Markets
Sector
A grouping of companies that operate in the same broad segment of the economy, such as Technology or Healthcare.
Example
Apple and Microsoft are both classified in the Technology sector, while ExxonMobil sits in Energy and JPMorgan sits in Financials — grouping lets you compare how similar businesses are performing.
Common Misconception
A well-diversified portfolio isn't just about owning many stocks — owning 20 stocks that are all in the same sector still leaves you concentrated in that sector's risks.
Why It Matters
Sector performance tends to be cyclical (energy strong when oil prices rise, tech strong in low-rate growth environments), so understanding sector exposure helps explain why a portfolio might lag or lead the broader market in a given year.