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October 2015 Daily Chart
As of October 30, the Top Eight Model Portfolio’s monthly performance trailed both the tech-heavy Nasdaq Composite Index (as measured by Fidelity’s Nasdaq Composite Index Fund) and the broad S&P 500 Index (as measured by Fidelity’s Spartan 500 Index Fund - Investor Class):
The Nasdaq Composite Index set two new all-time highs on April 23 and 24, 5056.06 and 5,092.08, more than 15 years after its previous all-time high of 5,048.62, set on March 10, 2000, during the dot-com boom, but it backed off those highs by the end of April.
During that 15-year period, the Nasdaq Composite Index suffered two very serious bear markets and enjoyed two significant bull markets.
It hit a closing low of 1,114.11, down 78% from 19 months earlier on October 9, 2002, during the dot-com bust.
The Nasdaq Composite Index clawed its way back to an intervening bull market high of 2,859.12 on October 31, 2007, up 157% from five years earlier, during a real estate and financial system deregulation boom.
But when sub-prime mortgages blew up, starting a financial crisis and the Great Recession, it fell again to a March 9, 2009, low of 1,268.64, down 56% from 16 months earlier.
During the six-year plus recovery from the Great Recession, the Nasdaq Composite Index rose to its new all-time high of 5,092.08 on April 24, up 301% from its 2009 low.
While the S&P 500 index has made real (inflation-adjusted) all-time highs in 2015, the Nasdaq Composite Index is a long way from setting an inflation-adjusted record. Using March 2000 and March 2015 Consumer Price Index data, the Nasdaq Composite Index would have to reach 6,701.65 just to match its 5,048.62 March 2000 all-time high on a real (inflation-adjusted) basis.
TOP EIGHT MODEL PORTFOLIO OCTOBER 2015
|1. Retailing (FSRPX)|
|2. IT Services (FBSOX)|
|3. Construction & Housing (FSHOX)|
|4. Insurance (FSPCX)|
|5. Consumer Discretionary (FSCPX)|
|6. Leisure (FDLSX)|
|7. Software & Computer Services (FSCSX)|
|8. Medical Delivery (FSHCX)|
EXCHANGES FOR OCTOBER 2, 2015
|Sell Biotechnology (FBIOX),|
|buy Consumer Discretionary (FSCPX)|
|Sell Pharmaceuticals (FPHAX),|
|buy Leisure (FDLSX)|
|Sell Medical Equipment & Systems (FSMEX),|
|buy Software & Computer Services (FSCSX)|
FREQUENTLY ASKED QUESTIONS
About Fidelity Select Fundranker
Fidelity Select Fundranker employs a straightforward investment strategy—invest in Fidelity Investments Select mutual funds that are doing the best right now, and move regularly into better performing funds.
Fundranker utilizes a technical investment system, which means no guesswork, no predictions, no judgments. Each month, Fundranker rates and ranks Fidelity Investments’ 41 Select mutual funds (39 as of June 19, 2009) according to various aspects of their recent performance and selects the top eight funds in which to invest. To follow the Fundranker system, an investor typically would make two or three exchanges at the beginning of each month to stay in the top eight funds.
Fidelity Select Fundranker’s Top Eight Model Portfolio set a new all-time high most recently on July 20. From the hypothetical portfolio’s January 2, 1997, start date through July 20, 2015, it gained a fantastical 1,397.391% on a total return basis, that is, including dividends. During that same period, on a total return basis, the S&P 500 Index, as measured by Fidelity Spartan 500 Index Fund - Investor Class, gained only 295.960%:
As of October 30, 2015, in a 6-year, 8-month long bull market that started at the depths of the Great Recession, the Top Eight Model Portfolio led the S&P 500 Index but trailed the Nasdaq Composite Index:
For a long-term, 10-year comparison, as of October 30, 2015, the Top Eight Model Portfolio trailed the Nasdaq Composite Index but considerably outperformed the S&P 500 index:
“I find your publication to be of great interest and benefit to me in my investing work, and I appreciate your research and thoughtful commentaries. You have a very effective method of analyzing the performance (based on data and analysis...not hope) of the Fidelity funds, and frankly it would be quite a lot of work for an individual to replicate this each month for themselves.” George Hecht