Recommendations & StrategiesQuestion 71 of 110
A sector rotation strategy involves which of the following?
a.Holding a fixed, unchanging allocation forever
b.Shifting investments among industry sectors based on the economic cycle
c.Buying only one stock and holding it indefinitely
d.Investing exclusively in Treasury bills
Explanation
Sector rotation shifts portfolio emphasis among industry sectors expected to outperform at different stages of the business cycle, such as favoring cyclicals in expansions and defensives in downturns. It is an active, tactical approach. It contrasts with a static buy-and-hold allocation.
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