Sectors are for the most part an arbitrary grouping of stocks whose
companies compete in the same market.
Many financial institutions have made up their own sectors and
analysts are assigned to study and follow them. You are also welcome to
come up with your own sectors. You may also notice that sometimes
sectors are sub-divided into industries by some financial institutions.
While sectors may not tell us much about individual stocks, they offer
us a better view on how one group of companies is faring versus others.
Perhaps a certain industry may emerge as a dominant industry for a
period of time and rather than investing in one company, investors can
consider investing in the whole industry or its major players. Sectors
also allow us to focus our attention only on those companies that play
in the same industry without distraction from companies in other
sectors. It makes it easier to identify those companies that are
competing more effectively and perhaps to select candidates for
investment. While there are no concrete standards on the number or
types of sectors, some have emerged as more popular than others. After
all, we have to agree on some things sometimes. The following is a
typically accepted list of sectors, which incidentally is also published by
Dow Jones. …