Industry Bet

DEFINITION of 'Industry Bet'

A strategy whereby investors or portfolio managers increase or decrease holdings in an entire industry, rather than buying or selling individual stocks from that particular industry. For example, an individual investor could take a position in a pharmaceutical fund rather than purchasing the stock of one pharmaceutical company. Industry bets are utilized because many investors believe that it is easier to accurately predict the future price trend of an entire industry, versus the trends of individual stocks.


An industry is a group of corporations that are similar in terms of their primary business activities. Dozens of industry classifications exist, and these are typically grouped into larger categories known as sectors. Examples of industries include pharmaceuticals, railroads, utilities, household and personal products, airlines, insurance, mining, retail, transportation and manufacturing.

BREAKING DOWN 'Industry Bet'

Stocks within the same industry often experience correlation in price trends, rising and falling together, as the entire industry is subject to the same underlying factors. The North American Industry Classification System (NAICS) is used by investors to classify corporations. Under the NAICS, which was developed by a joint effort between the United States, Canada and Mexico, companies that employ like production processes are categorized in the same industry. The NAICS replaced the Standard Industrial Classification (SIC) system in 1997.

RELATED TERMS
  1. Industry

    A classification that refers to a group of companies that are ...
  2. North American Industry Classification ...

    A new business classification system developed through a partnership ...
  3. Industry Group

    A classification method for individual stocks or companies, usually ...
  4. National Association of Investors ...

    A non-profit organization that is dedicated to providing investing ...
  5. Standard Industrial Classification ...

    A standard series of four-digit codes created by the U.S. government ...
  6. Pharmaceutical Industry ETF

    A sector-following fund that invests in developers and manufacturers ...
Related Articles
  1. Markets

    Explaining Industry

    The term industry refers to a classification of companies that share similar business activities.
  2. Markets

    Great Company Or Growing Industry?

    Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth.
  3. ETFs & Mutual Funds

    GICS Vs. ICB: Competing Systems For Classifying Stocks

    Global Industry Classification Standards and the Industrial Classification Benchmark separate stocks into sectors.
  4. ETFs & Mutual Funds

    FPHAX: Mutual Fund to Invest in Pharmaceuticals by Fidelity

    Learn about the pharmaceutical industry, including the two main threats it faces in 2016 and an analysis of the Fidelity Select Pharmaceutical Portfolio.
  5. Markets

    SIC Vs. NAIC -An Introduction To Industry Classification Codes

    Standard Industrial Classification (SIC) Codes and the more recent NAICS codes are crucial to classifying data to measure industrial growth.
  6. Markets

    Industries That Will Never Go Away

    A list of industries that will not perish anytime soon, as they provide and feed our basic needs.
  7. ETFs & Mutual Funds

    PJP: PowerShares Dynamic Pharmaceuticals ETF

    Learn about the PowerShares Dynamic Pharmaceuticals exchange-traded fund, which specializes on investing in pharmaceutical companies.
  8. ETFs & Mutual Funds

    FPHAX: Fidelity Select Pharma Fund Portfolio Trends in 2016

    Evaluate the composition of the Fidelity Select Pharmaceuticals Portfolio, and learn how the fund's makeup has evolved between March 2015 and March 2016.
  9. ETFs & Mutual Funds

    Four Key Pharmaceuticals ETFs To Consider

    ETF funds are now very liquid investments and are suitable to investors who seek to match the price performance of the indexes without the cost of owning shares. PJP is the most liquid ETF, followed ...
  10. ETFs & Mutual Funds

    FPHAX: Fidelity Select Pharmaceuticals Performance Case Study

    Learn more about the Fidelity Select Pharmaceuticals Portfolio, with a summary of the investment strategy, performance and trends over a five-year period.
RELATED FAQS
  1. What are some popular mutual funds that give exposure to the drugs sector?

    Discover some of the most widely traded and top-rated mutual funds that investors can use to make profits from gains in the ... Read Answer >>
  2. What developed countries have the largest proportion of industrial companies?

    Examine the industrial sector in developed countries, and learn about the shift in manufacturing production to emerging market ... Read Answer >>
  3. What mutual funds can be used for investing in the industrial sector?

    Learn how investors can take advantage of the benefits of the industrial sector by purchasing shares of sector-focused mutual ... Read Answer >>
  4. Are there ETFs that track the drugs sector?

    Find out whether pharmaceutical exchange traded funds (ETFs) are available for investment. Learn more about how ETFs track ... Read Answer >>
  5. What countries comprise the majority of the global drugs sector?

    Find out which countries are the largest producers of pharmaceutical products in the world and why the United States dominates ... Read Answer >>
  6. What is the difference between an industry and a sector?

    The terms industry and sector are often used interchangeably to describe a group of companies that operate in the same segment ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center