What Is Sector Rotation? How It Works and Importance in Investing
By BRIAN BEERS Updated May 07, 2023
Reviewed by CIERRA MURRY
Fact checked by YARILET PEREZ
What Is Sector Rotation?
Sector rotation is the movement of money invested in stocks from one industry to another as investors and traders anticipate the next stage of the economic cycle.
The economy moves in reasonably predictable cycles. Various industries and the companies that dominate them thrive or languish depending on the cycle.
That simple fact has spawned an investment strategy that is based on sector rotation. Even those investors who don't base their entire strategy on sector rotation would be wise to anticipate the cycle.
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