As we have noted before, this market has been somewhat unique in that counter-cyclicals have outperformed cyclicals since the market top in October 2007. As you can see in the first chart below, counter-cyclicals have outperformed by nearly 18% over the past seven years.

However, since the March 2009 low, the last six weeks of the year have been a period where we have seen on average about a 3% outperformance each year by either cyclicals or counter-cyclicals. In the past five years, cyclicals have outperformed from November 15th to January 1st three times by an average of just over 3%. During the other two years, counter-cyclicals have outperformed by an average of just about 3% as well. The next five charts show performance for this six week period by year.

11/15/2009 – 1/1/2010

11/15/2010 – 1/1/2011

11/15/2011 – 1/1/2012

11/15/2012 – 1/1/2013

11/15/2013 – 1/1/2014

So far in 2014, cyclicals have managed to outperform counter-cyclicals by just a smidge since November 15th. It will be interesting to see what transpires over the next five weeks. So far this year, counter-cyclicals hold three of the top four performing sectors year-to-date. Will money managers keep riding high with health care and utilities or will there by a contrarian move to bid up the laggards of the year, energy and materials? Only time will tell.

11/15/2014 – 11/21/2014

MSCI World Performance – Equal-Weighted Sectors