Generally speaking, I believe rotation is beneficial. It certainly holds true with tires, houseplants and artwork. But does it work for your investment portfolio?
Let’s take a look. . .
Ready to Rotate?
The Associated Press recently wrote the following about investing and sector rotation (as ran in AZ Republic 6/16).
“Signs of a recovering economy are all around. To devotees of what’s known as sector rotation, they may be signals to start buying and selling. Average investors, however, should think twice about trying their hand at this approach.”
“Sector rotation is a simple idea: Because certain business sectors tend to profit more in specific stages of an economic cycle, jumping in and out of those sectors at the right time can put an average investor one-up on the market. Think of a surfer positioning himself to catch one righteous wave after another. In sector rotation, investors make specific bets on which segments of the economy will thrive- or at least not implode.”
“Two elements make the practice perilous. The first is predicting if and when that part of the economy will make its move. Do-it-yourself investors tend to be a step behind sophisticated professionals.”
Sector investing can be more volatile than a more diversified portfolio but is a strategy that may work if executed well. Always seek advice before investing. I welcome your inquiries on sector rotation.
Until next week,
Susan R. Linkous
Securities offered through LPL Financial
Member FINRA and SIPC
All of the above is my humble opinion and no strategy is a guarantee against loss. Take care.