What is pro cyclical and what is pro cyclical stocks?

What do it mean that cycles are divided into pro-cyclical, counter-cyclical, and non-cyclical? An industry has different performance at different stages of the economic cycle, when the economic environment is good, the expression of a certain industry is also better, and the economic cycle rises and falls, this is a pro-cyclical industry, and some industries, when the economic environment is not good, but can buck the trend, such an industry is a counter-cyclical industry, there are also some industries, regardless of the economic environment is ** or **, boom or not, are indifferent to Mount Tai, should rise when it rises, when it falls, they have their own pace, this is no cycle.

What are the pro-cyclical and counter-cyclical industries.

Generally speaking, the industries that are closely related to economic development are obvious pro-cyclical industries, such as banking, real estate, infrastructure, etc., when the country's economy is developing rapidly, the main force of investment, such as real estate, infrastructure, the growth rate is very fast. Correspondingly, banks are also homeopathic, because the economy needs to be vigorously developed when the economy is good, so corporate loans are more, driving the performance of banks, when the economy is sluggish, these industries are also implicated, the economic situation is not good, the first to be suppressed is also real estate and infrastructure.

Strictly speaking, there is no complete counter-cyclical industry, after all, when the economic situation is not good, there are very few industries that can always maintain the upstream, but some industries are less affected by the economic downturn, and no matter how bad the economy is, there are no less things that are just needed, for example, you can't go to the doctor because you get sick because of the economic downturn. In economics, there is a term called lipstick economy, which means that when the economy is in a recession, the number of high-consumption products such as luxury goods will be significantly reduced, but small consumption products such as lipstick can make up for and meet the consumption psychology of girls, and the sales of lipstick will rise, that is to say, when the economy is in a recession, high-consumption products will be **, but low-consumption products may be used as a substitute and make up for the contrarian trend**. However, this performance is not very obvious in the data, so this kind of industry is only relatively cyclical, and it is not a complete counter-cyclical industry.

Strictly speaking, procyclicality refers to the tendency of financial variables to fluctuate around a certain trend value in an economic cycle. Therefore, a pro-cyclical increase means an increase in the amplitude of the volatility.

When looking at other people's analysis, you will always see cyclical stocks, white horse stocks, blue chip stocks, etc., mature investors are very familiar with these Kenhe Qiding, but some new investors may be relatively unfamiliar, in fact, mainly according to the different classification targets, ** is also divided into different camps. Let's learn about the pro-cyclical stocks first, so that we can have a better understanding of the market.

"Cycle" refers to the economic cycle, and there are different ways to divide the economic cycle, in which the two-stage method divides the ** cycle into "expansion stage" and "contraction stage", while the four-stage method divides the economic cycle into four stages: "recession", "depression", "recovery", and "prosperity".

Different economic situation will have different impacts on business operations, when the economic situation is better, it will have a favorable impact on some industries, improve the business environment of related enterprises in the industry, and the direct performance of related enterprises will have positive growth, and this part of the industry is also a pro-cyclical industry, related enterprises are pro-cyclical, stock prices will be prosperous when the economy is booming, and falling when the economy is not very prosperous.

Corresponding to pro-cyclical ** is counter-cyclical**, and pro-cyclical ** in the face of the same economic cycle when the stock price shows diametrically opposite trends, mainly manifested in the economic boom when the stock price does not rise and may appear, and the economic depression when the stock price does not fall but may **.

Financial industry: China Merchants Bank, Ping An of China;

Real estate industry: Vanke A, Poly Real Estate;

Non-ferrous metals: Tongling Nonferrous Metals, Huafeng Aluminum;

Iron and steel industry: Baosteel Co., Ltd., Bayi Iron and Steel Co., Ltd.;

Building materials industry: conch cement, Beijing new building materials.

Of course, in addition to the above industries, there are also chemical, port shipping, coal, etc. are all pro-cyclical industries, and pro-cyclical ** is not only the few I listed above. In fact, there are quite a lot of pro-cyclical**, and the above is just a very small number of relatively active ** used as examples to help us understand pro-cyclical**.

