Rather than trying to predict what sector of the market will lead the rest, we are better off by holding as many sectors as feasible. By diversifying our investments among numerous sectors we no longer have to worry about picking the right sector or the wrong sector. The sectors I am referring to are known in the investment community by the name "asset class". There are an unlimited number of asset classes depending on how one divides up the universe of investment products, but the big ones are U.S. stocks, international stocks, and bonds. Within the U.S. stock market there is the 50 largest companies (tracked by the Russell Mega Cap Index), 200 largest companies (tracked by the Russell Top 200 Index), the 500 largest companies (tracked by the S&P 500 Index), and so on and so forth.
An investment research company by the name of Callan Associates compiles a periodic table style graphic which displays the relative performance of some of the better known asset classes (click the image below to see the full size graphic). This graphic is fascinating to me as I can clearly see the randomness in asset class investment performance from year to year and am reminded that it is impossible to know - with any certainty - what next years mix will look like. Take a look for yourself and let me know what you think!