Which Sectors Will Come Through the Recession Ahead of Class?

Each sector has a different way of responding to recessions and financial crises. Usually the stock market tends to start recovery about 6 months before the economy. Financials tend to lead the charge. Will financials lead yet again with the bailout? The reaction is to say no. Financials are what has dragged the market down. Other sectors have a better chance of a quick recovery. I like to think that since the financials dragged us down, they will pull us back up. Look at the rallies. Have the not all been led by charging advances by banks? Have not all stumbles been led by bad news in the finance industry? Say what you want but the financials are what has been determining the market.

The market as a whole looks completely undervalued. It is hard to separate the good yet undervalued companies with those who deserve to be trading low. We have seen some good signs from the consumer sectors lately. I like to look at the consumer discretionary sector as one that will help lead any rallies with an increased consumer confidence. Energy is another sector that will no doubt rebound with the economy. If there is money to be made, corporations will exploit what they have to. As far down as energy is right now, I have to think that energy has become a long term strategy despite any 'green' attempts by Obama. The world is dependent on oil and will not change overnight. Technology is a sector that everyone has been weary about since 2000. Nevertheless, technology is the future. Technology is the face of cash money. Healthcare is a hard sector as I do not fully understand everything Obama wants with healthcare. However, with so many people reaching retirement, I cannot help to think that healthcare is quickly becoming a staple of its own kind.

The market has a long way to go. Pick only the great companies in the near term until we get back on our feet. Then, feel free to speculate and buy fast growing companies. At this point, it is good to be long anything. We have answered the question regarding when a bottom is here. Now the question changes to how long will we sit here before we make the steady climb back up. Patience is the key in this market. Any sector over time will make you money. Only the few select sectors will make you cash money. Choose wisely.