Market Sectors

Sectors and industry groups ranked by performance, with the latest price of the tracking fund for each group and the ability to open any row to list the companies inside it.

The tracking fund matters because it is continuously priced. A sector's aggregate performance is computed from its members; the fund is a single security whose price is live and whose ETFETFA fund whose shares trade on an exchange all day like a stock.Read the full explanation mechanics keep it close to the basket.

This is the same idea as the relative strengthRelative strengthHow a stock performs against a benchmark, rather than in isolation.Read the full explanation line in the indicators pillar, applied across a classification instead of to one security. What makes it useful is that sector leadership is more persistent than individual stock leadership.

1. 1Rank the sectors over a windowEstablish which groups are leading and which are lagging.
2. 2Open the groupList its members and see whether the group's move is broad or driven by a few names.
3. 3Check breadth against the fundA group up two percent because one enormous member rose is different from one where every member rose.
4. 4Take a name to Deep DiveSector context narrows the field; the company work still has to be done.

Sector classification groups companies by what they sell, which is not the same as grouping them by how they earn. Large diversified companies sit in one sector while operating across several.

So a sector average can be less homogeneous than it looks, and the largest members can dominate a group whose smaller members are doing something entirely different. Opening the group is what checks that, and it takes one click.

Sector membership is not a property of a company. It is an assignment made by a classification scheme, and the schemes disagree with each other and change their minds.

• The major schemes assign each company to one sector on the basis of its principal revenueRevenueWhat a company billed customers over the period, before any cost is subtracted.Read the full explanation source, which is a judgement for any diversified business.
• A company earning revenue across several industries is assigned to one of them, and the rest of it is invisible in the classification.
• Classifications are revised periodically, and a revision moves large companies between sectors, changing every historical sector series.
• Some of the largest companies have been reclassified more than once, which is enough to change what a sector's history looks like.

The practical consequence is that a sector return series is a series about a changing membership. Comparisons across a reclassification are comparing two different baskets, and the discontinuity is rarely marked on any chart.

Noticing that money has moved from one part of the market to another is an observation. It becomes useful only when it is converted into a question that can be answered from disclosure or from prices.

Each row moves from a colour on a screen to something checkable. The last one matters most: when correlations rise, sector analysis stops adding information, and reading rotation into a market-wide move is reading detail into noise.