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Major Sectors

There are nine major sectors of the economy, which are

  • Basic materials
  • Consumer discretionary
  • Consumer staples
  • Energy
  • Financial
  • Health care
  • Industrial
  • Technology
  • Utilities

A basic description of each major sector follows.

Basic Materials: Chemicals, Metals and Mining, Steel

Most of the companies in this category produce commodities whose sale price tends to converge with the cost of production, especially in the low-inflation environment as we have seen in recent years. These companies generally maintain high debt levels and poor long-term growth characteristics. The sector can perform well during periods of high inflation.

Consumer Discretionary: Autos, Building and Construction, Publishing, Retail

As with capital goods, these stocks perform poorly heading into economic slowdowns and perform well in expanding economies. This sector is less sensitive to overall interest rates (consumers buy homes, cars, and furnishings very happily on credit while corporate purchasers worry about budgets).


  

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