How to make money with a sector rotation strategy
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Weekly Market Update 🗒️💡
All of the major indexes put up a winning week, with the Dow posting a 1.75% gain breaking a 4-week losing streak. The S&P closed up 1.90% this week, much better than last week’s 2.7% loss, having its first green week in the last 4.
Are stocks on the rise? It might be too early to say…
The president of the Atlanta Fed mentioned this week that the Central Bank can keep its interest rate hikes to only 25 basis points, rather than the 50 basis point hikes we’ve recently seen. This gave market sentiment a slight boost this week and upped investor confidence. Good sign.
Are you a racing fan? Then you’re going to love this. Shares of Formula One Group FWONA 0.00%↑ were up 2% on Friday reaching a record high. The stock is up 5.80% year to date.
Analyst at Morgan Stanley, Benjamin Swinburne, had this to say Thursday:
“We believe F1 is the fastest growing global sport and that growth is expected to drive 10-15% adjusted EBITDA compound annual growth rate from 2022 to 2026.”
I’m not convinced F1 is the fastest-growing global sport just yet, but the industry might be worth looking into.
Meta META 0.00%↑ shares rose more than 5% after they announced a price drop for its high-end VR headset “The Quest Pro”.
Apple AAPL 0.00%↑ shares rose more than 2% this week after Morgan Stanley noted the company has a “catalyst-rich event path”. I don't even know what that means exactly but it sounds... good?
Tweet of the Week
What is a sector?
A “sector” is a group of stocks that are in a similar line of business. Below you’ll see an image of the 11 Stock Market Sectors.
These sectors are all intertwined in one way or another. For example, if the price of oil falls, companies that produce or transport oil will make less money as a result. If interest rates rise, the real estate sector will make less money because more people will be defaulting on their loans.
Market sectors are more connected than you might think, which is why it’s so important to diversify your portfolio by sector to reduce the risk of having all your eggs in one basket.