The Standard & Poor's 500
The Standard and Poor's 500 or S&P 500 exists to reflect a broad and general sense of how mostly-American business is doing. Here is a list of what comprises the 9 sectors which make up today’s S&P 500:
Each sector has its own distinctive characteristics which make the sector appealing – or not – in given market conditions in given eras. For example, if you owned the technology sector between 1995 and 2000 you made a fortune.
But if you owned it from march of 2000 to june of 2003 you lost your shirt.
Technology is about offense – it is comprised of growth stocks which generally don’t pay much in dividends. You buy them because you believe earnings will grow and their price/earnings multiples will grow faster than that of the “market."
What’s defense? Utilities. If you owned them from 1995 to 2000 you kissed your sister. They grew but… pedantically. But from 2000 to 2003, they were heroically boringly flat. In a falling-anvil market, dull is King.
By sector, here are the performances from 1970 to 2010.