Phase 4 · Cross-sector intelligence
Why sectors behave differently.
Build economic intelligence instead of stock intelligence. Compare survival, multiples, drawdowns and recession behaviour across sectors.
Sector comparison
Multi-axis comparison matrix.
Each axis is a behavioural fingerprint. Notice the gap between Tech (high CAGR, short survival) and Utilities (low CAGR, long survival).
| Sector | 20y CAGR | Survival | Multiple | Drawdown | |
|---|---|---|---|---|---|
| Technology | +14.6% | 22y | 28.0× | -52% | |
| Consumer Discretionary | +9.4% | 19y | 19.0× | -45% | |
| Consumer Staples | +8.7% | 32y | 18.0× | -22% | |
| Financials | +9.1% | 28y | 12.0× | -52% | |
| Health Care | +11.2% | 26y | 19.0× | -34% | |
| Industrials | +8.4% | 31y | 16.0× | -38% | |
| Energy | +7.2% | 24y | 9.0× | -56% | |
| Utilities | +6.8% | 41y | 17.0× | -28% |
Observations
Why each sector behaves the way it does.
Health Care
Health Care companies survive longer than any other sector — median tenure in the S&P 500 is 26 years vs 14 for Tech.
Evidence · 30% of S&P 500 Health Care constituents are 40+ years old. Tech sector: 4%.
Technology
Software companies command higher multiples than any other sector — even when growth profiles are similar.
Evidence · Median S&P 500 Software P/E 28 vs S&P 500 Industrials P/E 16, despite comparable EPS growth.
Utilities
Utilities rarely fail — average 41-year survival vs 14 for Tech.
Evidence · Only 2 utility bankruptcies in the last 30 years. Regulated rate base + essential demand.
Consumer Staples
Consumer Staples outperform during recessions — negative correlation with unemployment.
Evidence · XLP outperformance vs SPY in 2008, 2020 recession months averaged +2.4% relative.
Industrials
Industrials recover slower from recessions than any sector — long-cycle capex exposure.
Evidence · Industrials took 28 months to recoup 2008 highs vs 14 for Consumer Discretionary.
Financials
Banks pay the highest dividends in the index, but cut fastest in stress.
Evidence · XLF dividend yield 3.1% (highest). 2008 cuts averaged 38% across constituents.
Energy
Energy multiple expansion is structural post-2022 — capital discipline broke a decade of underperformance.
Evidence · XLE P/E went from 9 (2014) → 12 (2024) on shareholder return policies.
Materials
Materials are the most cyclically extreme — copper up 70% in one year, then down 40%.
Evidence · XLB realised vol 28% vs SPY 14%; 5 of last 6 bear markets started in Materials.
Takeaways
What we learn by comparing sectors.
Survival isn't return. Health Care's 26-year median tenure and 11.2% CAGR beats every sector except Tech on a risk-adjusted basis — without the drawdowns.
Multiples are stickier than growth. Software multiples stay elevated even when growth slows because the durability is structural — once a customer is integrated, churn is 5%.
Utilities are the sleeper compounder. 6.8% CAGR is uninspiring until you realise it's 41 years of survival with a −28% drawdown. Adjust for risk and the Sharpe is competitive.
Defensive sectors are not all the same. Consumer Staples outperform in recessions; Utilities survive them. The failure mode is different — staples see earnings cuts; utilities see rate-base compression.
Industrials are late-cycle cyclicals. Long-cycle capex means Industrials recover slowest from recessions — they need orders first, then deliveries, then earnings.