When investing in pro-cyclical**, you need to pay attention to at least the following three points:

In the prosperous economic cycle, we can get good profits by investing in pro-cyclical ** many times, but it should be noted that when the economic cycle is switched, try not to touch these**, when the economic environment deteriorates, the stock price will often start **, and the investment is likely to suffer large losses at this time.

The cyclical nature of some industries will change during the course of the economy, and may have previously shown a positive correlation with economic conditions, but the correlation may become weaker and weaker over time.

There will also be some enterprises in the pro-cyclical industry whose business conditions are not very good and their performance is relatively poor, so when choosing the best enterprises, we should still pay attention to the performance of the enterprise itself, and we cannot blindly believe in its cyclicality.

(PS: The above content does not constitute investment advice or recommendation).

Pro-cyclical refers to the meaning of pro-economic cycle, which simply means that it operates with the economic cycle, such as when the economy is booming, when the economy is in a recession, and ****** keeps switching with the good or bad of the economy.

The opposite of pro-cyclical is counter-cyclical, also known as defensive plates. Counter-cyclical means that it does not follow the economic cycle, not necessarily when the economy is booming, and not necessarily when the economy is in a recession.

The economic cycle refers to the cycle of the economic cycle, which is generally divided into four stages: recovery, prosperity, recession, and depression. The company's operation and performance are synchronized with these four stages, and the company is called the Shun Blockage Cycle. Pro-cyclical sectors include:

Large financial sectors, real estate, infrastructure, etc., and industries in the reverse period include: agriculture, medical care, film and television, entertainment, etc.

3 Risks Related to Pro-Cyclical Investing:

1. Pro-cyclical and small cycle, in the pro-cyclical period, the product will rise, and the stock price will rise. If the plate is in a small cycle, it is a phase, and the impact on it will be invalid.

2. Expectations and valuations do not match, sometimes expectations are too full, and many companies have made very high gains in the expected stage under the big cycle, which is easy to peak. Pay attention to this in the pro-cyclical period.

3. Pay attention to the high stock price in the pro-cycle, in the rational market, even if the short-term ** increase is more, it is meaningless. In the pro-cyclical sector, the slow and simple macro is what really needs attention.

Many people don't know much about it. Because in my country, most people don't know what valuation is, because I have a large population and different living standards, even if a person with a better living standard is not engaged in business or company business, he does not know what a share is. Most people have just heard of it, but they don't understand it, so now let's talk about what pro-cyclical in ** means, <>

As the name suggests, pro-cyclical is to conform to the economic cycle, and a country's economic cycle includes four stages: recovery, prosperity, stagflation, and recession. For example, the national economy is relatively developed, so there is a strong demand for non-ferrous metals, metals, chemicals or construction industries, so these industries will bring a sharp rise in economic prosperity. That is to say, conforming to the first cycle is according to the development of society, according to the strong demand of the society, and the changes brought about by the economic development of some enterprises driven by the adaptation are the pro-cyclical mentioned in the first cycle.

If we want to be the best, then we must understand the pro-cyclical to focus on the understanding of those companies in the pro-cyclical process. On the contrary, everyone can**,** investment is not just for everyone to know the sound financial management, he has a certain risk, but the return is also high. <>

Of course, also talk about a little luck ** friends, I believe that the word cycle must be no stranger to the simple word, the cycle is in the process of my movement, the repetition of certain characteristics is so pro-cycle six, it can be said that it is a relatively simple form of cycle in ancient poetry, there are pro-cyclical plates mainly including financial real estate, pro-cyclical stocks, in fact, there is also a bank **, we commonly use the Bank of China, China Construction Bank, Industrial and Commercial Bank of China, etc., the economic environment highlights the growth or fall of the same period, The tertiary industry service industry has gradually kept up with you, and you have begun to pursue high-end consumption, so the stories of some high-end real estate, automobiles and other industries will be relatively stable. <>

With this pro-cyclical trend, investors must understand the development of this company in the country, because there will be many competing companies in this industry, such as some companies we are familiar with and companies that you are not familiar with, so of course you should choose the shares of some familiar companies

Pro-cyclical means conforming to the economic cycle. A country's economic cycle includes four stages: recovery, prosperity, stagflation, and recession. Such as:

The country's economy is booming, so there is strong demand for non-ferrous metals, metals, chemicals or infrastructure industries, and these industries will rise sharply when the economy is booming.

