Cyclical stocks

Cyclical stocks are stocks whose prices surge during economic upturns and plunge during economic downturns. Home construction, automobiles, and paper industries are representative examples. These stocks are heavily influenced by the general cycle of the overall economy, and investors can predict fluctuations in stock returns based on the overall economic cycle. The opposite concept of cyclical stocks is non-cyclical stocks. These are relatively neutral to the economy and include food, insurance, and pharmaceutical stocks.

Since many are familiar names, they are easily confused with large-cap blue chips.

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Topics: stock,Peter Lynch
Category: Wiki/Economy