As a sneaker I’m lucky enough to have a tongue. So I feel it’s my duty to tell you something important. Allow me to talk about sectors.
Our economy is broken into 11 major sectors. Companies that make products we all need, like toothpaste, fall within the consumer staples sector. Electric and oil companies are in the energy sector. Your cell phone company is in the communication services sector. And so on.
As a sneaker, and a fashionable one at that, I fall into the consumer discretionary sector, or products we may want, but don’t necessarily need.
Why do investors care about sectors, you ask? Because investing in a sector is one way that you can own a piece of companies in a certain part of the economy. And that is one way that can help you manage risks and diversify your portfolio.