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SECTOR ROTATION

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SECTOR ROTATION Definition Sector rotation is an investment strategy involving the movement of money from one industry sector to another in an attempt to beat the ... – PowerPoint PPT presentation

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Title: SECTOR ROTATION


1
SECTOR ROTATION
2
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

3
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.
4
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

10
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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