Understanding Sectors - Stocktrades Canada

I’m a beginner investor and learning. I seem to be getting confused about stock market sectors. Could someone clarify for me please? In some reference material consumer sectors refer to Consumer Discretionary and Consumer Staples. In other material, I come across Consumer Cyclical and Consumer Defensive. Am I correct in thinking that Consumer Defensive = Consumer Staples and Consumer Cyclical = Consumer Discretionary?

Thank you in advance

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Asked on January 18, 2024 7:01 am

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Private answer

Hi there,

That is somewhat correct. The formal names come from the GICS (Global Industry Classification System) - you can see them all here and there is a link to an excel file that gives you all the industries and sub industries:
https://www.msci.com/our-solutions/indexes/gics

But yes, some call Staples Defensive. A cyclical isn't deceassiry discretionary although an argument could be made it is. There are stocks in many sectors that are considered cyclical - for example - Energy stocks are considered cyclical by many. So cyclical doesn't not necessarily equate to discretionary, but it can. Think of cyclical that anything impacted by the cycle of the economy. So it'll move up or done as the economy moves. Keep in mind, some are more volatile than others.

Hope that helps.

Mat

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Posted by Mathieu Litalien

Answered on January 19, 2024 5:16 am

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