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Strategies & Market Trends : Fidelity Select Sector funds

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To: Shihchung Diana Shiue who started this subject	12/18/2000 2:08:31 PM
From: selectinvestor	of 4916

From this week's Commentary ... The Good News The year 2000 may prove to be the worst stock market since 1977, when the S&P 500 lost - 11.5% . The S&P 500 is down - 10.7% so far this year. The good news is that in the worst Bear Market in over twenty years, our portfolios are doing very well : Investor's is up 16.9%, Technology is up 0.79% and Security is up 5.08%. Only the Buy & Hold portfolio is down - 4.91%. For a technology heavy buy & hold portfolio this is doing very well given that the NASDAQ is down - 34.8% year-to-date. These returns outperform most mutual funds and newsletters by a wide margin. This week our defensive strategy continued to prove itself, the S&P 500 lost - 4.21%, and the NASDAQ lost - 9%. All of our portfolios held their value signifying better than these indices. Our defensive sectors are primarily the strongest financial sectors. As long as investors believe that the Federal Reserve is set to move to a neutral stance next week and is likely to begin lowering interest rates next year, then these sectors should continue to do well. The Bad News There will be a lot of bad news in the coming weeks. December is the early warnings period for fourth quarter and end of year earnings reports. Expectations are that this December will be a season for lowering expectations for fourth quarter, end of year and, more importantly, year 2001 earnings projections. While some analysts plead that the bad news has already been priced into the market, others suggest that we cannot know how far down the downgrades will go until after we have seen the detailed results and that cannot happen until mid-January at the earliest. The markets are pricing in a hard landing, verging on a recession. If we see a soft landing in the first quarter of 2001, the markets will rebound strongly. Russell Cox selectinvestor.com

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