Portfolio Diversification – by Sector or Industry?

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Dan,
Probably a simple question…when you are considering your allocation/diversification, do you allocate by the “sector” or the “industry”. The “sector” looks like a broader designation.

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Asked on April 20, 2023 12:38 pm
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I would be looking at the sector, and Mat would be as well. Industry designations are pretty wide, and it's much easier to just work off of the 11 sectors available.

However, I also don't get too laser focused on this either. There are plenty of companies that are a particular sector, but have much different exposure as others in the same sector. For example, Park Lawn is a Consumer Cyclical stock, however, its revenue streams are more defensive in nature due to the funeral part of its business than a company like BRP Inc, which would no doubt see a dip in earnings in the event of a recession. Both consumer cyclical stocks, both very different businesses that will be impacted differently during particular points of the economic cycle.

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Posted by Dan Kent
Answered on April 21, 2023 9:50 am