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Best Sectors And Stocks To Invest In For The Long Run

|Includes: Danaher Corporation (DHR), HD, KSU, PCP, SYK

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Conservative investors like stocks with positive return above interest rates with an absolute minimum of volatility. The Sharpe ratio has been one of the most used tools to examine the performance of an investment by adjusting for its risk. Normally this is done on investment- and hedge funds, but this table shows how the Sharpe ratio would have rate the 300 largest stocks globally (by trading volume) and have easy accessible trading data for the past 30 years. Because almost all of them are from the US, I have used the accumulated Feds funds rate since 1983 as the "risk free rate" in the equation.

Of the ten large sector classes, five of the sectors hold almost 85 percent of all stocks from the top 50 companies with best Sharpe ratio. Three of the sectors hold more than half of all companies. This is the sectors and companies that you should have been invested in since the early eighties.

I use this formula (MetaStock) to calculate the Sharpe ratio on monthly data for the last 30 years: (((C/Ref(C,-360)-1))-2.8552)/30)/((Stdev(C/Ref(C,-1)-1,360)*Sqrt(12)))

Sector Companies
Consumer Cyclicals 9
Healthcare 9
Consumer Non-Cyclicals 8
Financials 8
Industrials 8
Energy 3
Basic Materials 3
Technology 2
Telecommunications 0
Utilities 0
Company Sharpe ratio Symbol Sector
DANAHER 40.0721 DHR Industrials
KANSAS CITY SO 31.4996 KSU Industrials
CDN NATURL RES 28.6355 CNQ.TO Energy
PRECISION CAST 23.5304 PCP Industrials
STRYKER 22.3802 SYK Healthcare
HOME DEPOT INC 22.0493 HD Consumer Cyclicals
ST JUDE MEDICL 21.5147 STJ Healthcare
NIKE INC CL B 19.0121 NKE Consumer Cyclicals
MEDTRONIC INC 16.1686 MDT Healthcare
GAP INC 15.2927 GPS Consumer Cyclicals
AFLAC INC 12.2711 AFL Financials
APPLE INC 12.2692 AAPL.O Technology
NOVO-NORDISK A/S 11.5374 NVO Healthcare
ECOLAB INC 11.2531 ECL Industrials
JACOBS ENGINEER 10.5296 JEC Industrials
THE PROGRESSIVE 10.4300 PGR Financials
CHURCH DWIGHT 10.2645 CHD Consumer Non-Cyclicals
WAL-MART STORES 9.7403 WMT Consumer Cyclicals
M&T BANK CRP 9.6502 MTB Financials
SHERWIN-WILLIAMS 7.8651 SHW Basic Materials
WALGREEN CO 7.2680 WAG Consumer Non-Cyclicals
LOWES COMPANIES 7.1710 LOW Consumer Cyclicals
TJX CO INC 7.0924 TJX Consumer Cyclicals
ALTRIA GROUP 6.9530 MO Consumer Non-Cyclicals
MYLAN INC 6.9191 MYL.O Healthcare
VORNADO REALTY 6.8557 VNO Financials
BECTON DICKINSN 6.8155 BDX Healthcare
ST STREET CP 6.6463 STT Financials
JOHNSON JOHNSON 6.5934 JNJ Healthcare
WALT DISNEY CO 6.5775 DIS Consumer Cyclicals
ROB HALF INTL 6.4915 RHI Industrials
SIGMA ALDRICH 6.4757 SIAL.O Basic Materials
CHEUNG KONG 6.3546 0001.HK Financials
ILLINOIS TOOL WK 6.3178 ITW Industrials
COLGATE PALMOLIV 6.2936 CL Consumer Non-Cyclicals
THERMO FISHER SC 6.0523 TMO Healthcare
HERSHEY CO 5.8086 HSY Consumer Non-Cyclicals
AUTOMATIC DATA 5.7033 ADP.O Industrials
PEPSICO INC 5.5613 PEP Consumer Non-Cyclicals
W R BERKLEY CP 5.5519 WRB Financials
APPLIED MATL 5.5375 AMAT.O Technology
LEUCADIA NATL CP 5.5265 LUK Financials
ROGERS COMM B 5.4684 RCIb.TO Telecommunications Services
MCCORMICK & CO 5.4351 MKC Consumer Non-Cyclicals
MCDONALD'S CORP 5.3634 MCD Consumer Cyclicals
ENERGEN CORP 5.1455 EGN Energy
TYSON FOODS 5.0055 TSN Consumer Non-Cyclicals
UNIV HEALTH SVC 4.9923 UHS Healthcare
INTL GAME TECH 4.9322 IGT Consumer Cyclicals