Investing Dictionary
Strategies

What is Sector Rotation?

Moving money between sectors depending on the economic cycle

Full Explanation

Different sectors outperform at different points in the economic cycle. Investors rotate into defensive sectors (healthcare, utilities) during downturns and into cyclical sectors (tech, consumer discretionary) during expansions.

Pro Tip

Timing sector rotation perfectly is very hard. Most retail investors are better off staying diversified.

Related Strategies Terms

Momentum Investing

Buying stocks that are already going up

Rebalancing

Adjusting your portfolio back to your target allocation

Swing Trading

Holding stocks for days to weeks to capture medium-term moves

Tax-Loss Harvesting

Selling losing investments to reduce your tax bill

View all Strategies terms →

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