Charts

Is it Safer to Invest in Utilities or Staples?

At times like these, after a high growth sector like technology, telecom, computers, or railroads has had an amazing decade of high performance and high valuations, it is natural to ask whether it makes sense to invest in more “boring” sectors of the stock market like utilities and consumer staples. Today’s chart in the sectors cateogory is brought to you by Yahoo Finance historical data on Fidelity sector funds.

At a glance, utilities seem to have tracked the S&P 500 surprisingly closely. This may make sense when we consider that as much as utilities are a staple, they are still somewhat pro-cyclical in charging often highly regulated rates on volumes of energy, water, and other resources that are often highly correlated to overall economic activity. Consumer staples, on the other hand, surprised me with how well they have performed vs the overall market average.

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