Why is this tool useful?
Sector analysis is an assessment of the economic and financial condition and prospects of a given sector of the economy. Sector analysis serves to provide an investor with a judgment about how well companies in the sector are expected to perform. Sector analysis is typically employed by investors who specialise in a particular sector, or who use a top-down or sector rotation approach to investing. In the top-down approach, the most promising sectors are identified first, and then the investor reviews stocks within that sector to determine which ones will ultimately be purchased.