From the course: Economics for Everyone: Understanding a Recession
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Sector and cycle investment trends
From the course: Economics for Everyone: Understanding a Recession
Sector and cycle investment trends
- Some investors watch the business cycle and they make investments at certain times to try to time which sectors might be performing better than others. Historically, the data shows that usually utilities, consumer staples like products you buy every day, food, paper products, things like that, and technology companies, those three kinds of companies tend to do best during a recession. Now, each business cycle can be a little bit different and past predictor is not a guarantee of future returns, but folks who invest with sectors tend to be looking at those three in a downturn. When the economy begins to recover, though, people tend to look at commodities and industrial markets, because those are very interest rate and demand-sensitive markets. And with low interest rates and a return of demand, industrials usually perform very well. And finally, there's some investments that do their best when the economy is really on…
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