The Financial Times – Look to history for profitable stockpicking
The growth, proliferation and popularity of exchange traded funds has had consequences not all of which are beneficial. Today investors need no longer discern and analyse the differences between Exxon and Chevron since the Energy Select Sector ETF provides an opportunity to own both. And while the Technology Select Sector ETF, the short-cut to own S&P tech stocks, gives you both Apple and Google, you also end up with some MasterCard stock. As might be expected, this has created more interest in group, sector and top-down approaches… One of the difficulties in analysing historical sector performance has been the lack of data. For one, the S&P had approximately 100 groups, 20 of which might have been considered consumer-orientated. In 2001 S&P introduced 10 economic sectors, which made analysis somewhat easier but their data were only backdated to 1989. My firm subsequently took the data back to 1962 and then beyond.
Source: Bianco Research