If, in the past, you have ever felt like Wall Street feels
like a ghost town in the middle of August, then you may find comfort in the fact
that the numbers support that feeling.
The fact is, August has been a challenging month for the market over the
last twenty-five years. After removing
the high and low returns for statistical analysis I found that the S&P 500
TR has experienced a negative mean return of -.39% over the last twenty-five
months of August. The trend is choppy at
best as the S&P 500 TR returned to a positive return of .07% for the
trailing twenty months of August, before slipping back into negative territory
with a mean return of -.26% for the trailing fifteen year period. Rounding out my analysis is another positive mean return for the S&P 500 TR over the last ten years.
Based on the broad-based market weakness in the month of
August over the last twenty-five years it should not be surprising that the
best performing and most consistent performing sectors are defensive in
nature. Only three sectors have been
able to achieve a positive mean return for every time period that I examined,
and finished as top half performers versus the others sectors and the S&P
500 TR. Those three sectors were the
health care, consumer staples and real estate sectors. Of the three, the clearest strength was seen
in real estate, as it finished as a top three performer for every time period
researched.
So where did the majority of the weakness come from during
the last twenty-five months of August?
The numbers indicate that the telecom and industrial sectors have had
extreme trouble in August. In fact, they
finished as the bottom two performing sectors for three of the four time periods. Industrials were unable to achieve a positive
mean return for any of the researched periods of time. Duration has not helped with industrials
suffering a mean return of -1.11% for the month of August over the last
twenty-five years.
Technology stock investors may consider increasing their
exposure. Though the sector was not as
consistent (higher volatility and of course a higher standard deviation) as the
previously mentioned winners, it has showed signs of strength in August
especially over the last twenty years where it was the leading sector.
|
August
|
Cons Disc
|
Health Care
|
Energy
|
Financials
|
Cons Staples
|
Technology
|
|
1988
|
-2.90%
|
-2.74%
|
-1.13%
|
-0.46%
|
-0.06%
|
-6.20%
|
|
1989
|
3.09%
|
1.76%
|
3.09%
|
4.39%
|
-1.54%
|
2.61%
|
|
1990
|
-11.80%
|
-6.81%
|
-1.25%
|
-9.35%
|
-7.29%
|
-12.83%
|
|
1991
|
4.02%
|
3.21%
|
2.84%
|
5.40%
|
3.98%
|
4.90%
|
|
1992
|
-1.38%
|
-2.58%
|
1.56%
|
-3.24%
|
-0.44%
|
-2.80%
|
|
1993
|
6.98%
|
2.19%
|
6.13%
|
3.94%
|
4.78%
|
7.15%
|
|
1994
|
4.96%
|
9.85%
|
-2.42%
|
2.68%
|
6.36%
|
9.90%
|
|
1995
|
0.63%
|
2.36%
|
2.36%
|
4.67%
|
-0.17%
|
1.14%
|
|
1996
|
3.94%
|
5.89%
|
5.99%
|
4.88%
|
-3.18%
|
5.44%
|
|
1997
|
-2.61%
|
-2.61%
|
4.19%
|
-3.21%
|
-3.70%
|
-0.11%
|
|
1998
|
-14.83%
|
-16.36%
|
-22.25%
|
-20.56%
|
-12.18%
|
-19.33%
|
|
1999
|
-5.14%
|
2.70%
|
3.64%
|
-4.89%
|
-3.24%
|
5.24%
|
|
2000
|
0.34%
|
10.63%
|
13.76%
|
8.88%
|
1.54%
|
15.69%
|
|
2001
|
-5.73%
|
-1.59%
|
-6.85%
|
-3.98%
|
3.15%
|
-12.90%
|
|
2002
|
1.10%
|
-1.42%
|
2.48%
|
1.83%
|
1.26%
|
-3.11%
|
|
2003
|
4.27%
|
-1.53%
|
7.71%
|
0.06%
|
1.84%
|
7.54%
|
|
2004
|
-1.29%
|
0.99%
|
-1.94%
|
2.75%
|
0.66%
|
-4.37%
|
|
2005
|
-4.25%
|
0.99%
|
7.45%
|
-1.72%
|
-1.54%
|
-0.76%
|
|
2006
|
2.79%
|
2.68%
|
-4.32%
|
1.17%
|
3.52%
|
6.26%
|
|
2007
|
1.27%
|
