Three confused stock-investing golfers are conversing on the back nine. They’re currently saying:
Golfer-1: “After being in the red almost all year long, I’m finally in the black again. I hope the market keeps going up so I don’t move back into the red!”
Golfer-2: “Really. I’ve more than doubled my portfolio. I don’t want to say anything past that. I don’t wanna make you feel bad.”
Golfer-3: “I’m going to punch you. My stock account is nearly cut in half! The market is barely up so how are we having this conversation right now? Who’s your advisor?”
All have diversified portfolios.
How did this happen?
And as we enter the stock market’s strong season, how can we be more like Golfer-2, who’s actually being modest? (He’s up 160%.)
Just take a look at the difference in performance of each of these “major” sectors in 2020, alone.
When it comes to stock market investing, being in the right sector (industry group) is the whole ball game.
Even if you’re a stock investor, the importance of sector activity is still at the top of the list. Because 80% of the reason any individual stock does what it does is attributable to the industry the underlying company is in.
“A rising tide lifts all boats” is a misused adage when applied to the entire stock market.
Depending on the major sector you’re invested in, you could have had dramatically different results.
A difference of 73.21% percentage points, to be exact. (Technology being up +30% and Energy being down -43.21%.)
And that’s the difference between the Major sectors’ performance.
“Major Sectors” are those “generally speaking” sectors, like the “Technology Sector” as opposed to the more narrowly focused sub-sectors of Technology, like the Semiconductor sector, Software sector, Computers sector and Internet sector.
While there was a 73.21% difference in performance between the Major sectors, look at the difference between some of the more narrowly focused sub-sector ETFs.
The difference between these sub-sector funds is a whopping 190.24%.
Solar Energy was up 130.68%, while Oil & Gas explorers were down 58.95%.
If you’re a stock investor who thinks sector investing is boring, you should still focus on the stocks in the strongest sectors.
The easiest way to find stocks that jump 600%, 1,200% or 1,400%…
…like Pacific Ethanol, Vivo Power International and SPI Energy, is to start with the sectors showing the most strength.
Their sector, the Alternative Energy Sector, was the strongest around the turn of the year, going into 2020. The follow through in performance is quite evident.
“A rising tide lifts all boats” is a terrible adage to apply to the general stock market, but it’s certainly applicable to sectors.
I’ll tell you a secret before I see you on tomorrow’s Post Election Profits online event…
We saw strong signaling from the Alternative Energy sector near the turn of the year. That was our clue that it should be our primary focus in 2020.
But there are specific times, during specific cycles, when this method of “tracking which sectors are currently strongest, in order to determine what’s like to be the strongest in the coming year” is most effective.
The one week that tends to give us the most potent guidance on which groups will be the strongest, is the week we’ve just closed out – the week after the presidential election. It’s the most important week of the 4-year presidential election cycle.
If you know that 80% of the reason a stock does what it does is because of the sector it’s in, then all you need to know is which sectors will be strong. Then 80% of your work is DONE.
And we now have the answer to the question: Which sectors will likely be strongest over the next 12-months.
On my live event, Monday November 16th, at 1:00pm Eastern, I’ll reveal which sectors to focus on in the coming 12 months.
This is at no cost to you.
I’m not going to repeat this one-time, LIVE, exclusive True Market Insiders event. So don’t miss it!
Founder, True Market Insiders