Share sectors

Every stock market is split up into sectors and sub sectors (also known as industries).

Different index’s and markets will group shares under different categories, however, here is a broad idea of the different sectors;

Basic materials – aluminium, steel, gold mining, metals, paper, containers, lumbar
Capital goods – aerospace, engineering, construction, machinery, manufacturing , electrical equipment
Communications – communication equipment, mobile phone, broadband
Consumer cyclical – automobiles, building materials, leisure time, retail, restaurants, textiles, home building
Consumer staples* – beverages, cosmetics, foods, medical products, tobacco
Energy – gas, oil
Financial – banks, insurance, loans, brokerages
Health care – pharmecuticals, private hospitals
Technology – computer software, electronics, photography, office equipment
Transportation – delivery services, logistics
Utilities* – water, electric, gas

*These sectors are not cyclical as people will always need electricity, water, food etc. However the other sectors are cyclical and will often perform better at different times of the year or at different times of an economical cycle.

Like with the indexes it is important you buy shares whose sectors are moving up and sell shares (shorting stock) whose sectors are moving down. This is to make sure you aren’t trading against the momentum.

Sectors will always out perform other sectors, it is well worth researching the best and worst sectors in the stock market to aid your stock picking decisions. Several websites provide useful tools for you to do this, I recommend using ADVFN , which is free to register.


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