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Industrials and Materials

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Industrials and Materials

2 sectors that should be underweight

Ayesha Tariq
Mar 31, 2023
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Last week we saw the stock of 3M revisit their 2013 prices. That’s quite a move to the downside for a Dividend Aristocrat.

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Ayesha Tariq, CFA @AyeshaTariq
3M on a monthly chart. Ouch... hitting 2013 levels. $MMM
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6:00 PM ∙ Mar 24, 2023
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While I realize that 3M has their own set of mishaps and concerns, this got me thinking about Industrials, which has been one of the strongest sectors in the last few months. Over the last 6 months, Industrials have been the second best performing sector of all the S&P Sectors and materials the fourth.

Last 6-month performance of the S&P500 Sectors - Source: StockCharts.com

I was surprised to see some of the top performers in the Industrial Sector Fund over the last 6 months:

Nevertheless, we’ve come to the point in the business cycle where the Industrials and Materials begin to fall out of favor and as sector allocations they should be underweight in your portfolio.

Source; Fidelity

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