Sector Rotation
> Sector Rotation Model
Classic Sector Rotation Model Using Fundamental Economic
Analysis
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
 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
 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
 Click 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
 Click 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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