Fidelity Select Fundranker

Fundranker Blog—April 2010 Archive

Stealth Nasdaq

Apparently, the Nasdaq Composite Index has slipped under the radar. Possibly because recovery from the Great Recession has been hard to see from Main Street, nobody seems to have noticed that, as of April 23, the Nasdaq Composite Index (as measured by Fidelity’s Nasdaq Composite Index Fund) gained 100% since its Great Recession low on March 9, 2009. Over the same time period, the S&P 500 Index (as measured by Fidelity’s Spartan 500 Index - Investor Class Fund) gained 84%, and Fundranker’s Top Eight Model Portfolio gained 79%:

Nasdaq 100%

Posted 4/23/10 8:16pm ET in Fundranker, Market | Permalink | Comments (0)

Fundranker Upturns April 2010 Update

Fundranker’s Top Eight Model Portfolio added another multi-month gain in February and March, 2010. The table below shows Fundranker’s multi-month gains and compares them to returns of the Nasdaq Composite Index (as measured by Fidelity’s Nasdaq Composite Index Fund) and the S&P 500 Index (as measured by Fidelity’s Spartan 500 Index - Investor Class Fund) over the same time periods. Since we didn’t start tracking the Nasdaq Composite Index until October, 2003, its returns are shown starting in 2004:

      FSF Nasdaq S&P 500
     Period Months Return  Return   Return
Apr/Jul 1997     4 30.508    26.737 
Nov/Dec 1997     2 3.682    6.342 
Feb/Apr 1998     3 16.283    13.686 
Sep/Jan 1999     5 57.092    34.423 
Mar/Apr 1999     2 12.267    8.028 
Oct/Feb 2000     5 79.523    6.960 
Apr/May 2001     2 5.270    8.454 
Nov/May 2002     7 24.740    1.461 
Apr/Aug 2003     5 27.002    19.657 
Oct/Feb 2004     5 22.058  13.227  15.740 
May/Jun 2004     2 5.001  6.771  3.309 
Sep/Dec 2004     4 15.808  18.259  10.379 
May/Sep 2005     5 26.361  12.312  7.029 
Nov/Jan 2006     3 22.953  8.880  6.555 
Mar/Apr 2006     2 8.780  1.820  13.073 
Nov/Jan 2007     3 7.126  13.073  11.059 
Mar/Jun 2007     4 9.584  7.986  7.446 
Aug/Oct 2007     3 14.491  12.500  6.942 
Apr/Jun 2008     3 13.553  0.761  (2.739)
Mar/Sep 2009     7 42.376  54.521  45.835 
Nov/Dec 2009     2 10.099  11.240  8.041 
Feb/Mar 2010     2 14.629  11.885  9.313 

With its current two-month upturn, Fundranker has risen 11 of the last 13 months from its March 9, 2009, low. Fundranker is up again through April 15; perhaps it will extend its bull market run and this latest multi-month upturn still another month.

Over all the upturns, Fundranker now has an average gain of 21.237%; the S&P 500 Index gained only 11.693% on average. Over the 13 upturns during which we tracked the Nasdaq Composite Index, Fundranker now has an average gain of 16.371%; the Nasdaq Composite gained only 13.326% on average. See our Fundranker Upturns January 2010 Update post for earlier information.

Although past results are never an assurance of future performance, it’s still great to know that Fundranker regularly outperforms the Nasdaq Composite and S&P 500 Indexes.

Posted 4/15/10 9:14pm ET in Fundranker, Market | Permalink | Comments (0)

Gain on Technology Is Almost Long-Term

Fundranker has held Select Technology since 5/4/09, but it has fallen out of the Top Eight Model Portfolio for April and is due to be exchanged on April 5, just one month short of being considered long-term for federal income tax purposes.

If you hold Select Technology in a taxable account, and since we have gained nearly 50% on it to this point, you may want to consider holding it one more month so the gain can become long-term. If you wait until 5/5/10 to exchange your shares, you will have held them more than one year, and you’ll be able to take advantage of the lower, long-term, capital gain tax rates for 2010: 0% for the 10% and 15% brackets and 15% for higher brackets. Take special note that you have to hold your shares more than one year, so if you bought them on Fundranker's 5/4/09 exchange date, you must hold them until at least 5/5/10 to qualify for long-term.

Although one of Fundranker’s basic premises is to move each month without fail into the new set of Top Eight Model Portfolio funds, Select Technology only fell to number 13 in the rankings at the end of March, so you would not be fudging the system by much, and your tax advantages could be considerable. Also, it wouldn’t be much of a stretch for Select Technology to move back into the Top Eight Model Portfolio in May.

If you do decide to wait until May to sell your shares of Select Technology, then you would have three exchanges for April 5 instead of four:

  • Sell Communications Equipment (FSDCX), buy new number four ranked fund
  • Sell Retailing (FSRPX), buy new number five ranked fund
  • Sell Electronics (FSELX), buy new number seven ranked fund

With these exchanges, you would end up holding Select Technology at least another month, and you would not buy the new number eight ranked fund. For the names and symbols of these new top-ranked funds, see the April 2010 newsletter, which was emailed to subscribers on April 1.

Posted 4/2/10 12:15pm ET in Fundranker, Tax Tips | Permalink | Comments (0)

Making Work Pay Tax Credit for 2009 and 2010

The Making Work Pay tax credit for tax years 2009 and 2010 came about as part of the American Recovery and Reinvestment Act of 2009, which was signed into law by President Obama in February, 2009, to help stimulate the economy in the depths of the Great Recession.

Under the Making Work Pay tax credit, working people are supposed to receive up to $400 per year ($800 for married taxpayers filing jointly) of a refundable credit against their federal taxes. Refundable means that if any remains after it is applied against your tax, it will result in a tax refund. The Making Work Pay credit begins being phased out for single taxpayers at an AGI of $75,000 and for married taxpayers filing jointly at an AGI $150,000.

The whole idea of this tax credit was to get money in the hands of working people as soon as possible so they could spend it and stimulate the economy, so withholding tax tables were changed as of April 1, 2009, and workers started receiving a little bit more take home pay for the remainder of the year. Those little bits, over the last nine months of 2009, as well as over the entire 12 months of 2010, should add up to about $400 ($800 for married taxpayers filing jointly).

When you fill out your 2009 federal tax return, and you get down to the Payments section of your Form 1040, you’ll put down your withholding, which should be about $400 ($800 for married taxpayers filing jointly) less than it would have been had the tax credit not existed, and then you’ll also put down $400 ($800 for married taxpayers filing jointly) for the tax credit. So your tax payments should add up to about the same amount as they would have had the tax credit not existed, but Uncle Sam contributed $400 ($800 for married taxpayers filing jointly) of it for you. He just gave the credit to you a little at a time during the year instead of giving it to you all at once when you file your tax return.

A few taxpayers may find that their employers cut their withholding too much during 2009. If you have more than one job, or you and your spouse both work, remember that your different employers are unaware of your income from the others. They simply look up your payroll withholding according to the number of allowances on your W-4 form. It was up to you to make sure that you claimed the appropriate number of allowances on your 2009 Form W-4 so that your employers didn’t cut your withholding too much during the year. If you are unpleasantly surprised at how this works out on your 2009 tax return, make sure you update your 2010 Form W-4 right away.

Posted 4/1/10 7:20pm ET in Tax Tips | Permalink | Comments (0)