What are cyclical stocks and how do they act in the stock market?

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Cyclical stocks are one of the most characteristic of equities. Because through them, higher returns can be achieved in the most expansive economic periods. Even when in return, recessives suffer significant depreciation in their prices. Not surprisingly, their lines of business have a very notable link with economic cycles. To the extent that they make more profit in the bullish part of the cycle and vice versa.

Pertenecen a sectores tan múltiples como el consumo discrecional, el financiero o los diferentes segmentos turísticos (aerolíneas, grupos hoteleros, centrales de reservas, etc.). Sea cual sea el caso, además destaca otro grupo de compañías cotizadas en renta variable que reaccionan con mayor lentitud ante la aparición de nuevos periodos económicos. Pero que al final apuntan very vertical ups and downs in the quotation of their prices. As in the specific case of industrial companies. All of them maintain a very well established trend in periods of boom and bust of the economy. Become highly appreciated candidates to open and close positions in the financial markets, respectively.

Decidedly, if there is a financial market that establishes the sentiments of an economy in a clearly expansive way, that is none other than the Nasdaq technology. On the contrary, in other words, countercyclical, gold futures. With an absolutely divergent response from both in each of the periods that determine the situation of the economy. To the point that the monetary flows of large investors go from one to another in the face of any change in the prospects for global growth.

How to act in these scenarios?

Con esta clase de valores puede llevar adelante una strategy de inversión que es muy ventajosa para los minoristas. Tan simple como tomar posiciones en períodos alcistas y comercializar en recesiones. Es una norma que siempre está presente en los mercados financieros. Donde el dinero va a los sectores que ofrecen mayores oportunidades de revalorización. Para decantarse por esta acción, en primer lugar será necesario identificar cuáles son los valores de estas características que se integran en el mercado continuo español. Además, Arcelor, Sol Meliá, Indra, NH Hoteles, Mapfre or Acerinox They are some of the most relevant representatives of this select group of national actions. They are in charge of selling products that are generally expensive and are not met as basic needs. Where its consumption is postponed for better situations.

How to act in these scenarios?

One of the keys to detecting them is based on the increase in the volume of hiring that is generated in the most positive phases for the economy. With strong presence of purchase orders with respect to sellers. It will be the definitive signal to enter their positions for periods of permanence in the medium and long term. Because economic cycles have a very long lasting that can last for many years. Even when it is in the stage of irruption of expansive cycles where these values behave better than their competitors. With appreciations, which in most trading sessions, are above 5%.

Because in effect, one of the main characteristics of cyclical stocks is that in bullish periods they always behave much better than the rest of the stock market proposals. While they are in recession, their depreciations are more striking. When money leaves countercyclical values to take refuge in cyclicals it is a clear sign of confidence on the part of financial markets. It will be the moment to take positions in some of its representatives.

During the hardest period of the economic crisis, between 2008 and 2010, a cyclical stock par excellence such as Arcelor left the 45% of its valuation in the national continuous market. Going from 45 to 25 euros in just two years. Quite the opposite of a countercyclical like Ebro Food, which even increased by about 16%. From 12 to 14 euros per share. With a lag in the analyzed period between both values greater than 60% and that perfectly summarizes the difference between two opposing concepts of understanding the stock market.

Proposals to contract

Contracyclical sectors, on the contrary, are made up of companies that generate goods and services that maintain a very stable demand. They are represented by business segments as relevant as utilities, food or basic needs. There is a very compelling reason to clarify this scenario and it is because in times of economic recession, consumers stop traveling or buying vehicles. But instead, they continue to feed themselves and consume the basic energies for the maintenance of their home. Consequently, the companies that provide these services suffer less from the effects of the economic crisis. With less wear on its prices and that it can even rebound against the general sentiment of the financial markets.

Therefore, it is not surprising that in one way or another they are considered as defensive values or refuge. For a reason that is very easy to understand and that is none other than these cycles of the economy face a better behavior in their prices. For the same reason that they behave worse than the rest in the most critical phases of economic growth. Or even in periods with an indefinite trend, such as the current one. At the same time, these types of values are more prone to distribute dividends among its shareholders. With returns on savings between 3% and 8%, as a deterrent to keep its shareholders in the most turbulent periods of the international economy.

Tips not to get lost

If the values that present these peculiarities are characterized by something, it is because they are more vulnerable to economic cycles. And thus require a substantially different treatment. Both in terms of entry times and when undoing positions. Where you can start from a series of recommendations that we expose you below.

• An investment strategy can be configured depending on the moment in which the shares live, but on the evolution of the international economy. The conditions will be very different from one situation to another. As if there were more sensitive values to be hired at one time or another. You will have no choice but to differentiate these periods that occur in the international situation.
• Not because the international economy is not performing well, all values are stipulated to be detrimental to your personal interests. In other words, they cannot be profitable for improve balance from your checking account.
• One of the most effective strategies for different economic scenarios is buy or trade the shares at the beginning of each of the periods. Anticipation will be one of the keys to driving performance margins. In very satisfactory proportions for your interests as a small or medium investor.
• If you want to make a balanced investment portfolio for the different scenarios of the international economy, you will have no choice but to include the values of the electric sector and banking. They collect everything essential to balance the tendency of both situations. Either way, it will be a very effective and not aggressive strategy.
• You have to be determined to make decisions in periods of economic expansion. Via determined actions, but very attentive to what you must do at all times. Whatever the case, you should avoid any stage of doubts that could harm your interests in the equity markets.

Cyclical stocks par excellence

Si necesitas hacer tu nuevo briefcase de inversiones con valores expansivos, no deben faltar algunos sectores del mercado de valores. Entre ellos, el sector bancario puesto que es en este período donde más se aprecian sus acciones. Por encima de otros segmentos comerciales. Hasta el punto de que se pueden conseguir rendimientos más que notables de los ahorros. En muchas de las ocasiones inclusive above 10%. In any of the financial entities that are listed on the financial markets.

Another of the most expansive sectors in this period corresponds to new technologies. This is a much more aggressive bet, but it comes with a very strong payoff. Because they effectively highlight their revaluations above other more stable values. You have many proposals to select from, even though it will be very convenient for you to detect the values with the best technical aspect. And if they are in an uptrend, then all the better for your personal interests.

De cualquier manera, la clave del éxito serán los niveles de entrada en estos valores. No en vano, determinarán la rentabilidad de sus cuentas personales. Del mismo modo que debes conocer comercializar. Quizá la parte más complicada de este procedimiento tan especial en los mercados de valores. Debido a que hay que estar muy atento a cuándo terminan las fases expansivas de la economía. Como periodos recesivos en los que no tendrás más remedio que adoptar una postura mucho más defensiva. Sin otro target que proteger sus activos con mayor eficacia y garantías de éxito.