Sector Rotation

Sector rotation is when investors shift their money from one industry group to another based on where they think returns will be better. You'll hear about it during economic cycles—as conditions change, different sectors (like tech, energy, or healthcare) tend to perform better or worse. It matters because spotting these shifts early can help you position your portfolio ahead of the crowd. For example, when the economy is slowing down, investors might rotate out of growth-focused tech stocks and into defensive sectors like utilities or consumer staples, which tend to hold up better during tough times. It's not about picking individual winners—it's about betting on entire industries.