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Sector Rotation Model - 4 Economic Phases of Busines Cycle
Sector Rotation  >  Sector Rotation Model

Classic Sector Rotation Model Using Fundamental Economic Analysis

Sector Rotation Model

This classic sector rotation model breaks the business economic cycle down into 4 key stages we can observe.  Within each stage of the business cycle the economy is experiencing different rates of production growth, consumer expectations, interest rates, and yield curve shapes.

By analyzing these economic indicators and grouping them by what we expect to see in each business cycle stage we can use them as clues to identify what stage of the economic cycle we are facing, and more imprortantly which sectors we should invest in now.


4 Basic Stages to the Economic Cycle

There are four basic stages to a regular economic business cycle, and within each stage of the cycle we have different levels and changes in industrial production, consumer confidence, interest rates, and Gross Domestic Production.  Learning how to identify each stages of the economic cycle is critical to practicing the classic sector rotation model.  Let's explore each stage of the business economic cycle now.

Full Recession Stage

Sector Rotation Strategies for a Full Recession.Click the chart for a larger image of this stage of the business and economic cycle.  In this stage the economy is in full recession and economic contraction.   Clear economic signals are evident to follow on a fundamental basis.  Position your portfolio by following these Sector Rotation Strategies During a Full Recession.


Early Recovery Stage

Sector Rotation Model - Where to Invest During Early Recovery Stage of Business Cycle.Click the chart for a larger image of this stage of the business and economic cycle.  In this stage the economy is in starting its economic recovery adn GDP is growing.   Clear economic signals are evident to follow on a fundamental basis.  Position your portfolio by following these Sector Rotation Strategies During an Early Recovery Stage.


Full Recovery Stage

Sector Rotation Model of Where to Invest During a Full Economic RecoveryClick the chart for a larger image of this stage of the business and economic cycle.  In this stage the economy is in full recovery and economic growth.   Clear economic signals are evident to follow on a fundamental basis.  Position your portfolio by following these Sector Rotation Strategies During a Full Recovery Stage.


Early Recession Stage

Sector Rotation Model - Where to Invest in the Early Stages of a RecessionClick the chart for a larger image of this stage of the business and economic cycle.  In this stage the economy is entering a recession and economic contraction.   Clear economic signals are evident to follow on a fundamental basis.  Position your portfolio by following these Sector Rotation Strategies During the Early Recession Stage.



Next up:  Sector Rotation Analysis of the Stock Market Cycle

 

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