Fundztrader is Closing Down

Unfortunately the team behind Fundztrader has stepped down and will no longer continue publishing new information.

There will be no new ratings posted, effective immediately!

We will leave the website up so that visitors have some warning time, but it will be taken down permanently some time in the future. When that date is determined, we'll update this message.

Sector Trading - There is a Bullish Sector Somewhere

Do you look at the mutual fund rankings that magazines publish every year? The performances can often be eyepopping. Have your ever seen a year that the best performing mutual funds had a loss?  Of course not, there’s always secgtor funds that have a good year, even in the bear market years. It might be energy sector or medical sector, or foreign country mutual funds that have a good year. 

For example, let’s look at the Fidelity family of funds. Since 1988, Fidelity has always had equity funds that were positive for the year.  The worst year was 2002, when both the S&P 500 and the Russell 2000 were down over 20% for the year. Even then, Fidelity still had 6 of 94 equity funds with positive returns.  A challenging environment to be sure, but there were still opportunities.

The table below gives an example of varied sector performance.

The top 3 lines are the annual returns of the top 3 Fidelity Funds for that year (in green).

The next 2 lines are the returns of the S&P 500 and the Russell 2000 (in blue).

As you can see the years 2000-2002 were pretty tough on the market overall, yet the returns of the top 3 mutual funds were pretty good each of those years.

Click for full size image

Click for full size image

Fund selection plays an important role in crafting your portfolio’s performance. Even though “rising tide lifts all ships” there is a big difference between the best and the worst, regardless of the overall market’s return for a given year.

It turns out that if you restrict your holding period to something less than one year, you’ll find that this trend of bull and bear markets continues to hold true.

The fact is, given the so-so performance of the market over the last several years, the only real tool available to the average investor to create real wealth has been fund selection.

The trick of course is finding those sectors for trading before they are finished going up. There are a lot of very smart people in the financial world who can come up with fundamental reasons why one sector is going to do better than another one, or one country will do better than another. They have more inside information than the average investor. They sit all day in front of a trading screen, that is more intellectual firepower than most of us can muster. So, how do we increase the odds that the average investor like us can find funds that will increase in value after we buy.

The one real advantage that the small investor has is that he can be quite nimble, moving his assets from one fund to another overnight, with no impact on the markets. The other thing to realize is we don’t have to be the smartest guys in the house, we just have to follow smart traders. That makes the whole problem a lot easier to solve.

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Comments on Sector Trading - There is a Bullish Sector Somewhere »

May 4, 2010

John Galloway @ 8:45 am

I am highly upset that you are closing down the site..I have beeen following your picks for a year now…My entire Fidelity account is set up to trade from Fundztraders…
I have been to google looking for other sector selects…I have found a few….Some charge a large fee..I looked at Jim Lowell’s site but he started running his mouth about Obama being a socialist, that turned me off…plus he wants traders to stay in the market and go down with the ship…His returns during the bear market was awful..Invest and lose 35%, that is his idea…no wonder wall street loves him….I would pay a fee if Fundztraders has a pay site….maybe $300 a year, Jim Lowell wants $149 for the ETF site, but he loses money most of the time. email me let me know something…the Greece debt thing is really messing up the markets

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