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What is a sector?
A stock market sector is a group of stocks that have a lot in common with each other, usually because they are in similar industries.
According to the most commonly used classification system: the Global Industry Classification Standard (GICS), there are 11 different stock market sectors:
Source: Investment U
Pick a sector you are familiar with or interested in could be a good starting point to invest in stocks.
What does sector mean for investors?
We categorize stocks into sectors to make it easy to compare companies that have similar business models. When investing, you can choose from stocks within the sectors that interest you. Sectors also make it easier to compare which stocks are making the most money. This helps you make decisions about what your next investments will be.
Source: A Wealth of Common Sense
Takeway：If you bought a Technology stock in 2017, you probably had a very nice investment return
Certain sectors perform better than others, so if the market is heading higher, we want to buy stocks within sectors that are performing the best. In other words, we want to invest in sectors that are outperforming the overall market.
For example, the technology sector might be up 10% versus a 3% rise in the overall market, as measured by a benchmark such as the S&P 500 index.
How investors view sectors?
Stocks tend to follow the performance of their respective sector, in addition to the overall stock market. Keeping abreast of the market can make it easier to determine when a stock that belongs to a particular sector has bottomed out.
For example, many investors conducted sector analysis on Friday, June 1, 2018, for the investment week of May 29, 2018, to June 1. As of that Friday, shares of companies in the coal industry group were the top performers with a return of 10.25%, while automobiles came in second with a growth of 6.12%. The automobile industry received a boost from shares of General Motors (GM) that rose on news that Softbank Vision Fund planned to invest $2 billion in the automaker's self-driving cars.
Source: The Motley Fool, Investopedia
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