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Author: TMFSelena Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2221  
Subject: Re: cyclical Date: 5/11/1999 12:11 PM
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Cyclical stocks are ones tied to the economic condition -- such as manufacturers of big-ticket items or providers of luxury services.

If the economy heads south for a while, with more people out of work and people in general being worried, then the fortunes of cyclical companies change. Consumers put off major purchases, such as homes, cars, refrigerators. They may cancel or postpone expensive vacations.

This means that business won't be too brisk for automobile makers, major appliance makers, cruise lines, construction-related companies, etc.

In sum, you'll see cyclical companies sporting revenues that surge and fade in relation to the economy.

The opposite of cyclical companies are defensive ones, such as pharmaceutical firms, food companies, and utility companies. No matter the economic condition, people will still eat, take their pills, and turn on lights.

Hope that helps!

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