Cyclical stocks are those that pay very high prices (the share price is relatively modest) and rise and fall with the ups and downs of the economic cycle.
Mostly speculative stock.
Cycle shares and economic trends are highly bound, and there is a certain advance reaction.
We can refer to the trend of international commodity prices. The trend of international commodity prices is the leading indicator of commodity inflation. The trend of cyclical stocks is also closely related to the trend of international commodity prices.
First, even the inexperienced should know that commodities are the most exposed to the economic cycle.
Each economic cycle creates a wealth myth in the commodities market.
In the same way, commodities related to the stock, are typical cyclical stocks.
For example, the stock prices of basic bulk raw materials such as coal, steel, nonferrous metals and chemical industry will fluctuate with the price of bulk commodities, showing obvious cyclical characteristics.
Second, there are intensive industries that are clearly affected by economic expansion and contraction.
For example, building materials, machinery, manufacturing and other sectors, the rapid economic expansion, the market demand for these industries will increase;
Conversely, these sectors will be the first to suffer from the economic downturn and reduced investment appetite.
Third, industries that supply goods and services that do not demand them.
For example, non-essential consumer goods such as hotels, airlines, high-end clothing and luxury goods sell well when the economy is hot and everyone has money to spare.
If the economy is in a downturn and people want to tighten their belts, the first thing to go will be non-essential spending.
In addition, the big financial industry, in addition to insurance, banking, real estate, will be affected by the economic cycle to varying degrees.
Not to mention real estate;
Brokerage has always been regarded as a barometer of the stock market, the stock market every round, brokerage board is the vanguard of the charge.
Due to their own profit model, banks are greatly affected by the basic interest rate and the deposit reserve ratio, and these two indicators are powerful grip to regulate the economic cycle, leading to the performance of banks will also appear certain cyclical characteristics.