A New Twist on an Old Investing Adage
Following a great 2013, many stocks likely disappointed investors in January. For those who follow the investing adage, “as January goes, so goes the year,” the U.S. stock market may not be looking so bright for the rest of 2014. But research suggests there are opportunities to be found.
“Negative Januarys do have interesting implications” for U.S. stocks, says Brian Belski of BMO Capital Markets. He recently dissected monthly S&P 500 Index performance, taking a look at the years when the market declines in January.
I think you’ll be surprised at his results.
Brook Asset Management was up 7.27% for the first quarter, compared to the MSCI GBT TR Net World Index, which returned 3.96%. For March, the fund was up 1.1%. Q1 2021 hedge fund letters, conferences and more In his March letter to investors, which was reviewed by ValueWalk, James Hanbury of Brook said returns during Read More
Going back 24 years, the stocks that performed the best in January significantly lagged for the rest of the year compared to the stocks that did the worst. You can see in the chart that the companies in the bottom quartile for January performance rose a significant 20 percent from February through December. The stocks that did the best in January increased only an average of 12 percent during the rest of the calendar year.
Belski’s analysis aligns with the recent poor performance in sectors that we previously identified as having strength over the past several months. Of the 10 sectors in the S&P 500, our models have identified consumer discretionary, health care and industrials sectors as having sustained leadership.
But in January, industrials and discretionary stocks were among the worst-performing sectors. Energy and materials were also in the bottom half.
While past performance does not predict future results, BMO’s research suggests that many of these stocks in the lagging sectors could outperform for the rest of 2014.
Already in February, materials, consumer discretionary and energy stocks are up more than 4 percent.
The Holmes Macro Trends Fund (ACBGX) portfolio managers and I are especially bullish on domestic dividend-paying companies experiencing robust fundamentals, including strong revenue and earnings growth. We believe this focus has helped the fund outperform its benchmark, the S&P 1500 Composite Index, by more than 7 percent over the past year as of January 31.
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling -800-US-FUNDS1-800-US-FUNDS (1-800-873-86371-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.
Past performance does not guarantee future results.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The S&P 1500 Composite is a broad-based capitalization-weighted index of 1500 U.S. companies and is comprised of the S&P 400, S&P 500, and the S&P 600.