Cyclical stocks refer to companies whose stock prices are significantly affected by the fluctuations in the overall economy. These are typically companies that produce non-essential goods or services, as they tend to see a decline in demand during economic downturns. As a professor of finance, it is crucial to understand the concept of cyclical stocks, as they play a crucial role in diversifying one's investment portfolio. By recognizing the cyclical nature of these stocks, investors can make informed decisions and minimize risk. So, it is essential to keep a close eye on the economy and its impact on these companies' stocks.
