Sector Rotation Through the Cycle
Different industries tend to lead at different stages of the economic cycle. Here is the classic sector rotation map, a real example from 2022 and why the pattern is a guide, not a rule.
The classic map
| Phase | Often leads | Why |
|---|---|---|
| Early recovery | Financials, consumer discretionary, small caps | Credit loosens, spending rebounds |
| Mid expansion | Technology, industrials | Business investment grows |
| Late expansion | Energy, materials | Demand and prices run hot |
| Recession | Consumer staples, utilities, health care | People still buy essentials |
A textbook pattern; real cycles often break it.
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