Who’s Leading & Who’s Lagging in this Market? The Answers Might Surprise You ...

Wednesday, March 06, 2019
Mike Larson

Who’s leading, and who’s lagging, in this market? The answers might surprise you for a very simple reason:

Way too MUCH attention is being paid to the losers, while way too little attention is being paid to the winners!

That’s terrible for investors like you. Not only is your attention constantly being diverted by “squirrel stories” that don’t truly matter for markets in the long term, you’re also being steered toward bad investments for this stage in the economic and credit cycles … and AWAY from good ones.

I’m going to do my best to fight that – and get you back on the right track! I’ll start with all the evidence that proves my case ...

There are 11 sectors in the S&P 500 and an equal number of benchmark ETFs that track them. The relevant sectors and ETF ticker symbols are as follows:

Energy (XLE), materials (XLB), industrials (XLI), consumer discretionary (XLY), consumer staples (XLP), healthcare (XLV), financials (XLF), IT/technology (XLK), communication services (XLC), utilities (XLU) and real estate (XLRE).

Of the entire bunch, only TWO made new highs in the recent rally. They are XLRE and XLU.

Meanwhile, XLE, XLF and XLB remain far below their highs (set a whopping 13 months ago in the case of the latter two).

The oft-talked-about tech ETF, XLK, is still trading around 7% below its high. Meanwhile, XLI is about 6% below its peak.

Interesting, no? And that’s not even the half of it. Take a look at this table. It shows the one-year total returns for all 11 S&P 500 sector ETFs. I color-coded the returns column for ease of reference, and sorted it from best to worst.

*Note: XLC started trading on 6/18/18. Return calculated since then.

Source: Weiss Ratings

What should jump right out at you? Defensive, higher-yielding, recession-resistant, income-focused ETFs are KILLING IT!

They might not have anything to do with Modern Monetary Theory … U.S.-China trade negotiations … whiz-bang technologies like artificial intelligence and the Internet of Things … or any of the other buzzwords and stories the financial press can’t keep talking about.

But they have the far more important benefit of making you the most money!

The moral to this story?

Aggressive investing worked best for several years leading up to February 2018. But it has NOT worked best since.

Instead, “Safe Money” stocks and sectors have taken the lead. Their returns are more than double, triple or even greater than the sectors that get all the attention.

So, I urge you to change your investing strategy. Focus on the winning investment sectors and stocks you’ll find in my Safe Money Report. Leave the laggards and the riff-raff to someone else.

One last thing: This sector performance breakdown practically screams “Slowdown/Recession dead-ahead!” It confirms the message the bond market has been sending out for several quarters now.

So, in addition to re-allocating toward defensive investments, I recommend you continue to carry higher levels of cash in your portfolio.

If I’m right, we haven’t seen the worst of the market turmoil yet. Much more is coming down the pike in 2019 and beyond.

Until next time,

Mike Larson

P.S. I'd love to share more Safe Money ideas and investment strategies with you in person at the MoneyShow Las Vegas. It runs from May 13-15 at the Bally's and Paris resorts, and it's absolutely free to attend. You'll just need to register in advance. Click here to do so. Or call the MoneyShow team at 800-970-4355 and let them know I sent you. Hope to see you there!

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