The secret to success is the investment sector has avoided the worst developments in the market.
The plunge in oil prices is a reminder not brake extremely useful to investors that they must choose the right branch. For the year to the end of the session 2/12, energy stocks worldwide fell by 8.7%, lower than the nearly 31 percentage points compared with the yields that health (the best group events) bring back.
Still, this gap is still quite small compared to history. In 2013, the difference between the best events sector (retail) industry movements and worst (material) is 39 percentage points. Robert Buckland, professionals from Citigroup, said that 2014 was a year of relatively “quiet”.
Figure 39 percentage points may seem small but not small when accumulated over the years. An investor can earn yields 66% since 2007 if complete removal of branches worst developments in each year. This is higher than twice the yield of 32% MSCI World index that brings in the same period.
Of course, the industry is not the only important factor. Investors can earn higher yields if they quit the whole capital in 2008. However, many fund managers can not choose this path because they operated the only mutual fund investment and stock and can not be switched to channel bond.
Chris Watling, experts from consulting firm Longview Economics, argue that investors should have the correct view of the economy and will choose the right branch. In recent years, the mainstream financial crisis and the stagnation of the developed countries, then the status of the sluggish developing countries. This environment facilitates the nature of self-defense sectors. For example, people will always feel so tired and medical stocks growth. Same logic holds true for essential consumer group (group share of manufactures packaged food, beverages, tobacco …) In fact, these two sectors have the best developments since since 2007.
However, even those investors can accurately predict the trends mentioned above are also affected by the large variation in psychology.The financial stocks may be at a lower price than the beginning of 2007, but the group has the best events of 2012. 8 years, the material has undergone two locations with the best developments and The worst.
Both groups are volatile nature. The financial stocks (or at least the banks) have a high debt ratio, while the businesses of the group of materials depends very much on the economic cycle.
There is another group dominated the statistical charts in 2010 and 2013 despite the economic health: group of non-essential consumer goods.This group includes companies producing cars, entertainment and restaurants. Clearly the consumer’s wallet thinning, this group will be affected negatively.
Most fund managers do not consider themselves the choice of investment sectors which are the stock options. They want to “shine” financial statements, visiting factories and consider leadership. But sometimes they will have to make decisions based on industry group.
During the late 1990s, investors could not choose by industry if they want to succeed. They have to believe in the TMT (technology, media and telecommunications) if you do not want to lose their jobs. Of course then they lose money when the bubble burst customers. In a moment, the best become the worst team.