Materials
ByAlthough the materials sector has done well recently, caution should be used investing in the materials sector during the month of September. From 1990 to 2008 this sector has produced an average loss of 2.7% and has only beaten the S&P500 16% of the time.
It should be noted that the Canadian materials sector is substantially different than the U.S. materials sector that is used in this analysis. The U.S. materials sector is composed of Rocks, Paper, Trees, Steel and Chemicals, with a very small holding of gold. In Canada the sector has a very small percentage of chemical companies and gold is a much larger percentage of the sector. Canadian investors tend to use the Barclays ETF, XMA as a proxy for the materials sector. Most of this fund is gold stocks.
With softer earnings from the summer months and slowing GDP year-end expectations for the economy the metals and mining sector tends to produce a loss in the month of September. In August and the beginning of September the metals and mining sector has been doing well, but the downside risk with this sector outweighs the upside potential.
