The I Ching and sector selection
Sector selection is also a concept that works in perfect harmony with the I CHING because every sector is bound to eventually go from YANG to YIN and from YIN to YANG.
Because no investor knows for sure which sector will have a better performance during a particular year, it is also crucial the investor prepare his stock portion of his portfolio on a mixture of various sectors such as Capital Goods Industries, Capital Goods Technology, Energy, Financials, Consumer Cyclical, Staples, Transportation and Utilities in accordance with his profile. Even though many brokerage houses put out a guide for choosing the percentage of each sector according to each profile, a prudent guide is to have at least 5 sectors with no more than 25% of the total equity investment on anyone sector.
Another way to reduce the sector risk would be to buy the indices such as the Spiders (SPY) and QQQ.
This simple strategy if added to sector allocation would reduce his risk dramatically and provide for up to 97% of the portfolio’s performance.
