TSCI Street Pulse - December 21, 2009

Sector Rotation

In our August 10th Clarion, based on the sector performances since the “March 9th Low” (see table below), I suggested switching from the First Group, which had risen sharply in the five-month period, to the laggards in the Second Group. On balance, this would have turned out okay, with the Financials flat and the other sectors, pretty much in line, other than Utilities, which rose 14% since the beginning of August.

The Utilities sector has been “hot” lately: (a) since the first of November, the index is up 12.9%; and (b) this past week alone, the index was up 6.6%.  

After the run-up in gold, investors seem to have shifted gears and are now focusing on locking in yield. Interest rates have nowhere to go but up. It is not a matter of “if”, only a matter of “when”. Thus, I expect high-dividend stocks to be front-and-center for the next little while.

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Bob Weir, B. Comm, B.Sc., CFA. - eResearch

Mr. Weir has 43 years of investment research and analytical experience in both the equity and fixed-income sectors, and in the commercial real estate industry. He was at Dominion Bond Rating Service (DBRS) from 1994 to 2001, latterly as Executive Vice-President responsible for supervising the firm’s 34 analysts and conducting the day-to-day management affairs of the company. He joined eResearch in 2004 and has been its President, CEO, and Managing Director, Research Services since May 2005.