In order of importance, the direction of the overall market, sector selection, and individual stock choices determine equity market portfolio returns.
Investors often devote most of their time to assessing the overall market trend and carefully selecting individual stocks, but not enough time recognizing the influence of sector trends.
The U.S. economy today is vastly different than it was many decades ago. At one time, Industrials, Utilities, and railroads dominated the sector representation in market indices. Later, Financials joined this group. This in time morphed into the 11-sector composition we have today. The past 30 years of the S&P 500 sector composition reflects modern times in which technology is a major part of global commerce.