What is the “sector” of shares? Explanation of industry dispersion for beginners

Contact

The "sector" of shares is a classification of companies by industry.

For example, IT, finance, energy, healthcare, and life necessities.

Understanding the sector makes it easier to see why stock prices move, why strong industries change depending on the economy, and what to see with decentralized investments.

In this article we will organize the basics, main types of sectors, relationships with economics, and usage methods for beginners.

What is a sector?

Sector is a group of companies divided by industry.

There are various companies in the stock market. There are also banks, pharmaceutical companies, food manufacturers and petroleum companies. It is difficult to understand when you look at these in the same way.

There is no need to learn all the fine classifications among beginners.

First of all, it is enough to press "the same stock has different value of value movement depending on the industry".

Why sector is important

The stock price is not only the financial results and news of individual companies.

You may be able to buy or sell in the entire industry.

For example:

• Financial stock is conscious by interest rate rise
• High crude oil makes it easy to buy energy stock
• It is easy to understand consumption-related strains due to scenic deterioration
• Demand is easy to residue in pharmaceuticals and foods

In other words, in the stock market, there is a "flow of the entire industry" separately from "materials per company".

Without this point of view, the stock price may not be elongated even if you are going to buy a good company. This is an actual investment.

Major sectors

1. Information Technology

Information technology sectors include semiconductors, software, clouds, and AI related.

It is a field that is highly expected to grow and is popular when the market is strong.

However, due to the probability of the forecast, the stock price will also increase. In terms of interest rate rise, it is easy to evaluate future profits and may be sold as a Growth strain.

2. Finance

Financial sectors include banks, insurance and securities companies.

Especially banks are easy to understand the interest rate environment. When interest rate rises, it is easy to expect profit and improvement, and financial stock may be facing.

Insurance companies are also affected by interest rates, operational environments, natural disasters and capital policies. It is a little different from the bank and insurance.

3.

Healthcare sectors include pharmaceuticals, medical devices, and medical services.

It is considered a relatively defensive sector because medical demand is hard to disappear even if it is not scenic.

On the other hand, pharmaceutical companies are affected by the development of new drugs, patents and regulations. There is a risk for each individual company in a stable sector.

4. Energy

Energy sectors include oil, gas, and resource development.

This field has a high impact on resource prices. When the crude oil price rises, it is easy to catch up, and if the resource price falls on the other hand, it will be heavy on performance and stock price.

Although it may be attracted by the inflation section, it is necessary to pay attention to the points that are easily affected by the resource market.

5. Life Essentials

Foods, beverages, daily necessities, etc.

The demand for food and daily necessities is easy to rest even if it is not scenic. Therefore, it can be seen as a relatively stable sector at the time of recession.

However, if the raw material price, logistics cost and labor cost rise, the profit rate may be overwhelmed. In the stable sector, there is a weak scene in the cost rise.

Sector and economic relations

Depending on the economy, the strong sector changes.

Here is a slight image:

Of course, it doesn’t work like this every time.

However, when you see the economic news, you can think that this news is what sector you want to catch up.

Why sector balancing is important

Focusing on only one industry can reduce risk.

For example, only IT stocks, semiconductor stocks, and high dividends. Although it is strong when the market is matched, if the whole industry is inverted, it may be possible that the stock holdings are down together.

Even if the number of symbols is increased, the same sector may not be dispersed in real sense.

It’s important to invest in decentralized investments.

It is to see which industry is biased.

Easy to misunderstand for beginners

"Safety for famous companies"

Even famous companies can see if the whole industry is worse.

For example, if the market condition of semiconductor is worse, the stock price will be easier to fall even if it is a superior semiconductor company. The strength of individual companies and the wind direction of the entire sector should be considered separately.

"Dispersion = number of symbols"

Even if you have 10 symbols, all of the same sectors are risky.

For example, if you have 10 bank shares, it is close to in。 investment in the financial sector. This is a symbol dispersion, but it is not a sector dispersion.

How to use in practice?

It is easy to understand when beginners start with a wide distributed product.

Here are some examples:

• Global Stock Index
• S&P500
• TOPIX-linked products
• Balanced Fund

There are many brands in one product.

However, the net sector ratio is different for each product. S&P500 is more likely to increase the ratio of the information technology sector depending on the season, and TOPIX is compared to the composition of the Japanese market.

Once you get used to it, you should be aware of the sector ratio as follows:

• Strengthen AI
• Increased dividends
• See energy and finance in line with the economy
• Protect your life with essentials and health care

You don’t have to pair it perfectly from the beginning. Even if you just know the bias, investment decisions will change considerably.

Important perspectives in relation to investment

Looking at the sector makes it easier to understand the relationship between interest rates, economics and inflation.

For example, when you see news that interest rate rises, banks may be a windbreak. On the other hand, IT stocks that are bought in future growth expectation may become a風versible.

If the crude oil price rises, energy companies can work positively, while shipping and manufacturing may increase costs.

In this way, the same news is different from the sector.

Sector classification is quite easy to use as the entrance to connect economic news to investment.

The concept for beginners

At first, you don’t need to make difficult analysis.

First of all, it is enough to see which type of product you own is biased.

Here are some easy-to-check locations:

• Nの Account
• Monthly Investment Trust Report
• ETF Component Brand Page
• Portfolio screen of securities company app

In investment trusts and ETFs, the monthly report may have an industry-specific composition ratio.

Let's look at it to see whether IT is biased, financial is large, and there are few healthcare and life essentials.

Sector is a classification of companies by industry.

In the stock market, the stock price may move not only through the material of individual companies, but also throughout the industry.

Understanding the sector makes it easier to see:

• Changes in economic and strong industries
• Easy to organize the effects of interest and inflation
• The number of symbols may not be dispersed.
• Be aware of the bias of your portfolio

First, let’s start by looking at the industry ratio of your products.

It’s not just about investing. It is to check whether it is too biased or not, and arrange it in a shape that can be continued for a long time.

*This article is a general explanation for investment education. We do not recommend buying or selling certain financial instruments or symbols.

■ Concept

Understand stocks move by industry instantly

■ Text

• Main: What is the stock sector?
• Sub: Value movement changes in industry

■ Color scheme

• Navy × White
• Green Accent

■ Configuration

• Left: IT, Finance, Medical
• Central: Pie chart
• Right: Rise Down Arrow