2.97%
|
-1.40%
|
0.65%
|
2.63%
|
2.26%
|
|
2008
|
6.36%
|
0.45%
|
-2.37%
|
0.25%
|
1.79%
|
1.74%
|
|
2009
|
3.95%
|
2.08%
|
0.43%
|
8.13%
|
1.68%
|
2.06%
|
|
2010
|
-4.38%
|
-2.20%
|
-5.24%
|
-7.09%
|
-2.13%
|
-4.54%
|
|
2011
|
-6.52%
|
-6.11%
|
-9.45%
|
-9.22%
|
-2.11%
|
-7.67%
|
|
2012
|
4.09%
|
1.84%
|
2.43%
|
3.09%
|
0.85%
|
4.45%
|
|
# Of Up Years
|
14
|
15
|
14
|
15
|
13
|
14
|
|
Mean
|
-0.23%
|
0.54%
|
0.61%
|
0.03%
|
0.10%
|
0.23%
|
|
Standard Deviation
|
4.49
|
3.60
|
4.56
|
4.62
|
2.83
|
6.08
|
|
Trailing 10yr Mean
|
0.81%
|
0.66%
|
-0.62%
|
-0.11%
|
0.73%
|
0.89%
|
|
Trailing 15 yr Mean
|
-0.73%
|
0.14%
|
-0.57%
|
-0.69%
|
0.49%
|
-0.29%
|
|
Trailing 20 Yr Mean
|
0.21%
|
1.09%
|
0.49%
|
0.22%
|
0.42%
|
1.10%
|
|
August
|
Telecom
|
Nat Resources
|
Real Estate
|
Utilities
|
Industrials
|
S&P 500 TR
|
|
1988
|
-2.86%
|
-3.25%
|
-0.33%
|
-0.31%
|
-5.45%
|
-3.39%
|
|
1989
|
0.65%
|
4.53%
|
-0.11%
|
-0.32%
|
4.62%
|
1.95%
|
|
1990
|
-8.53%
|
-3.34%
|
-5.62%
|
-5.54%
|
-13.94%
|
-9.04%
|
|
1991
|
3.05%
|
1.22%
|
0.09%
|
2.72%
|
0.27%
|
2.37%
|
|
1992
|
-1.37%
|
-0.33%
|
0.87%
|
-0.17%
|
-3.58%
|
-2.05%
|
|
1993
|
6.64%
|
4.75%
|
2.57%
|
3.44%
|
3.60%
|
3.79%
|
|
1994
|
4.19%
|
1.01%
|
0.90%
|
0.91%
|
4.60%
|
4.10%
|
|
1995
|
2.11%
|
0.69%
|
1.43%
|
1.22%
|
-1.47%
|
0.25%
|
|
1996
|
2.98%
|
5.59%
|
4.47%
|
1.81%
|
1.95%
|
2.11%
|
|
1997
|
-2.89%
|
2.03%
|
-0.52%
|
-2.93%
|
-1.12%
|
-5.60%
|
|
1998
|
-17.17%
|
-19.09%
|
-10.07%
|
-7.16%
|
-16.67%
|
-14.46%
|
|
1999
|
-4.04%
|
2.33%
|
-1.55%
|
-2.98%
|
-3.48%
|
-0.49%
|
|
2000
|
5.60%
|
11.98%
|
-2.82%
|
6.87%
|
3.95%
|
6.21%
|
|
2001
|
-12.09%
|
-3.65%
|
2.99%
|
-3.93%
|
-3.89%
|
-6.26%
|
|
2002
|
1.99%
|
3.14%
|
0.12%
|
2.23%
|
-1.00%
|
0.66%
|
|
2003
|
3.60%
|
6.99%
|
0.84%
|
1.17%
|
4.37%
|
1.95%
|
|
2004
|
-1.46%
|
-1.27%
|
6.94%
|
2.61%
|
-0.35%
|
0.40%
|
|
2005
|
-0.50%
|
7.46%
|
-3.43%
|
1.55%
|
-1.80%
|
-0.91%
|
|
2006
|
3.42%
|
-3.36%
|
3.49%
|
2.29%
|
-0.16%
|
2.38%
|
|
2007
|
-0.25%
|
-1.86%
|
4.58%
|
1.24%
|
-0.43%
|
1.50%
|
|
2008
|
0.57%
|
-3.90%
|
2.00%
|
-1.73%
|
1.98%
|
1.45%
|
|
2009
|
-0.47%
|
0.35%
|
12.97%
|
1.47%
|
4.79%
|
3.61%
|
|
2010
|
-2.33%
|
-3.62%
|
-1.16%
|
-0.13%
|
-7.32%
|
-4.51%
|
|
2011
|
-4.53%
|
-8.72%
|
-5.95%
|
-1.48%
|
-9.04%
|
-5.43%
|
|
2012
|
2.39%
|
3.03%
|
0.14%
|
-1.51%
|
2.26%
|
2.25%
|
|
# Of Up Years
|
12
|
14
|
15
|
13
|
10
|
15
|
|
Mean
|
-0.47%
|
0.43%
|
0.43%
|
0.07%
|
-1.11%
|
-0.39%
|
|
Standard Deviation
|
4.09
|
3.97
|
3.03
|
2.29
|
4.58
|
3.57
|
|
Trailing 10yr Mean
|
0.17%
|
-0.46%
|
1.68%
|
0.58%
|
-0.18%
|
0.56%
|
|
Trailing 15 yr Mean
|
-1.05%
|
-0.24%
|
0.48%
|
-0.06%
|
-1.15%
|
-0.26%
|
|
Trailing 20 Yr Mean
|
-0.10%
|
0.61%
|
0.84%
|
0.29%
|
-0.41%
|
0.07%
|
|
25 Year
|
20 Year
|
15 Year
|
10 Year
|
|
|
1
|
Energy
|
Technology
|
Cons Staples
|
Real Estate
|
|
2
|
Health Care
|
Health Care
|
Real Estate
|
Technology
|
|
3
|
Real Estate
|
Real Estate
|
Health Care
|
Cons Disc
|
|
4
|
Nat Resources
|
Nat Resources
|
Utilities
|
Cons Staples
|
|
5
|
Technology
|
Energy
|
Nat Resources
|
Health Care
|
|
6
|
Cons Staples
|
Cons Staples
|
S&P 500 TR
|
Utilities
|
|
7
|
Utilities
|
Utilities
|
Technology
|
S&P 500 TR
|
|
8
|
Financials
|
Financials
|
Energy
|
Telecom
|
|
9
|
Cons Disc
|
Cons Disc
|
Financials
|
Financials
|
|
10
|
S&P 500 TR
|
S&P 500 TR
|
Cons Disc
|
Industrials
|
|
11
|
Telecom
|
Telecom
|
Telecom
|
Nat Resources
|
|
12
|
Industrials
|
Industrials
|
Industrials
|
Energy
|
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.
