Introduction
This current series of articles could be summarized as a review of ways to construct and diversify a common stock portfolio. In part 1 found here, I discussed various viewpoints on how many stocks a portfolio should hold. In Part 2A found here, I presented and discussed Peter Lynch’s 6 general categories of stocks. In this part 2B, I will continue reviewing diversification strategies by evaluating the potential benefits of portfolio construction across the 11 sectors.
Therefore, the best place to start is with a review of the 11 major sectors. (Note: REITs used to be included in the financial sector but were recently given their own sector status.) However, in addition to the 11 major sectors, there are numerous subsectors included in each. Consequently, a portfolio can technically be over-weighted in a broad sector while still being more broadly diversified over various subsectors. To provide the full impact of how broadly diversified each major sector is, I offer the following list of the 11 major sectors plus all the subsectors in each:
Energy
Oil & Gas Drilling
Oil & Gas Equipment & Service
Integrated Oil & Gas
Oil & Gas Exploration & Production
Oil & Gas Refining & Marketing
Oil & Gas Storage & Transportation
Coal & Consumable Fuels
Materials
Commodity Chemicals
Diversified Chemicals
Fertilizers & Agriculture
Industrial Gases
Specialty Chemicals
Construction Materials
Metal & Glass Container
Paper Packaging
Aluminum
Diversified Metals & Minerals
Gold
Precious Metals & Minerals
Silver
Steel
Forest Products
Paper Products
Industrials
Aerospace & Defense
Building Products
Construction & Engineering
Electrical Components & Equipment
Heavy Electrical Equipment
Industrial Conglomerates
Construction Machinery & Supply
Agricultural & Farm Machinery
Industrial Machinery
Trading Companies & Distribution
Commercial Printing
Environmental & Facility
Office Services & Supply
Diversified Support Services
Security & Alarm Services
Human Resource & Employment
Research & Consulting Services
Air Freight & Logistics
Airlines
Marine
Railroads
Trucking
Airport Services
Highways & Railtracks
Marine Ports & Services
Consumer Discretionary
Auto Parts & Equipment
Tires & Rubber
Automobile Manufacturers
Motorcycle Manufacturers
Consumer Electronics
Home Furnishings
Homebuilding
Household Appliances
Housewares & Specialties
Leisure Products
Apparel, Accessories & Luxury Goods
Footwear
Textiles
Casinos & Gaming
Hotels, Resorts & Cruise Lines
Leisure Facilities
Restaurants
Education Services
Specialized Consumer Services
Advertising
Broadcasting
Cable & Satellite
Movies & Entertainment
Publishing
Distributors
Catalog Retail
Internet Retail
Department Stores
General Merchandise Store
Apparel Retail
Computer & Electronics
Home Improvement Retail
Specialty Stores
Automotive Retail
Home Furnishing Retail
