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Sam Subramanian

Win with Disciplined Sector Rotation

Sam Subramanian PhD, MBA

Stock market volatility scares investors.

However, your financial health can be affected if you let fear drive your investment decisions.

The performance of several types of equity assets from December 31, 1993 to December 31, 2013 is shown below:

Disciplined Sector Rotation beats S&P 500 and the average investor returns

Source: Richard Bernstein Advisors LLC, Standard & Poor's, Dalbar

A dollar invested in AlphaProfit Fidelity Focus and ETF Focus portfolios on December 31, 1993 is worth $46.39 and $45.41, respectively. A dollar invested in S&P 500 is worth $5.84. In comparison, a dollar in average investor's account has grown to $1.64.

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The S&P 500 gained at a 9.2% annual rate during this period. Many equity asset types fared better than the S&P 500.

Yet, Dalbar's estimate of the annualized return earned by the average investor during this 20-year period falls well short at just 2.5%.

The 20-year period includes phases of substantial turmoil and volatility from the Great Recession and the dot-com bust.

The average investor underperformed nearly every equity asset class due to poor timing of asset allocation decisions.

The average investor would have fared better by buying and holding most equity assets instead of buying assets after prices have run up and selling them in a panic after prices have plunged.

AlphaProfit's disciplined investment process has helped its Fidelity and ETF model portfolios provided in the Premium Service perform better than even the top performing energy, healthcare, and information technology sectors.

The AlphaProfit Fidelity Core and Fidelity Focus model portfolios have gained at annualized rates of 17.0% and 21.1%, respectively while the AlphaProfit ETF Core and ETF Focus model portfolios have gained at annualized rates of 16.8% and 21.0%, respectively.

AlphaProfit's investment selection process evaluates sectors on valuation, momentum, and news quality to identity likely leaders and laggards. See: Fidelity Select Funds: Choose the Best Fidelity Sector Fund Consistently

The sector rotation process includes or retains prospective leaders and eliminates prospective laggards from the model portfolios.

AlphaProfit's investment process has navigated through both favorable and unfavorable phases with a 75% success rate in picking winners. The long-term performance of the AlphaProfit Fidelity and ETF model portfolios reflect this success rate. AlphaProfit's Premium Service has bagged Hulbert Financial Digest's #1 rank 12 times.

Bottom line: Do not let fear drive your investment decisions. Keep your emotion in check and you will prosper.

To get the current recommendations in the AlphaProfit Fidelity and ETF Focus model portfolios, subscribe to AlphaProfit Premium Service now.

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Five Smart Ways of Using Fidelity Select Funds and Avoid Three Common Mistakes ETF Investors Make

Related Links:
Fidelity Mutual Funds Model Portfolios Performance
ETF Model Portfolios Performance
Sector ETFs: Invest in the Best Sector ETF Consistently
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By Hulbert #1 rank winner Dr. Sam Subramanian

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About AlphaProfit MoneyMatters and AlphaProfit
AlphaProfit MoneyMatters is a free e-letter distributed to registered users of AlphaProfit's website. The e-letter analyzes the economy, markets, and sectors and provides money-making insights on stocks, exchange-traded funds, and mutual funds. AlphaProfit MoneyMatters is edited by Dr. Sam Subramanian acclaimed for his financial acumen and analytical skills.

AlphaProfit Investments, LLC is an independent investment research firm based in Sugar Land, TX. AlphaProfit publishes the AlphaProfit Sector Investor's Newsletter, edited by Dr. Sam Subramanian. Leveraging sector funds, the Newsletter provides high-performance model portfolios with Fidelity funds and exchange-traded funds. It also includes actionable stock recommendations. This newsletter features among MarketWatch's top 10 investment newsletters and has won the coveted #1 rank from Hulbert Financial several times.

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