Where Traders Help Traders
Welcome To Traders Cove Sector Corner
Sectors
Sectors
Agriculture
Airlines
Alternative Energy
Bio Technology
Financial
Gold & Silver
Oil & Integrated Gas
Short Etf's
Solar
Steel
Stem Call
Storm Recovery
Vice Stocks
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Sector Breakout is an excellent source that categorizes sub-sectors and shows
how they are fairing in the market.
In general, sector breakouts are fluid in the sense that the companies contained
within a "sector" vary between financial related websites that track sectors.
A general understanding of Trader's Cove sectors is provided below followed
by a good article on Sectors in general terms.
Trader's Cove highlights certain companies by grouping them together in
Cove-Unique "sectors" considered viable candidates to trade successfully
given the stated Cove trading objectives.
- The Agriculture Sector groups companies related to the agriculture industry
- including production & equipment.
- The Alternative Energy Sector groups companies related to development of
- alternative energy sources - directly or indirectly.
- The Gold & Silver Sector groups companies related to mining those precious metals.
- The Oil & Gas Integrated Sector groups companies who explore, drill(both land & offshore) and market oil and/or gas.
- The Solar Sector groups companies related to the use of solar power.
- The Steel Sector groups companies that produce steel products.
- The Storm Recovery Sector groups companies that either produce storm protection products or repair storm damage or provide services related
- to storm recovery efforts.
Stock Sectors - How to Classify Stocks By Ken Little, About.com
One of the ways investors classify stocks is by type of business. The idea is to put companies in similar industries together for comparison purposes.
Most analysts and financial media call these groupings "sectors" and you will often read or hear about how certain sector stocks are doing.
One of the most common classification breaks the market into 11 different sectors. Investors consider two of there sectors "defensive" and the
remaining nine "cyclical". Let's look at these two categories and see what they mean for the individual investor.
Defensive:
Defensive stocks include utilities and consumer staples. These companies usually don't suffer as much in a market downturn because people don't
stop using energy or eating. They provide a balance to portfolios and offer protection in a falling market. However, for all their safety, defensive stocks
usually fail to climb with a rising market for the opposite reasons they provide protection in a falling market: people don't use significantly more energy
or eat more food.
Defensive stocks do exactly what their name implies, assuming they are well run companies. They give you a cushion for a soft landing in a falling
market.
Cyclical Stocks
Cyclical stocks, on the other hand, cover everything else and tend to react to a variety of market conditions that can send them up or down, however
when one sector is going up another may be going down.
Here is a list of the nine sectors considered cyclical:
- Basic Materials
- Capital Goods
- Communications
- Consumer Cyclical
- Energy
- Financial
- Health Care
- Technology
- Transportation
up and down in relation to businesses cycles or other influences.
Basic materials, for example, include those items used in making other goods - lumber, for instance. When the housing market is active, the stock
of lumber companies will tend to rise. However, high interest rates might put a damper on home building and reduce the demand for lumber.
How to Use
Stock sectors are helpful sorting and comparison tools. Don't get hung up on using just one organization's set of sectors, though. MorningStar.com
uses slightly different sectors in its tools, which let you compare stocks within a sector. This is extremely helpful, since one of the ways to use sector information is to compare how your stock or a stock you may want to buy, is doing relative to other companies in the same sector.
If all the other stocks are up 11% and you stock is down 8%, you need to find out why. Likewise, if the numbers are reversed, you need to know why
your stock is doing so much better than others in the same sector - maybe its business model has changed and it shouldn't be in that sector any longer.
Conclusion
You never want to be making investment decisions in a vacuum. Using sector information, you can see how a stock is doing relative to its peers and that will help you understand whether you have a potential winner or loser.
