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What about just finding the industries that are expected to grow the fasted over the next 10 years, and when they are reasonably valued buy ETFs of them, and hold them for a long time.

It seems like a good strategy.

The high growth expectations are already baked into the stock's price. To overperform, the company would have to exceed the high expectations. This is difficult. I would expect a backtest to show that moderate growth stocks do better.

What is "reasonably valued"? In backtests, momentum often boosts returns. Buying low-momentum stocks does not seem to work in general.

Just based on a straight average of S&P 500 stocks, the Healthcare and IT sectors have the highest average estimated growth (future 5-years). Consumer Staples and REIT have the lowest average estimated growth.

Ticker        Company Name        [Sector]  [SalesY1]  [Growth]  [sectGro]  [Mo]  [sectMo]          Sector
  UNH      UNITEDHEALTH GROUP        35       400,278      5         19     -46     7.2           Health Care
 AAPL           APPLE INC            45       416,161     12         17      21     22.0    Information Technology
  DOW           DOW INC              15        42,964    -13         14     -45     -5.3          Materials
  JPM     JP MORGAN CHASE & CO       40       166,775      8         13      26     5.0           Financials
GOOGL       ALPHABET INC CL A        50       350,018     15         12      82     2.9     Communication Services
  UPS     UNITED PARCEL SERVICE      20        91,070      5         12     -24     5.0           Industrials
  XOM       EXXON MOBIL CORP         10       340,568     12         11       0     -0.9            Energy
 AMZN        AMAZON COM INC          25       637,959     18         10      12     6.8     Consumer Discretionary
  DUK       DUKE ENERGY CORP         55        29,934      7         8       11     14.8          Utilities
  AMT   AMERICAN TOWER CORP REIT     60        10,127     23         6       -8     -7.8          Real Estate
  WMT         WALMART INC            30       680,985      8         4       21     -3.5       Consumer Staples

https://gtr1.net/2013/?~SectorGrowthEstimate25a:h2...

Create [Mo]: [Total Return % over 252 days]
Create [Growth]: [SI EPS Growth Est]
Create [Sector]: [SI TRBC 2 Digits]
Create [sectGro]: [Average [Growth], grouped by [Sector], at step5]
Create [sectMo]: [Average [Mo], grouped by [Sector], at step5]
step0: [S&P 500 Member; lag=1 days] == 1
step1 to step6 are deblanking
step7 keeps largest SalesY1 in each Sector.

It is hard to outperform in the market no matter what you do. I was talking about an industry ETF, not individual stocks. I would think if you held it for a long time, and did not get in during a bubble, it could outperform, but back to point 1, it is hard to outperform the market.

Is identifying an industry sector which will outperform the market be any easier than identifying a company/stock which will outperform the market?

I'm thinking the answer is "No."

I would think it would be easier. There are mature industries, where the growth has already occurred, and industries that are still growing. I would think chips would grow faster than coal for example.

Is identifying an industry sector which will outperform the market be any easier than identifying a company/stock which will outperform the market?
I'm thinking the answer is "No."

Outperforming the market is hard, so you're probably right. Prices are pretty unpredictable.

But the business results of the industries themselves aren't random: I think one could list a few industries that are unusually poor prospects over the decades, and others that are usually better bets. You can't be sure, but I think you can skew the odds in your favour.

Those with likely poor prospects, or which prosper only occasionally:
Retail, basic materials, textiles and clothing, steel, manufactured housing and RVs, construction, car parts, telecoms

A couple that usually have better prospects:
Software, medical devices, drugs, cosmetics, beer, defence, gaming. Tobacco (ick).

So perhaps a simple strategy that wouldn't be TOO crazy would be to find the industries with the best long run returns in a typical stretch (not just a single end date today), and from among those find the ones with the most reasonable valuation levels (using CAPE?) compared to their own histories.
Sort of an industry version of the country-by-country CAPE strategy. As with that strategy, make sure there are enough companies in all your groupings to have meaningful expectation of statistical support and mean reversion.

Jim

To OP https://www.shrewdm.com/MB?pid=316073816
Is identifying an industry sector which will outperform the market

Although the phrase "will outperform the market" is problematic, there are a couple of easy to use tools available free at Stockcharts to identify regions, sectors or sub-sectors/industries that are trending stronger than "the market" and for the short term (next 3-5 weeks) more likely than not to outperform the market, due to standard momentum & trend.

One is the sectors list, and using the simple SCTR number (Stockcharts Technical Rank) as a sort.
https://stockcharts.com/freecharts/sectorsummary.h...

Another is the Relative Rotation Graph, which is a great visualization of change in relative strength among whatever several symbols you choose - takes a bit of training to understand what it's showing but no big deal.
https://stockcharts.com/freecharts/rrg/?group=sp50...

FC

Thank you FC.

Here is a doc named "Asset Class Performance is Unpredictable"
The original link is dead, but I grabbed it before it died.

https://www.mediafire.com/file/cf5iiuyjidm/MultiAs...
https://drive.google.com/file/d/1em6Ay0wpIoSC_tBLk...

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