2011 Weekly Trades

All distributions and dividends are assumed to be reinvested, which has no meaningful effect on the rates and percentages shown. For comparison, the same period returns of the Vanguard Index 500 Fund (symbol VFINX), whose performance is close to the S&P 500 index, are also shown.

It should not be assumed that trades in the future following the Fidelity Select Switching System will be profitable or will equal the performance of the trades shown below.

Note: Buy prices marked by a * have been adjusted for a distribution by the
      fund between the purchase and sale dates.  This distribution is assumed
      to be reinvested in the fund, which has no meaningful effect on the
      percent changes or overall rates of return shown. Fidelity normally
      makes any distributions for the Selects on the first two Fridays in
      April and on the first three Fridays in December.
                                                            Sell or          Index
Buy       Fund              Sale/Exchange              Buy   Recent  Percent  500
Date      Purchased         Date     Exchange to:      Price Price   Change   Change

1/3/11    Natural Gas       2/14/11  Energy Service    33.46  35.09   4.9%    5.0%
1/10/11   Consumer Finance  2/22/11  Multimedia        11.58  11.92   2.9%    3.8%
1/18/11   Electronics       3/5/11   Energy Service    52.63  51.55  -2.1%    1.4%
1/24/11   Medical Delivery  5/31/11  Energy Service    52.38  60.32  15.2%    4.9%
1/31/11   Energy Service    4/18/11  Biotechnology     79.79  83.20   4.3%    1.9%
2/7/11    Energy Service    4/18/11  Biotechnology     81.90  83.20   1.6%   -0.7%
2/14/11   Energy Service    4/18/11  Biotechnology     83.34  83.20  -0.2%   -1.7%
2/22/11   Multimedia        4/4/11   Energy Service    46.70  47.59   1.9%    1.5%
2/28/11   Energy Service    4/18/11  Biotechnology     85.87  83.20  -3.1%   -1.5%
3/5/11    Energy Service    4/18/11  Biotechnology     85.23  83.20  -2.4%   -0.2%
3/14/11   Biotechnology     7/11/11  Energy Service    75.25  87.19  15.9%    2.4%
3/21/11   Biotechnology     7/11/11  Energy Service    74.65  87.19  16.8%    2.2%
3/28/11   Transportation    5/2/11   Biotechnology    56.16*  58.09   3.4%    4.0%
4/4/11    Energy Service    5/9/11   Air Transport     88.76  81.37  -8.3%    1.1%
4/11/11   Electronics       5/23/11  Medical Delivery  52.16  51.82  -0.7%   -0.3%
4/18/11   Biotechnology     7/11/11  Energy Service    82.35  87.19   5.9%    1.5%
4/25/11   Electronics       6/6/11   Energy Service    53.61  50.80  -5.2%   -3.4%
5/2/11    Biotechnology     7/11/11  Energy Service    86.48  87.19   0.8%   -2.7%
5/9/11    Air Transport     6/13/11  Money Market      41.10  37.71  -8.2%   -4.8%
5/16/11   Medical Delivery  7/5/11   Leisure           61.11  60.61  -0.8%    0.9%
5/23/11   Medical Delivery  7/5/11   Leisure           60.11  60.61   0.8%    1.8%
5/31/11   Energy Service    8/8/11   Money Market      83.08  66.38 -20.1%  -16.5%
6/6/11    Energy Service    8/8/11   Money Market      79.21  66.38 -16.2%  -12.7%
6/13/11   Money Market      7/18/11  Energy Service     1.00   1.00   0.0%    2.8%
6/20/11   Money Market      7/25/11  Energy Service     1.00   1.00   0.0%    4.8%
6/27/11   Retailing         10/31/11 Broker, Inv Mgmt  53.07  54.92   3.5%   -1.4%
7/5/11    Leisure           9/19/11  Electronics      100.02  91.91  -8.1%   -9.6%
7/11/11   Energy Service    8/15/11  Money Market      83.00  75.55  -9.0%   -8.6%
7/18/11   Energy Service    8/22/11  Money Market      84.19  64.52 -23.4%  -13.7%
7/25/11   Energy Service    8/29/11  Constr & Housing  89.54  71.59 -20.0%   -9.3%
8/1/11    Energy Service    9/6/11   Utilities         86.70  68.62 -20.9%   -9.2%
8/8/11    Money Market      10/17/11 Energy Service     1.00   1.00   0.0%    7.7%
8/15/11   Money Market      10/17/11 Energy Service     1.00   1.00   0.0%    0.1%
8/22/11   Money Market      10/17/11 Energy Service     1.00   1.00   0.0%    7.2%
8/29/11   Constr & Housing  10/3/11  Air Transport     32.53  27.73 -14.8%   -9.0%
9/6/11    Utilities         10/17/11 Energy Service    49.98  51.14   2.3%    3.3%
9/12/11   Retailing         10/31/11 Broker, Inv Mgmt  51.01  54.92   7.7%    8.1%
9/19/11   Electronics       10/24/11 Energy            46.30  46.72   0.9%    4.3%
9/26/11   Electronics       11/7/11  Natural Gas       44.57  47.29   6.1%    8.7%
10/3/11   Air Transport     11/14/11 Energy Service    32.05  36.35  13.4%   14.2%
10/10/11  Money Market      11/14/11 Energy Service     1.00   1.00   0.0%    4.9%
10/17/11  Energy Service    12/12/11 Biotechnology     63.35  65.43   3.3%    3.3%
10/24/11  Energy            12/12/11 Biotechnology    50.98*  48.88  -4.1%   -1.1%
10/31/11  Broker, Inv Mgmt  12/5/11  Biotechnology     43.37  42.38  -2.3%    0.6%
11/7/11   Natural Gas       12/19/11 Banking          31.72*  28.58  -9.9%   -4.1%
11/14/11  Energy Service    12/19/11 Banking           69.42  60.62 -12.7%   -3.5%
11/21/11  Money Market      12/27/11 Pharmaceuticals    1.00   1.00   0.0%    6.3%
11/28/11  Money Market      1/3/12   Biotechnology      1.00   1.00   0.0%    7.3%
12/5/11   Biotechnology     2/27/12  Natural Gas       83.45  99.06  18.7%    9.3%
12/12/11  Biotechnology     2/27/12  Natural Gas       82.11  99.06  20.6%   11.1%
12/19/11  Banking           1/30/12  Electronics       14.94  16.96  13.5%    9.1%
12/27/11  Pharmaceuticals   1/30/12  Electronics       13.62  13.72   0.7%    3.9%
   
