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 In The Lonely Bull

The stock market is made up of sectors.  These, in most cases, are industry groups in which the included companies have many business similarities (industrials and tech companies are two examples).  At any given time, some industry groups are more popular than others; business conditions may favor certain businesses.  Popularity drives buying which drives prices higher.  At some point high valuations work against further price increases and investors go back to looking for sectors that may be undervalued.

Investors call this group rotation and it is a normal part of any long-term advance.  Sometimes, it seems, that not much progress is being made as one sector falls, as another rises.  However, over time, this does help the market to advance as falling stocks do not fall back as far as they advanced.  Patience is needed as investors work though opportunities sector by sector.  Stay steady my friends.

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