Glossary

Cyclical Stock

Stocks which are sensitive to business cycles, therefore whose performance is closely correlated to the overall economy. Cyclical companies tend to offer goods or services that are in lower demand during downturns in the economy and higher demand during upswings. Examples include the automobile, steel, and housing industries. The stock price of a cyclical company will often rise just before an economic upturn begins, and fall just before a downturn begins.