Which sector to invest in 2011

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Zhuo, J. Parameter behavioral finance model of investor groups based on statistical approaches. Keywords: regret aversion, information cascade, financial literacy, investment decision making, risk perception, real estate. The use, distribution or reproduction in other forums is permitted, provided the original author s and the copyright owner s are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Introduction Behavioral finance assumes that imperfect information leads to irrational investment decisions. Figure 1. Conceptual framework. Table 1. Breakdown of sample size. Table 2. Demographic profile. Table 3. Table 4. Skewness, kurtosis, and factor loading. Table 5. Reliability statistics. Table 6. Table 7. Table 8. Buying the top three U. All returns exclude reinvested dividends.

Then sell that group, buy whatever sectors do best next year, and own those winners through Repeat the process each year. The strategy has an impressive track record.

The three sector winners produced a That beat a portfolio of the three sector losers, which rose 8. The sector winners carried slightly more risk, but their extra return compensated for the bumps. Momentum investing flies in the face of the long-term oriented advice that individual investors typically hear. Conventional advice eviscerates hot-hand investing as little more than gambling and market-timing, and to be sure, momentum strategies can fail miserably.

For example, the three best sectors of tumbled Letting your winners ride also fell short in , when the three winners gained The winning sectors also trailed slightly in and So be careful.

Letting your winners ride is a short-term play — no more than 12 months — that requires a high level of discipline and progressively higher stop-loss orders to protect your gains. Yet on a year-by-year basis, the odds favor momentum buyers.

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We use cookies If you close this message or continue to use this site, you will consent to the use of Cookies, unless you choose to disable them. Click on our Privacy Policy to understand more. Untitled Document Defensive sectors generally outperformed cyclical sectors in While global equities posted a decline in , three sectors managed a positive performance — Healthcare, Consumer Staples and Telecommunication Services Materials and Financials were worst-performing sectors in Information Technology managed to outperform the broader market despite its cyclical nature Not surprisingly, Healthcare funds outperformed in , while Asian infrastructure and global resource funds underperformed Despite the rise in gold prices, gold equities posted a loss, hurting the performance of precious metal funds Table 1: Sector Performance Sector Industry Nature 4Q 11 YTD Healthcare Defensive 7.

But Materials and Financials suffered On the other hand, stocks in the Materials sector were the worst-performing with a decline of This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund.

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