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Investing in Sectors

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At times during an economic cycle, specific sectors of the stock market have historically underperformed and outperformed.

For example, when things are going well in the economy, there tends to be excess demand for consumer discretionary goods and commodities. On the other hand, when things are slowing down in the economy, sectors such as consumer defensive stocks and utilities tend to outperform.

Timing your purchase into these sectors is called sector investing and can be a powerful way to practice portfolio management. While diversification will always be king, asset allocation tilts can add value over time as well.  

To get a better understanding of this method, have a try at the set of questions that follows!

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