How etfs work diagram rotation

There will be bad months, perhaps even bad years. Equally important can be the signs the market is exhibiting regarding future economic conditions.

The Logical Invest long-short US Sector Rotation Strategy

The sector rotation model has a yearly profit of 9. Industrials near the beginning Basic materials Energy near the end Late Recovery In this stage, interest rates can be rising rapidly, with a flattening yield curve; consumer expectations are beginning to decline; and industrial production is flat. This sector rotation strategy is built on the premise that certain sectors will outperform and investing in these sectors will outperform the market overall.

how etfs work diagram rotation

There is a good probability that the worst sector will recover slightly from its losses the next month and the best ETF will give away some of its gain due to profit taking.

The annual return is 8. This strategy worked for 1-month, 3-month, 6-month, 9-month and 12-month performance intervals. If you use the inverse ETFs, then you have to take into account the leverage of these ETFs and divide your buy orders by 2x or 3x.

Should You Attempt A Sector Rotation Strategy?

I am even less impressed. Right click and save as to download this episode to your computer. If it works I will continue to follow its leads. However, long-term evidence suggests that the good times will outweigh the bad times.

how etfs work diagram rotation

So take this with a grain of salt and skepticism as to whether it will continue to work. I am not receiving compensation for it other than from Seeking Alpha.

how etfs work diagram rotation

Our formula would select the red chart or sector ETF. Sectors that have historically profited most in this stage include: It's important to remember that past performance in the stock market does not always mean future success, and a particular sector may or may not be in favor at any time.

Sector rotation: Knowing the essentials

Watching for these telltale signs can give great insight into which stage traders believe the economy is in. But while describing sector rotation is simple enough, implementing a sector rotation strategy for your own portfolio is a whole different story.

I run a further test which places these sector ETFs into 3 portfolios or buckets based on their turnover. This way you can build a new U.

Faber's Sector Rotation Trading Strategy

They do matter in the rankings of the show, and I read each and every one of them personally. Do not even assume that you will make profits. What I like about this strategy is that there is very little turnover or rotation of ETFs needed.

Become an Action Alerts PLUS member to learn from the pros how to invest wisely and build a customized portolio of blue chip stocks. This allows us to short the worst performing sectors. Constructing profitable short strategies is very difficult.