SECTOR ROTATION

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SECTOR ROTATION
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Definition

• Sector rotation is an investment strategy
  involving the movement of money from one industry
  sector to another in an attempt to beat the
  market based on economic cycles.
• Using sector rotation
• Must know where you are in the economic cylce via
  data
• The NBER usually calls recession and recovery
  after the fact
• The stock market movement precedes the economic
  cycle by 6 to 12 months

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NBER
A recession is a significant decline in economic
activity spread across the economy, lasting more
than a few months, normally visible in
production, employment, real income, and other
indicators. A recession begins when the economy
reaches a peak of activity and ends when the
economy reaches its trough. Between trough and
peak, the economy is in an expansion.
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LEADING INDICATORS
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PERFORMANCE COMPARISON
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2010

• Based on Sector Rotation
• Continuation of technology cyclicals
• Rotating towards industrial, material, and energy
• Based on P/E relative ratios
• Based on which sector is still most off from its
  high

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2010 RISKS

• The market does not go straight up
• Some type of correction
• US economy
• Inflation needs to remain in check
• Unemployment eventually must decline
• Consumer and business spending
• World economies
• China growth or brink of crack?
• Debt issues around the world
• Currency issues

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381.2
194.4
79.9
41.2
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Resources

• http//www.briefing.com/investor/public/calendars/
  economiccalendar.htm
• http//research.stlouisfed.org/publications/mt/
• http//stockcharts.com/charts/performance/perf.htm
  l?SECT
• Finviz.com

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