It's best to diversify across the five main sectors of the economy: finance, utilities, consumer products and services, manufacturing and resources. Each of these broad sectors is made up of sub-sectors that often have different outlooks. Below we show our outlook for each sub-sector over the next six to 12 months.
Remember, though, there's danger in loading up on stocks in sectors that we expect to beat the market. For instance, Oil and Gas stocks are looking pretty good, as are insurance,Investment Co's. & funds, tech and trasportation. Just tread carefully with these because investors often bid up the prices of such stocks, making them vulnerable in market setbacks. Stocks in sectors that we expect to underperform, by contrast, often trade at bargain levels. Besides, predictions-including ours-are susceptible to errors. So make sure you own some stocks even in sectors that we expect to lag the market.
| Sector | Sub-Sector | Outlook |
| Financial | Banks & trusts Investment Co's. & funds Insurance | Match Outperform Outperform |
| Utilities | Gas/Electrical Pipelines Telephone | Underperform Underperform Underperform |
| Manufacturing | Building materials Chemicals Fabricating Engineering Steel-related Technology Transportation | Match Match Match Match Match Outperform Outperform |
| Consumer | Communications Food, beverage & tobacco Health care Merchandising | Underperform Underperform Underperform Underperform |
| Resources | Gold & precious metals Oil & gas Metals & minerals Paper & forest products | Match Outperform Match Match |