Outperforming what the Rest of the Market does Using Simple Rotation

From 1999 through 2005, the stock market essentially went nowhere. The SP five hundred, as an example, only showed a 0.2% compounded annual return in that time which isn’t a whole lot better return for the chance than you’d have gotten with a cash market fund. The fate of the Nasdaq 100 was even more dismal.

It’s been an annoying time for investors. They’ve been left wondering what they can do to improve their returns, and they are searching for alternatives to the low performance index funds and buy and hold investing. They need mutual fund advice. Many alternative newsletters and financial advisors 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 recommending some variation of this technique. It isn’t hard to do either, if you use Fidelity Select Funds.

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

Sector revolution Strategies

Though there are many sector revolution strategies 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 a minimum of a month to avoid early redemption charges.
4. If itis’s still the top fund after thirty days, keep holing it. If it is not, change to the fund that is top rated at that point.
5. Hold the new fund for thirty days and repeat.

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

Naturally, as with everything in the world, there is a disadvantage to the rotation system. Its drawdown isn’t any better of thefinal market. Between 2000 and 2002, the technique drawdown was almost 50%. Even though it achieved all time highs in 2006, you continue to want to proceed carefully. The drawdown factor may be something you need to consider when thinking about investing.

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