The technology stock sector includes cell phones and computer tablets.
When portfolio managers advise customers to diversity stock holdings, they mean the client should own shares of companies in different sectors of the economy -- a "don't put your eggs all in one basket" approach. Each publicly-traded company belongs to a group, or sector. Stock market sectors comprise businesses and industries that manufacture, distribute or provide similar products and services. For instance, the publicly-traded company that sells that juicy burger from your favorite fast-food joint falls under the food and beverage sector. Becoming familiar with sectors will improve your stock picks.
Energy
The consumer services sector inludes Walmart, Costco and Whole Foods.
When you fill up your gas tank, the fuel comes from a company in the energy sector. The electricity to power your electric shaver, keep the lights on in your office (solar and green energy, too) come from energy and basic material producers. Branches include oil and gas drilling companies and the metals and mining industries --- copper, iron, gold. See Resources for a list of publicly-traded companies in this sector.
Technology
The business services sector includes the Western Union Company.
Brands such as Google, Apple and Microsoft camp out here. But technology also includes companies that make the computer processors, information technology and science and technical instruments. Sectors have subsets and can intersect different businesses and consumer goods. For instance, wireless service, long distance carriers and internet service providers fall into this broad sector.
Finance
Commercial and investment banks such as Charles Schwab, Goldman Sachs and Bank of America Merrill Lynch rub elbows in the finance sector. But your auto insurance company, the lenders that provide school loans, mortgage underwriters, credit card issuers and money center banks -- large banking interests such as Citigroup, Wells Fargo and JPMorgan Chase -- all trade in the finance category. Sectors and industries become more specific and refined in sub-groups.
Health Care
You'll recognize some of the household names: Walgreens Company, Johnson & Johnson, Merck & Company and Pfizer. This sector includes suppliers, drug research companies and the booming field of biotechnology. As of this writing, the health care sector had a three-year return of 5.49 percent, according to Morningstar.
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