It’s three months since I last posted the performance of the S&P/ASX 200 Sectors, so time for an update. The major change over the last three months is Financials have come from behind to take a convincing lead. They’re followed by a reasonably predictable list, if you subscribe to sector rotation theory; industrials, consumer discretionary, information technology, materials and energy.

S&P/ASX 200 Sector Performance [Click to Enlarge]

I posted the sector vs market cycle here and this recovery continues to play out roughly as predicted. The issue most investors have with these types of theories is that they seek definitives rather than guidelines. By that I mean they want something that is guaranteed to work in a certain way. The only secret is there is no secret. There is no guarantee, and I’m sorry to say there is no magic formula. However, there are helpful signposts to guide us on our investing paths.

The Rothschild’s are among a group of investors who discovered cycles long before anyone else and my understanding is they profited handsomely from their knowledge edge over many decades, but I digress. Sector rotation like any theory, formula or screen is a starting point not the destination. It is essential to then layer on your own wisdom of current circumstances as no two iterations will be exactly the same.

In this cycle Australian banks were a good bet to come out on top in performance. I placed by bets on Macquarie, ANZ and Westpac. Consumer discretionary generally leads along with technology and industrials. Cycle theories shares one of its best attributes with value investing, it doesn’t matter how many people seem to know about it, the edge remains.

I should have known Telstra was destined to underperform the rising market, but then again I haven’t invested in Telstra was growth. It is the bed rock of my Australian equity holdings. It was my source of cash when I was fully invested and all those wonderful SPP’s came along. It continues to generate cash and hand a wad of it to me twice a year. Plus it’s time will come and then, just like in the past, I will cash out with a good capital gain.

One final note. Just over a week ago a friend contacted me to say thanks for recommending Biota. After decades of investing Biota was there first ever ten bagger and it happened in less than a year. While that made me feel good I add that comment to illustrate that at the end of the day it usually comes down to individual stock picking.

Any opinions on what sectors are likely to lead for the next six months?

S&P/ASX 200 Sectors and Indicies

In case you’re not familiar with the above sector codes.

Related posts:

1. S&P 500 Sector Earnings
2. Sector Rotation Plus S&P Responds to Jeremy Siegel
3. S&P500 Earnings Update and Sector Focus
4. S&P/ASX 200 Buring up for your lovin’
5. Klarman’s Wisdom and Sector Rotation
6. All Ords Set for a Nasty Snap Back