Top Strategy in January: Buy the Losers, Sell the Winners?
Since the beginning of the year, buying the losers and selling the winners seems to have paid off.
The best two sectors in the S&P 500 this month were the market's worst two sectors in 2011. Similarly, some of last year’s standouts are lagging so far this year.
Could this be due to seasonality? The telecom sector has now declined in five straight Januaries, while the utilities sector has been down five of the last six Januaries (including this month).
Looking ahead to February, there is not much hope for both of these sectors if history repeats itself. In fact, utilities and telecom stocks are typically among the worst-performing in the S&P 500 index.
On average since 1995, the telecom sector is down 2.2 percent, while the utilities sector is down 1.7 percent in February.
As for the S&P 500 , February is the index’s worst month during the first half of the year.