Market Pulse: What will perform best in 2015?
Special to the Bonanza
This year the S&P 500 Index, a measure of large-company stocks, is up about 13 percent. That’s better than the S&P Mid-Cap Index, which is up 9 percent.
Small-company indexes are lagging, rising 4 percent. In 2014, large-cap stocks performed far better than small-cap stocks.
Large-company stocks aren’t always the leaders. Small-cap stocks, with their 37 percent return, were last year’s leaders. So should investors own large-cap, mid-cap, or small-cap stocks in 2015?
Instead of being locked into one market segment, it is best to employ a strategy that allows the investor to rotate to the best-performing area.
Support Local Journalism
When large-cap stocks are leading, then hold an S&P 500 index fund. Once small-cap or mid-cap stocks lead, however, switch to a mid-cap or small-cap Exchange-Trade Funds (ETFs).
Rotating to the leading market segments is what my style index rotation model is all about. I’ve published the details of this model in Stocks & Commodities magazine, which is available in the lobby at 889 Alder Ave.
How do you know what segments are leading? Each weekend I post a style index ranking free-of-charge on the Analysis page of http://www.ETFtradingstrategies.com.
The ranking uses ETFs from the iShares family because they cover all the style index choices, ranging from large-cap growth to small-cap value. I buy and sell through Schwab so I often use Schwab ETFs because they trade commission free.
Trading style index ETFs allows investors to gain well-diversified exposure to a specific area of the market and gives investors the flexibility to quickly move from value stocks to growth stocks, or from small-cap stocks to large-cap stocks.
By owning the better performing ETFs (top half of the relative strength ranking) an investor can outperform.
David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.
Support Local Journalism
Readers around Lake Tahoe, Truckee, and beyond make the Sierra Sun's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.