What is 'Secular'?

Secular is a descriptive term used to refer to market activities occurring over the long term. Secular can also refer to certain stocks unaffected by short-term trends. Secular trends are not seasonal or cyclical; instead, they remain consistent over time, while secular stocks maintain a certain trajectory regardless of current economic trends.

BREAKING DOWN 'Secular'

Secular trends and secular stocks are those that experts expect to remain moving in the same direction over the long term. The clean-energy movement is a newer secular trend, and experts expect it to remain relevant for the foreseeable future. Within the stock market, experts consider technology firms such as Netflix, Inc. and Google secular because short-term economic trends have minimal lasting impact on their long-term performance.

Secular movements can proceed in either a positive or negative direction; therefore, the term is not necessarily associated with growth. In addition, secular can refer to subtle or dramatic movements as the term does not identify the degree of change. The defining characteristics are the long-term nature of the movement and the lack of impact of short-term trends on associated activity.

Secular Trends

It is important for investors to identify secular trends in markets, not just short-term trends, to develop a long-term investment strategy. Examples of secular trends include an aging population, which tends to have different spending and savings habits than a younger population, the expansion of a particular technology like the internet and heavy reliance on certain commodities such as oil. While experts consider them long term, secular trends are not permanent.

Secular Stocks

A stock is secular when the associated company earnings remain constant regardless of other trends occurring within the market. Companies are often secular when the primary business relates to consumer staples or products that most households consistently use. Customer staples can include personal care items, such as shampoo and toilet paper, various food-item producers and certain pharmaceutical companies.

Stocks for the Long Run

In his book "Stocks for the Long Run," Jeremy Siegel, an economics PhD and finance professor at the Wharton School, University of Pennsylvania, argues that equity securities — particular U.S. equities — will likely outperform the other major asset classes secularly or over the long term. He supports his argument with the fact that between 1871 and 2001, during any rolling 30-year period — a period experts consider long enough to be secular — stocks outperformed all other asset classes, in particular bonds and T-bills.

RELATED TERMS
  1. Secular Market

    A secular market is driven by forces in place for many years ...
  2. Trend Analysis

    Trend analysis is a technique used in technical analysis that ...
  3. Market Cycles

    Market cycles include four phases of market growth and decline, ...
  4. Sideways Trend

    A sideways trend is the horizontal price movement that occurs ...
  5. Near Term

    Near term is a period of time referring to a short time into ...
  6. Commodity Selection Index (CSI)

    A Commodity Selection Index (CSI) acts as a technical indicator ...
Related Articles
  1. Insights

    Has the Age of Secular Stagnation Arrived?

    Secular stagnation is an interesting model, but it's not the last word on our economic situation.
  2. Investing

    This Bull Market May Trample Bears, Last Until 2025: Raymond James

    The experience of secular bull markets since World War II suggests that this one is only halfway done.
  3. Insights

    The 6 Most Common Explanations for Economic Stagnation

    Professional economists disagree about why the global economy has stagnated since 2001. Find out what some prominent thinkers have to say on the subject.
  4. Investing

    Western Digital Hard Disk Future Looks Shaky (WDC, SNDK)

    The industry backdrop for hard disk drives remains challenged as some end markets are in secular decline, and flash continues to take share.
  5. Investing

    Buy FANG Stocks Ahead of Next Week's 'Party': GBH

    Analysts remain 'very bullish' on secular tech themes heading into 2018.
  6. Investing

    9 Growth Stocks With Lots of Firepower

    These companies are riding big secular trends that position them for future growth.
  7. Trading

    Where Does Under Armour Go From Here? (UAA, NKE)

    Under Armour fell more than 20% after missing fourth quarter metrics and lowering 2017 guidance, continuing a downtrend that's now reached a 3-year low.
  8. Investing

    Smartphone Markets Are Maturing: Should You Still Own QQQ?

    Explore the ramifications of maturing smartphone and PC markets for the PowerShares QQQ ETF, as well as a fund risk greater than Apple's declining revenues.
RELATED FAQS
  1. What are the differences between patterns and trends?

    Learn the difference between a pattern and a trend. Explore how technical analysts use patterns and trends to identify trading ... Read Answer >>
  2. Why Put Money into a Volatile Stock Market?

    Learn how the up and down movement of price, known as volatility, can benefit short-term investors and why long-term investors ... Read Answer >>
Trading Center