Financial Research
FSI Sector Allocation
- FSI Sector Allocation
The S&P 500 continues to power higher despite the ongoing worries that appear to be growing from some vocal growling bears. We have commented in our previous updates that the ongoing rally is certainly “Climbing the Wall of Worry”. Now we are entering a period that has been referred to as “Sell in May and Go Away”, which only gets bearish forecasters and investors even more anxious. We are well aware of the historical track record that does indeed show that the period from May till the end of October has provided lower returns than the November to April period. window. location =
- FSI Sector Allocation
2020 October Outlook
September has not been friendly to equity investors as it has posted the first decline of greater than 10% since the important March 23 trough near S&P 2200. That level was not only the nadir for 2020 but was also the lowest point for equities dating back to 4Q16. Although it was the first double-digit drawdown over the last six months, it was the fourth decline greater than 5%. These were all dips and buy opportunities within the context of an ongoing recovery rally. Many bearish forecasters have once again become quite vocal about all the reasons why the magnitude of the rally has not made sense, why the current pullback was so obvious, and why the investing backdrop has clearly had a negative shift. From our perspective, we disagree with these somber views.
- FSI Sector Allocation
2021 April Outlook
Following the equity market decline that occurred during 1Q20 as a result of COVID and the lockdowns of economies all over the world, the S&P 500 has now posted its fourth consecutive positive return quarter as 1Q21 has come to an end. The impressive rally has been one that fits the classic Wall Street mantra of “Climbing the Wall of Worry”. With the overall market being up roughly 80% from its March 23rd, 2020 low and all sectors having posted price returns greater than 39%, there has been a lot of dispersion in sector performance. Indeed, the top six sectors (Materials, Energy, Industrials, Financials, Tech, and CD) are all up nearly 90% while the bottom five (Comm Serv, HC, Real Estate Utilities, and Staples) are only up on average 53%. Hence, there has been quite an opportunity for investors to beat the benchmark S&P 500 by actively managing their sector allocations instead of just buying and holding S&P 500 index fund.
- FSI Sector Allocation
2021 March Outlook
The beginning of 2021 has already seen some wild intra-month swings. January saw the S&P 500 race ahead over 3% but ended the month down a bit more than 1%. For different reasons, February experienced a similar pattern as it also started the month strongly as the index rallied about 6% only to surrender over half its gain to finish the month up 2.6%. Well, we warned in our outlook publication that 1Q21 was going to be bumpy and it has not disappointed. Despite the overall market only being up only 1.5% year to date, the intra-market sector returns have been quite diverse with the top sector sectors of Energy and Financials being up 26% and 9.2%, respectively, while Utilities and Staples are down 7.4% and 6.7%. Thus, sector positioning has been critical and created opportunities to outperform the benchmark.
- FSI Sector Allocation
2021 February Outlook
As we flipped the calendar from 2020 to 2021, investors were more than happy to leave the Year of the Rat and optimistically shift towards a return to normalcy and better times ahead in the Year of the Ox, which is close enough to a bull for us. However, January saw numerous events that were quite unusual, the unprecedented spectacle that occurred on 1/6 at the U.S. Capitol, a transition in power in Washington D.C., retail investors attempting to battle the Hedge Fund community, and the return to the Super Bowl of Tom Brady as the oldest quarterback to get back to the big game.
- FSI Sector Allocation
2021 January Outlook
The S&P 500 in December kept its upward momentum and rewarded investors with another solid rise of over 3% following the impressive gains it had in November The month was a bit choppy as the index stair-stepped higher while Congress continued to struggle with getting the much anticipated fiscal stimulus package passed. Importantly, Congress ultimately finalized the much-needed package despite the last minute uncertainty that arose when the President tried to push for a higher dollar amount in the stimulus checks.
- FSI Sector Allocation
2020 December Outlook
Despite the ongoing election controversies and the continued rise in COVID19 cases, November has been a great month for equity markets. Indeed, the Standard & Poor’s 500 index has risen over 10%, again reaching all time highs during the month. Importantly, there have been positive developments on the COVID19 vaccine front that have shifted the investor outlook away from the current negative pandemic data to a potentially more optimistic future environment where global economies begin to reopen and heal.
- FSI Sector Allocation
2020 November Outlook
After a challenging September, October started off promising with the hopes that an agreement on a new fiscal stimulus would get passed. Indeed, the S&P 500 rallied nearly 5% to its October 12th peak near 3550 only to get disappointed by the lack of and agreement. The back half of October was hit by a negative trifecta of no stimulus deal, rising COVID cases and the return of lockdowns in Europe, and the ongoing uncertainty surrounding the upcoming Presidential election.