If you look at the share price pages of the FT, you will see that the list is divided up into a number of sectors. Most of these are natural groupings of companies in similar industries, such as Banks. Some are artificial groupings of companies that don't easily fit anywhere else. For instance, Support Services embraces everything from architects' practices to waste disposal.
It will take you time to become familiar with the characteristics of the various sectors. But one thing you need to appreciate from the beginning is that each sector tends to move as a group, regardless of the behaviour of individual shares.
The main reasons are:
These powerful trends make it risky to put too much of your money into any one sector. For safety's sake, you may consider spreading it between at least three different ones.
Ideally, these should be sectors that do not tend to move in the same direction at the same time. The following list is a simplified guide to the differences between sectors. Click here for a list of businesses in each sector.
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