It refers to a conforming economic cycle, which generally consists of 4 different phases, starting with recovery, then prosperity, then stagflation, and finally recession.

That is, **follow the operation of the economic cycle, when the economy is good**will**, when it is bad**.

and economy run in sync.

The economy generally goes through four stages, namely the boom period, the recession period, the depression period and the recovery period (the economic cycle keeps switching), and the synchronous operation of the economy is called pro-cyclical, and the operation of the economy out of sync is called counter-cyclical Yinzheng. Pro-cyclical industries include: finance, real estate, infrastructure, petrochemical, non-ferrous metals, etc., and counter-cyclical industries include:

Agriculture, medical care, film and television, entertainment, biotechnology, etc.

Pro-cyclical refers to the overvaluation of the value of related products due to the inducement of high trading when the market is high; When the market is down, the inducement of a downturn in trading** leads to an undervaluation of the underlying product. The so-called "pro-cyclical effect" refers to the overestimation of the value of related products due to the inducement of high trading when the market is high; When the market is low, the inducement of the transaction is low, which leads to the underestimation of the value of related products. Even in the absence of an active market and the need to establish a valuation model, due to the differences between different models and the differences in many variables, the valuation results inevitably have a strong subjective nature.

In the process of change in the motion of a transaction, certain characteristics are repeated many times, and the time elapsed by two consecutive occurrences is called the cycle. **It is also cyclical, constantly switching between **and**, the process between the point at the end of one time and the point at the end of the next ** is a cycle, or the process between the start of one time and the beginning of the next ** is also a cycle.

In **, the industry is also cyclical, for example, during this period of loss, these industry sectors rose well, and after a period of time, there were some other industry sectors that rose gratifyingly, and various industries rose one after another.

Pro-cyclical and counter-cyclical

What do it mean that cycles are divided into pro-cyclical, counter-cyclical, and non-cyclical? An industry has different performance at different stages of the economic cycle, when the economic environment is good, the expression of a certain industry is also better, and the economic cycle rises and falls, this is a pro-cyclical industry, and some industries, when the economic environment is not good, but can buck the trend, such an industry is a counter-cyclical industry, there are also some industries, regardless of the economic environment is ** or **, boom or not, are indifferent to Mount Tai, should rise when it rises, when it falls, they have their own pace, this is no cycle.

What are the pro-cyclical and counter-cyclical industries.

Generally speaking, industries that are closely related to economic development are obvious pro-cyclical industries, such as banks, real estate, infrastructure, etc., when the country's economy is developing rapidly, the main force of investment, such as real estate, infrastructure, the growth rate is also very fast. Correspondingly, banks are also homeopathic, because the economy needs to be vigorously developed when the economy is good, so corporate loans are more, driving the performance of banks, when the economy is sluggish, these industries are also implicated, the economic situation is not good, the first to be suppressed is also real estate and infrastructure.

Strictly speaking, there is no complete counter-cyclical industry, after all, when the economic situation is not good, there are very few industries that can always maintain the upstream, but some industries are less affected by the economic downturn, and no matter how bad the economy is, there are no less things that are just needed, for example, you can't go to the doctor because you get sick because of the economic downturn. In economics, there is a term called lipstick economy, which means that when the economy is in a recession, the number of high-consumption products such as luxury goods will be significantly reduced, but small consumption products such as lipstick can make up for and meet the consumption psychology of girls, and the sales of lipstick will rise, that is to say, when the economy is in a recession, high-consumption products will be **, but low-consumption products may be used as a substitute and make up for the contrarian trend**. However, this performance is not very obvious in the data, so this kind of industry is only relatively cyclical, and it is not a complete counter-cyclical industry.