One of the ways investors classify stocks is by type of business. The idea is to put companies in similar industries together for comparison purposes. These groupings are called “sectors” and you will often read or hear about how certain stock sectors are performing (“Tech stocks up today,” for example).
One of the most common classifications breaks the market into 11 different sectors; however, you may see other sector lists that have more than 11. It’s not particularly important which list you choose, but stick to one to keep comparisons valid. I like the 11-sector list for its simplicity.
Investors consider two of the sectors “defensive” and the remaining nine “cyclical.” Let’s look at these two categories and see what they mean ...