Diversification and Sector Rotation

Traditional investor is taught that a well-diversified portfolio includes stocks from many different at all times. In contrast, the savvy macrowave investor focuses on just a few sectors at any one time.

To the savvy macrowave investor, the traditional investor's strategy of broad "sector allocation" is merely a recipe for very mediocre returns. This is because the traditional investor is always holding, at anyone time, numerous weak sectors that are underperforming.

In contrast, the savvy macrowave investor looks for strong sectors to buy in an up market and weak sectors to short in a down market.
That means holding only a few of best-performing sectors at a time.

Moreover, the savvy macrowave investor regularly changes sectors as the stock market moves through the patterns of sec­tor rotation …

Peter Navarro
When The Market Moves, Will You Be Ready?

Source: Options Trading Beginner

The Importance of Sector Rotation

If you’re in the right sector at the right time, you can make a lot of money very fast.

Peter Lynch

Source: Options Trading Beginner

Pay Attention To Sector Rotation

If you’re really looking to try to outperform the market, investing in even the best stocks in under-performing sector isn’t the way to do it.

CNBC’s Bob Pisani