Skip to main content

Sector

In short

Industry grouping for stocks — 11 GICS sectors from technology to utilities

Sectors group companies by industry: Technology, Healthcare, Financials, Energy, etc. Diversifying across sectors means a crash in tech won't destroy your whole portfolio. Different sectors perform well in different economic conditions.

GICS (Global Industry Classification Standard) defines 11 sectors: Technology, Healthcare, Financials, Consumer Discretionary, Consumer Staples, Industrials, Energy, Materials, Utilities, Real Estate, and Communication Services. Sector rotation — moving money between sectors based on economic cycles — is a key strategy.

Related concepts

  • Diversification — If you put all your money in one stock and it crashes, you lose everything. Spread it across 20 different stocks, sectors, and even countries — when one falls, others may rise, protecting your overall wealth.
  • Asset Allocation — Asset allocation is how you divide your money between different types of investments. A classic '60/40' portfolio is 60% stocks, 40% bonds. It's the most important decision in investing — determines most of your long-term returns and risk.
  • ETF (Exchange-Traded Fund) — An ETF is like a basket of stocks that trades on the stock exchange just like a share. Buy one ETF and you might own 500 companies. They combine the diversification of mutual funds with the trading flexibility of stocks.
  • Market Capitalization — Market cap = share price × shares outstanding. Apple at $200/share with 15B shares = $3T market cap. Large caps (>$10B) are stable. Small caps (<$2B) are riskier but have more growth potential.