Why investors care so much about market rotation

Listen and subscribe to Stocks In Translation on Apple Podcasts, Spotify, or wherever you find your favorite podcasts.

Market movement is a constant part of trading and investing. In this episode of Stocks In Translation, Yahoo Finance's markets and data editor Jared Blikre, along with Yahoo Finance producer Sydnee Fried and Catalysts co-host Madison Mills, break down market rotation, seasonality, and how to understand market movements.

"Markets can either be rotating or they can be trending. And when they're rotating, they tend to go sideways," Blikre explains. When investors "see everything hitting new highs every day," that usually indicates that we are in a "bull market. And the opposite is also true. When things are going down every day, that's a bear market. But in between you just have this market rotation. And so that's kind of like keeping the market alive. Some sectors do well, some sectors don't, and they rotate."

Mills talks a bit about the "idea of whether or not certain sectors of the market have come in and out of a recession versus the broader economy. And whether that's part of what we're seeing in the rotation right now, because it has been such a weird moment in the market. And maybe the macro environment didn't have a, so-called recession in 2022, but maybe certain sectors did, maybe we're starting to recover from that."

Mills notes that "the market reminds me of a petulant child sometimes... As soon as they get exactly what they wish for, then they're upset about it."

"For the most part, if you're in the market over long term, things go up. Now where people get tripped up, is when they try to start juicing returns with leverage and getting those returns quicker," Blikre says.

Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes on our video hub or watch on your preferred streaming service.

This post was written by Mariela Rosales.