Mammoney - Your Ultimate Guide to Personal Finance & Investing

Sector rotation is an investment strategy that involves shifting investments between different sectors of the economy to capitalize on the varying performance of these sectors during different phases of the economic cycle. By understanding and anticipating these cycles, investors can enhance their portfolio returns and manage risks more effectively. This article delves into advanced sector rotation strategies, providing insights and techniques for investors looking to optimize their investment approach. The Economic Cycle and Sector Performance The economic cycle consists of four main phases: expansion, peak, contraction, and trough. Each phase has distinct characteristics that influence the performance of various sectors. Understanding these phases and their impact on sector performance is crucial for successful sector rotation. Expansion Phase During the expansion phase, the economy experiences robust growth, characterized by increasing consumer spending, rising corporate profits, an...