understanding financial jargon
Cyclic stocks are investments in companies who's performance tends to move in line with the economy. When the economy is booming cyclic stocks tend to do well, but when a recession sets in, cyclic stocks tend to under perform.
As such, cyclic stock performance can signal when an economy is improving, but they will be the first to suffer when the economy enters a bear market. For example when the economy is strong, banks, house builders, and retailers tend to do well, but tend to suffer when the economy weakens.
This is in contrast to defensive shares which tend to perform reasonably well in all economic conditions, or growth shares which may do well for a number of years when the company is operating in a growth sector, but which revert to cyclic behaviour once the reasons for growth have dissipated.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
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