Consumer Cyclicals

Businesses that offer consumer goods whose demand shift with the changes in the business cycle. Consumer cyclicals include automobiles, housing and other large ticket items.

A consumer cyclicals company’s business as well as stock price often fluctuates in tandem with the economy, which makes them more volatile and potentially risky investments. A consumer cyclicals company can earn a great deal of money for shareholders in times of prosperity but can also face bankruptcy due to recession and mismanagement(like Chrysler in 1982.)

A consumer cyclical stock may be a good investment if an investor can pick the bottom of the cycle, but this is often a risky attempt, as bottoms are only clear when viewed in hindsight.