QInsight Group

The Current U.S. Business Cycle

Revival industry groups that have historically outperformed the S&P 500 index on a risk/return basis: 



Electronics - Semiconductors
Aerospace/Defense
Computers - Software
Manufacturing - Diversified
Electrical Equipment 
Trucks and Parts
Machinery - Diversified
Office Equipment 
Banks - Money Center
Chemicals 
Banks - Major Regional
Insurance - Multi Products
Financial - Diversified
Railroads
Oil -- International 
Household Products 
Automobiles
Personal Finance
 
 
 
 

Revival

Review and Analysis

The US economy is currently in the early Revival phase (Revival 1).  In the Revival phase, the indexes of industrial production turn up (the Federal Reserve's index and the National Association of Purchasing Managers index) and non-farm payrolls increase (as measured on a 3-month moving average).
The early Revival phases last 6 months, and then the Revival phase begins.  We now only list the industry groups for the combined early Revival and Revival phases since we want to have an average holding period for each stock in excess of one year. 
 From 1980 to 1996, both the stock and bond markets have had excellent returns in the early Revival phase.  The S&P 500 stock index has had an average annual return of  26.11%, and the Lehman bond index had an annual return of 10.44% in this phase.  The current early Revival phase began on February 5, 1999. 
The industry groups that have historically outperformed the S&P 500 index on a return/risk basis in the combined early Revival and Revival phases are listed in the Industry Column to the left. Of course, not every industry group outperforms the broad indexes in every phase, but investors would be wise to focus their portfolio holdings in these industry groups.
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