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Beyond The Zulu Principle: Extraordinary Profits from Growth Shares by Jim Slater

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18. Cyclical Stocks

This book is primarily about growth stocks, but a chapter has been spared for cyclicals as all companies are cyclical to a greater or lesser extent. The term ‘cyclicals’ usually refers to those stocks that are particularly sensitive to the ups and downs of the economy as a whole.

One of the biggest single influences on the economy is the level and trend of interest rates. Cyclical stocks benefit most when interest rates are falling as, in due course, that usually stimulates the economy. Conversely, in times of rising interest rates, cyclical stocks fare very badly.

All companies do better when the economy is prospering and find the going tough when it is in the doldrums. However, even in the worst trading conditions, great ...

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