Finding the starting point to identify which equities to invest in can be challenging. One method is to determine which sector is currently favoured based on the macroeconomic backdrop. The economic (or business) cycle tracks the trajectory of an economy, and composes of four key phases: Expansion, peak, contraction, recession. While all economies undergo these four phases, their respective duration and intensity can vary. Today, we provide more details about the four phases and which sectors are preferred during each. Expansion Otherwise known as an economic recovery since it closely follows an economic bottom, this is a period of growth lasting anywhere between one to two years. Various indicators such as GDP and productivity show signs of improvement, coupled with easing monetary policy and falling interest rates which help support business valuation. Accordingly, the equity markets experience buoyancy as business valuation and thus stock prices rise. As consumers and investors become more confident, the consumer discretionary sector tends...