Utilities And Natural Gas: What To Consider When Investing In This Pair
Jay Kaeppel | Mar 13, 2019 01:50AM ET
The Test
We will make this as simple as possible:
- If the current month is January, February or December, hold Utilities.
- If the current month is March or April, hold natural gas.
- For all other months, hold a money-market fund.
The Funds
- For Utilities, we will use ticker FSUTX
- For natural gas, we will use ticker FSNGX
- For money market, we will use ticker VMMXX
Figure 1 – “System” Calendar
The Results
Figure 2 displays the growth of $1,000 invested using the rules above (utilities held Dec through Feb, natural gas held March and April, money-market held May through November) versus buying and holding the S&P 500 Index starting in Jan 1993.
Figure 2 – Growth of $1,000 invested using our Utility/Natural Gas strategy
Figure 3 displays some comparative numbers.
Figure 3 – Comparative Results
Summary
So, is this really a viable “system?” That’s not for me to say. The “system” has certain favorable qualities: simple, beat the S&P over time, much less volatile and with lower drawdowns than the overall market. However, there are also certain negatives: out of the market seven months of a year, can get left behind in a strong bull market, 100% focused in one sector five months a year.
Still, the results do generate some interesting food for thought.
Disclaimer: The data presented herein were obtained from various third-party sources. While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information. The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.
/h2
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.