No money market interest assumed because rates are a small fraction of 1%
In order to keep this complicated page from becoming even more so, the trade results shown do NOT include the use of "stop-loss" tactics, which is my recommended strategy. These are discussed in several other pages on this site, and there are some examples that illustrate the potential beneficial effects of using stop-losses. The more volatile sector funds such as those in high technology, Biotechnology, and Energy Service are more likely to get stopped out. In many such cases, the fund likely would have been held less than 30 days. If so, it would have been hit with Fidelity's 0.75% short-term selling penalty for Select funds.

Since it is unlikely that any investor would act on all of the weekly signals shown above and on the linked pages for prior years, here is an illustration of one use of the weekly trade list tables.

Starting on 1/3/11, the closest Monday to the start of 2011, if one had invested
into a single Select fund and followed the system, these would be the trades:

Buy       Fund              Sale/Exchange            Percent  Index 500
Date      Purchased         Date     Exchange to:    Change   Change
--------------------------------------------------------------------
1/3/11    Natural Gas       2/14/11  Energy Service     4.9%    5.0%
2/14/11   Energy Service    4/18/11  Biotechnology     -0.2%   -1.7%
4/18/11   Biotechnology     7/11/11  Energy Service     5.9%    1.5%
7/11/11   Energy Service    8/15/11  Money Market      -9.0%   -8.6%
8/15/11   Money Market      10/17/11 Energy Service     0.0%    0.1%
10/17/11  Energy Service    12/12/11 Biotechnology      3.3%    3.3%
12/12/11  Biotechnology     Still held as of 1/3/12     5.2%    3.4%
--------------------------------------------------------------------
Total return as of 1/9/12                               9.6%    2.4%
    accounting for maximum 2% annual management fee     7.6%

The calculation for the total return for the track is:
 (1.049)(0.998)(1.059)(0.910)(1.000)(1.033)(1.052) - 1  expressed as a percent.
Here is a table showing what have happened if one had followed the method illustrated above starting on the closest "Monday" to the beginning of each year since 1996. The returns shown are those for the following year (52 weeks). "Selects System" shows the results of trading the Select funds, which have been reduced by the maximum 2% annual management fee. Those returns do not reflect Fidelity's load (removed in September 2003) applied to initial purchases of Select funds, which ranged from 0% to 3% depending on the amount of the purchase. The links in the right column show the weekly trades for each year and the computations of the values in the table. Returns for the Vanguard Index 500 fund are included to provide a market condition context.
Year      Selects System    Index 500      Weekly Trade Lists & Computations

