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Monthly Archives: October 2017

Sector Allocation and Business Cycles

Of late I have been doing a lot of analysis around stock market sectors.  In the past I hadn’t really paid too much attention to sector weighting, but during all the technical analysis I have been doing has let me to believe there probably is something to trying to allocate holdings by sector.   I recently completed building my sector analysis model (see it here), and am test driving it to see if it can lead to enhanced returns in my portfolio.

During my deep dive into this subject, I ran across this page on the Fidelity website that did a pretty decent job of giving basic sector weighting advice.   They use a business cycle approach to sector weighting, and they had this interesting chart showing how different sectors do during different parts of the business cycle:

Sector Performance by Business Cycle
Sector Performance by Business Cycle

Fidelity’s opinion is that we are in the mid to late phase of the business sector, and that seems reasonable to me.  So using the chart above should give you an idea as to what sectors to start thinking about over-weighting or under-weighting.

One thing I realized when I started looking at my holdings by sector that I was way overweighted in the Technology and Consumer discretionary sectors.  This is because I typically ‘buy what I know’, products or services that I use.      I don’t think there is anything wrong in buying what you know, but this analysis has helped me keep better disciplined as to managing portfolio risk.

So its been an interesting dive into thinking about sectors, whether or not its meaningful or not only time will tell. I will be watching the market with a focus on sectors, and will see if this can be a tool to enhance portfolio performance.

 

October 20, 2017 Dan Leave a comment

An API World

I was perusing Twitter the other day, and this post jumped out at me:

So I checked out the list at https://github.com/toddmotto/public-apis

Over the years I have used a lot of free API’s to get data, and it was interesting to see this consolidated list of free data sources.   There has never been a better time to be a developer than now.

Granted, this list contains a lot of silly data (I’m talking about you – Game of Thrones API) but I foresee an explosion of more free data.  If this list proves at least one thing, people will put work into publishing work on the internet with no guarantee of compensation.  It is economically irrational behavior, but it goes to show that money may not be the only thing to motivate productive behavior.

Conceivably, with today’s client site coding advancements through the use of javascript frameworks, and all this freely available data,  anyone could build decent apps that just run on the local browser.  And instead of having to host that app on some webserver somewhere, you could just email it to friends and others who may want to use your app.

So if nothing else, this reinforces my belief that the internet is a force for good.  The internet gets a bad rap for encouraging anti-social and hateful behavior, so lets at least acknowledge some of the great work people are doing for free.

October 4, 2017 Dan Leave a comment

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