Sector Rotation

Sector rotation is when investors move their money from one industry group to another based on where they think returns will be better. You'll hear economists and fund managers talk about it constantly, because it's a practical way to think about how money flows through the market as conditions change. Different sectors—like technology, energy, or healthcare—perform better at different times depending on the economy's stage. For example, when interest rates are rising, investors might rotate out of growth-heavy tech stocks into more stable utility companies that pay steady dividends. It's not about picking individual winners; it's about betting on which entire industries will outperform. Understanding sector rotation helps you see the bigger picture of where smart money is heading.