1996           31.2%           21.9%       1996 Weekly Trade List
1997           33.1%           28.6%       1997 Weekly Trade List
1998           17.1%           27.7%       1998 Weekly Trade List
1999           56.4%           19.6%       1999 Weekly Trade List
2000           32.0%          -10.8%       2000 Weekly Trade List
2001          -20.5%          - 9.5%       2001 Weekly Trade List
2002          -23.8%          -21.3%       2002 Weekly Trade List
2003           18.4%           28.2%       2003 Weekly Trade List
2004           14.7%            8.8%       2004 Weekly Trade List
2005           12.5%            7.4%       2005 Weekly Trade List
2006           12.8%           13.6%       2006 Weekly Trade List
2007           11.2%            6.9%       2007 Weekly Trade List
2008          -42.4%          -38.4%       2008 Weekly Trade List
2009           90.5%           32.9%       2009 Weekly Trade List
2010           31.4%           12.9%       2010 Weekly Trade List
2011            7.6%            2.4%
              ------          ------
Average(96-11) 17.7%            8.2%

No claim is made that the system will perform in the future as it has in the past or as illustrated above. Also, there can be no assurances that the system will produce a profit in the future; it is possible that the system will produce losses.

Comments and Implementation Issues

(Past comments may be deleted when they are no longer relevant)

Januray 3, 2012:

We have now completed 2011 (actually Jan. 3, 2011 to Jan. 3, 2012), so we can see how the system did for the year. There were six completed trades plus the current one in Biotechnology that has been open for three weeks. There are almost always five to seven trades a year, so 2011 was on the high end of that range.

Four of the six completed trades were profitable as is the open trade so far. The second and third trades of the year did better than the broad market as measured by the Vanguard Index 500 fund, and that is true of the open trade. The other trades had results very close to buying and holding the index fund for the same periods. All told, the Selects Switching finished well ahead of the index fund in what turned out to be a volatile year for stocks that ended up close to where it started. For the tenth time in the sixteen years 1996-2011, the system has outperformed the index fund.

The track for 2012 begins with this week's trade in Biotechnology. I will continue to show the 2011 track until the open trade, also in Biotechnology, is over. The track for 2012 will be shown under the weekly trades list once there is a second trade started. The weekly trades list for the 2011 trades will appear until all of them have been completed. Starting next week there will be a link to 2011 list that shows the status of the trades and the 2011 track at the "end" of the year, which is Jan. 3, 2012 for the purposes of weekly tracking.

November 14, 2011:

Two funds, Air Transportation and Money Market, are signaled for sale this week. Such happens every so often. If an investor wants to own more than one Select fund in order to obtain some diversification, switching both of these into the current top-ranked fund, Energy Service, would not be appropriate. In this case, the easiest way to handle things is to exchange Air Transportation into Energy Service and continue to hold Money Market until a new fund in a non-energy sector rises to the top of the rankings.

June 20, 2011:

The money market fund has been the top-ranked for the past two weeks, which shows that the market's weakness for almost two months has caused all of the Select funds to show losses over the ranking period.

Although the 0.75% charge for selling a Select fund within 30 days of buying it does not apply to the money market fund, the system will hold it for the five-week minimum period.

Although Select Money Market currently pays a paltry rate of about 0.05%, it is better than other Fidelity money market funds. If you are in one of those, there is a small advantage to moving to Select Money Market (ticker FSLXX, Fidelity fund number 85). Because FSLXX is not your "core" fund, to move to it requires buying it in your Fidelity account, which does not incur any commissions or charges. To move out of it, you would need to sell FSLXX or exchange it to another Fidelity mutual fund. The extra effort may not be worth it unless the amount in the core account is large enough to make a meaningful difference in (after-tax) interest earned.

January 3, 2011:

We have now completed the 52 week period from 1/4/2010 to 1/3/2011, which is what is used for "year" 2010 data. It was a good year for the broad stock market as can be seen from the 12.9% gain for the Vanguard Index 500 fund. Smaller capitalization and high technology issues did even better. In strong markets like 2010, sector rotation typically does very well. That was certainly the case this past year as we see gains over 30% for the track shown on the linked page with the 2010 list of trades.

The major indices were down at the end of August, so all of the market's gains and then some were realized in the last four months of the year. Some of Select funds purchased according to the system during this period had exceptional gains.

There are normally five to seven trades during a 52 week period, and 2010 saw the high end. The last trade, in Energy Service, is still open. Since it was bought in November, we can count it as a full trade alhtough it likely will last at least a few more weeks. Four of the seven trades were profitable, and two of the losers fell by less than a percent. Five of the seven did better than the index fund. All in all, it was another great year for the Selects Switching System as is evident in the table of annual returns shown above.

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