Smart Money Moves

Industry-focused investments can help you profit in a slowing economy

course, housing the sector rotation within a tax-sheltered vehicle such as an Individual Retirement Account negates the tax hit.

What’s more, if you’re doing the job yourself, it requires a steely discipline that’s not as needed in the buy-and-hold approach. Successful investors must actively research and cull those sectors facing the economy’s headwinds, and snap up those with more promise. “If you do that, and you are more right than wrong, you increase your probability of beating the market over a longer time horizon,” Subramanian says.

INDUSTRY INSIGHT

 

Total Return (%)

 
Industry 3-Month 1-Year 5-Year
Biotechnology -0.8 13.3 26.5
Chemicals 0.1 27.3 21.9
Drugs -10.8 -1.5 6.1
Gold & Silver 35.5 71.0 31.2
Homebuilding 2.7 -41.9 2.5
Household & Personal Products -7.8 7.9 12.3
Oil & Gas 2.4 38.0 32.1
Regional Banks -3.7 -21.5 6.7
Restaurants -10.3 4.7 22.4
Semiconductor Equipment -9.2 10.9 15.9

SOURCE: MORNINGSTAR DATA AS OF 3/14/08

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