Why investors should avoid 'buy and hold' mentality in cyclical sectors

Be prepared to actively trade

Richard Robinson, manager of the Ashburton Global Energy fund, looks at why investors should be prepared to actively trade cyclical sectors instead of buying and holding for the long term.

What scares many investors away from cyclical sectors - including consumer cyclicals, basic materials, financial services and energy - is the fear of performance blowouts when the business cycle turns. This is why cyclical stocks should never be bought with a 'buy and hold' mentality. Investors in these sectors must be active in managing through a cycle. Cyclical drivers still key to equity performance - in spite of Brexit In our specialist sector, energy, there is one clear driver to consider - the oil price. However, the energy complex also has a range of sub-sectors - each react...