2.84%
5.97%
1998
0.55%
2.45%
-2.99%
-1.71%
0.70%
1.01%
1999
5.83%
16.60%
10.42%
6.55%
12.97%
3.87%
2000
-10.59%
-0.76%
5.47%
-3.79%
2.39%
-3.01%
2001
13.96%
10.52%
2.32%
6.01%
8.55%
7.77%
2002
-10.82%
0.63%
1.33%
-3.74%
-4.04%
-6.06%
2003
9.69%
1.16%
4.02%
7.04%
10.47%
8.24%
2004
-5.15%
-2.34%
-13.70%
-2.25%
-0.41%
-1.57%
2005
-2.74%
-6.46%
4.52%
0.73%
-6.09%
-1.90%
2006
0.88%
6.44%
-2.94%
2.15%
1.59%
1.34%
2007
3.74%
4.66%
0.20%
4.00%
4.13%
4.43%
2008
8.64%
8.94%
5.60%
5.89%
5.15%
4.87%
2009
11.96%
9.40%
29.62%
3.62%
18.46%
9.57%
2010
1.81%
1.43%
6.60%
1.98%
3.73%
1.58%
2011
3.81%
1.74%
5.25%
4.04%
3.35%
2.96%
2012
-1.57%
-1.22%
2.77%
1.67%
-0.93%
-0.63%
# Of Up Years
18
19
15
19
18
18
25 Year Mean
1.85%
2.69%
1.56%
1.56%
2.52%
1.96%
Standard Deviation
4.92
3.77
3.52
1.86
4.01
3.12
Trailing 10yr Mean
3.03%
2.60%
3.25%
3.01%
3.39%
2.65%
Trailing 15 yr Mean
2.07%
3.31%
3.27%
2.23%
3.67%
2.23%
Trailing 20 Yr Mean
1.89%
3.20%
1.97%
1.89%
3.25%
2.12%

 

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

 

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.