Its a well known fact that the S&P 500 is the benchmark for American equity markets and the bar set for most American investment firms.... Its also widely known that 80-90% of investment firms fail to outperform this benchmark But there is a strategy that enables simple folk like you and me to beat the market... Enter sector rotation Its beauty lies in its simplicity... In essence, this strategy tracks the S&P 500 but cuts out the fat... By holding only the top performing sectors and dropping the laggers, you can potentially outperform the market by 2% or more yoy This article explains in further detail https://seekingalpha.com/article/3173636?source=ansh Ive decided to utilize this strategy with my 401k plan... Ill check back here occasionally to post thoughts, actions and results...... Feel free to chime in with questions or suggestions at any time Thanks... Jrich
The article calls for holding the top 5 sectors, but since my 401k is still a baby, it doesn't make sense to split it 5 ways.... So ill make selections as i go along, reorganizing monthly or quarterly as necessary Here are the top 4 performing sectors over the past 9 months XLK (blue) = Tech XLU (purple) = Utilities XLV (pink) = Health Care XLF (green) = Financials But there are also 20 sub-sector ETFs that SPDR has to offer... And one has captured my interest due to a change in political environment and recent global affairs XAR... Defense and Aerospace ETF, with top holdings such as BA, LMT and RTN, i feel this is a no brainer...... XAR is my first selection Here is XAR stacked up against the same 4 top performers
Added XLK (tech) and XLU (utilities) today Because it just seems foolish not to own any technology in todays market.... and utilities because the S&P is only 130 points or 5% from my target of 2590, weather a correction or consolidation occurs after that, utilities are usually the least affected..... and they are currently outperfoming everything except tech
