Sector Rotation
Sector rotation is an investment strategy that involves moving money from one sector to another in order to take advantage of changing market conditions. This strategy is based on the idea that different sectors of the economy will perform differently at different times, and that by rotating money between sectors, investors can maximize their returns. Sector rotation can be used to diversify a portfolio, as well as to capitalize on short-term market trends.
History of Sector Rotation
Sector rotation has been used by investors for decades, but it has become increasingly popular in recent years as investors have become more aware of the potential benefits of diversifying their portfolios. The strategy was first developed in the 1950s by economist Paul Samuelson, who argued that investors should move their money between sectors in order to take advantage of changing market conditions. Since then, sector rotation has become a popular strategy among investors, and it is now used by many professional investors and financial advisors.
Comparison Table
| Strategy | Risk Level | Potential Return |
|---|---|---|
| Sector Rotation | Medium | High |
| Buy and Hold | Low | Low |
| Active Trading | High | High |
Summary
Sector rotation is an investment strategy that involves moving money from one sector to another in order to take advantage of changing market conditions. This strategy is based on the idea that different sectors of the economy will perform differently at different times, and that by rotating money between sectors, investors can maximize their returns. Sector rotation can be used to diversify a portfolio, as well as to capitalize on short-term market trends. For more information about sector rotation, investors can visit websites such as Investopedia, The Motley Fool, and Morningstar.
See Also
- Asset Allocation
- Diversification
- Value Investing
- Growth Investing
- Momentum Investing
- Index Investing
- ETF Investing
- Portfolio Rebalancing
- Risk Management
- Technical Analysis
