Sector Rotation & Portfolio Building
Different sectors lead in different cycle phases; a real portfolio assembles all of the above into something survivable.
The Major SchoolsIntermediate 5 min read· Lesson 5 of 5 in Investing Strategies
Rotation logic
Early cycle: financials, discretionary, industrials lead. Late cycle: energy, materials. Recession: staples, utilities, healthcare hold up. Rotation strategies overweight the phase leaders — in practice, momentum ranking a SECTOR list does the detection without requiring you to call the cycle.
Assembling the portfolio
A robust private-investor stack: an index core (say 60–80%), satellite tilts you actually believe in (quality/dividend/momentum), a written rebalancing rule, and sizing that survives a 40% drawdown without panic-selling. The Risk Management course quantifies that last, decisive constraint.
The meta-rule
Every strategy in this course works only if held through its bad years. The best portfolio is the one you'll actually keep — an honest inventory of your own discipline is part of the allocation.