Editor’s Note: During the recent heat wave along the East Coast where I live, I’ve spent a lot of time indoors channel surfing to pass the time. That how I came across the famous Seinfeld episode that had George Costanza convinced he should do “The Opposite” of what his instincts tell him to do to get his life back in order.

In George’s case, that is probably good advice. Usually, his misbegotten plans for romance and career advancement end in failure. But when he does the opposite, George quickly lands a new girlfriend and a dream job that allows him to finally move out of his parents’ house (meanwhile, Jerry just keeps breaking even).

Now that the stock market is at record highs, I’m wondering if it is time to implement George’s opposite strategy. Stocks are trading at very high valuations despite tepid economic growth projections for the second half of this year.

In Wall Street parlance that is known as contrarian investing. And if now is the time to be contrarian, the three worst performing sectors of the S&P 500 over the past three years may finally start doing the opposite.

Health Care

Over the past three years (through June 30), the average annual return for the health care sector has been a paltry 3.3 percent compared to a nearly 20 percent yearly average gain by the S&P 500 Index. Pharmaceutical companies were under attack during the Biden administration for price gouging and now the Trump administration is taking an ax to Medicaid.

Ultimately, health care companies are going to prosper. The lifesaving drugs and pain reducing medications they provide are essential to our quality of life. Once the current shakeout is over, they should be back in the good graces of Wall Street.

When that happens, the Health Care Select SPDR Fund (NYSE: XLV) should fully participate. That’s because it is managed to “provide results that, before expenses, correspond generally to the price yield performance of the Health Care Select Sector Index.”

The fund’s top three holdings are Eli Lilly & Co. (NYSE: LLY), Johnson & Johnson (NYSE: JNJ), and AbbVie (NYSE: ABBV). Combined, they account for roughly 28 percent of the fund’s net assets. As advancements in artificial intelligence improve research and testing protocols, these companies operating results should increase proportionately.

Real Estate

The real estate sector has performed only slightly better than health care, eking out an average annual 3-year return of just 4.1 percent (thru June 30). That’s not surprising given the rising interest rate environment during that period, which increases the borrowing costs for the equity real estate investment trusts (REITs) that dominate this sector.

If you aren’t familiar with REITs, they are designed to acquire income-producing properties and pass through the net rents they collect to their shareholders. For that reason, they are most attractive to income investors seeking relatively high cash flow.

That is the primary appeal of the Real Estate Select Sector SPDR Fund (NYSE: XLRE). According to the fund’s sponsor, it “includes companies from the following industries: real estate management and development and REITs, excluding mortgage REITs.”

The fund’s top three holdings are American Tower (NYSE: AMT), Prologis (NYSE: PLD), and Welltower (NYSE: WELL) which account for 28 percent of this fund’s net assets. If the Fed does cut interest rates later this year, demand for REITs should increase.

Consumer Staples

Consumer staples are essential to daily living and include household and food products, beverages, tobacco, and personal care items. Despite constant demand for consumer staples, this sector has only grown at a 6.7 percent annual rate over the past three years.

Of course, demand is only one half of the equation that determines price. The other half is supply, which may soon change now that the Trump administration has imposed higher import tariffs on many of those products.

That is not necessarily bad news for the Consumer Staples Select Sector SPDR Fund (NYSE: XLP). Consumers won’t stop shopping, but they may spend more money on items produced domestically once the full cost of the import tariffs are passed on to them.

The top three holdings of this fund are Walmart (NSYE: WMT), Costco Wholesale (NYSE: COST), and Procter + Gamble (NYSE: PG) which comprise 27 percent of this fund’s net assets.