To be successful with the Cyclical and Non-Cyclical Strategy and to learn when and why to buy or sell these stocks, and be confident in your execution or realise where you went wrong to improve future investment decisions.
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First watch news and keep up to date on economic indicators, such as, GDP updates, job reports and oil price updates. These all help gauge the health of the economy. When the economy is growing or rebounding after a recession, cyclical stocks increase in value. That being the case, use this time to benefit from economic growth, by investing in established companies in cyclical sectors, such as, real estate, Construction, Basic materials, Financial services and Consumer cyclicals.
But when economic conditions appear to be at a turning point, for instance cheap oil prices, job reports are down and economic news is pessimistic. This is the time to sell your cyclical positions and invest in non-cyclical industries such as healthcare, utilities and consumer staples.
Even though non-cyclical stocks might be negatively impacted, this typically, isn’t as substantial in comparison to cyclical stocks. It is also important to note that the majority of non-cyclical companies reward investors with better than average dividends. This generally helps non-cyclical investor returns outperform the market.
Below are links for the latest GDP updates and when US job reports will be released to the general public.
https://www.bea.gov/data/gdp/gross-domestic-product
https://www.bls.gov/schedule/news_release/empsit.htm
Cyclical And Non-Cyclical Strategy Conclusion
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