Performing Better than the Overall Market Performance by Using Simple Rotation

From 1999 through 2005, the stock market essentially went nowhere. The SP 500, for instance, only showed a 0.2% compounded yearly return during that time which is not much better return for the danger than you’d have gotten with a money market fund. The destiny of the Nasdaq One hundred was even more dismal.

It’s been an annoying time for investors. They’ve been left pondering what they can do to improve their returns, and they are looking for alternate choices to the low performance index funds and buy and hold investing. They need mutual fund advice. Many different newsletters and fiscal aides say that by investing in sector funds and using rotation, folk are finding better results. The Hulbert Financial Digest and other top-performing newsletters are all advocating some modification of this method. It isn’t tough to do either, if you use Fidelity Select Funds.

Let’s take a good look at what makes Fidelity Select Mutual Funds such a good selection for speculators :
* Although Fidelity imposes a minimum holding period of 30 days, their funds have historically realized above market returns.
* After the 30 day period, you can do unlimited trading with no redemption charges.
* Fidelity has a sector fund to track most sectors, so regardless of what domestic market sector is showing strength, youare going to be able to get in on it.
* Fidelity has at least $2500 per fund. There’s also no load on Select Funds.

Sector revolution Strategies

Although there are many sector revolution secrets in existence going back for about ten years, the one that follows is one of the easiest you’ll find :
1. Track all Fidelity Select Mutual Fund price changes for 25 days.
2. Invest in the fund with the highest gain.
3. Hold the fund for at least a month in order to avoid early redemption costs.
4. If it’s's still the top fund after 30 days, keep holing it. If it’s not, change to the fund that’s top rated at that point.
5. Hold the new fund for 30 days and repeat.

During those identical years the major indices were so flat, 1999 to 2005, financiers using this sector fund rotation strategy showed over 16% gain every year for a total of almost 200% gain in the same time period.

Naturally, as with everything in the world, there ‘s a disadvantage to the rotation system. Its drawdown isn’t any better of the overall market. Between two thousand and 2002, the method drawdown was nearly fifty percent. Although it achieved all time highs in 2006, you continue to wish to proceed carefully. The drawdown factor may be something you need to consider when pondering investing.

You can see, though, that there’s a real advantage in using a sector rotation strategy that you don’t get with buy and hold investing. Every serious investor should be sure to include the system in their investment portfolio.
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