As a sector specialist, what to do when you sector is out of favor?

Question

If you are a sector specialist (8+ years of experience) in a cyclical sector (industrial, mining, energy), and the sector is currently in a downturn (market cap % shrinking, less funds, less jobs etc), should you ride it out or leave for other sectors/jobs (going to related industry, or tech industry etc)?

amp8675309 · Accepted Answer

Sorry about the delay, earnings.

I’d break it down into pre election and post election (ie January and post inauguration), and for North America I separate Canada from US. Two years bullish. Near term, relative positioning is key. It is hard to be extremely bullish given inventory levels and terrible economic data.

From now until November I’m relatively bearish on US energy and bullish on Canadian energy. This generally applies to midstream and upstream (oil, gas, NGLS). Extremely bearish services 12m due to inventory.

ironnchef · Answer

a sector specialist should be able to trade a long/short basket of securities and make real P&L

if you can't do that....then you are bad at your job

if your employer is a long-only fund and fires the sector specialists of underperforming sectors...then perhaps you should find your way to a long/short fund where your expertise allows you to trade that knowledge

LinnaeusMaximus · Answer

Right...but they're PAID on P&L so relative performance plus $2.75 will get you on the subway...

You may keep your job and yes, you'll always be able to look at sector pair trades/relval stuff.  But when your sector is out of favor there is no sugar coating that the opportunity set shrinks, catalysts tend to play out slower or matter less, etc.  It's frustrating.

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As a sector specialist, what to do when you sector is out of favor?

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As a sector specialist, what to do when you sector is out of favor?

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