All too often, people will invest in the "next big thing," hoping to make out like a bandit. The trouble is, by the time a potentially rapid-growth investment is known, it's already priced into shares. More people moving into a small part of the market only sends prices far higher than the fundamentals will justify.
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 | | How to Find Opportunities Using Sector Analysis |  | There are many ways to find great investment opportunities. Breaking the market down into sectors is a simple way to find areas of growth.
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From there, it becomes easy to determine the specific workings of that sector, which in turn makes it easier to find the best opportunities within that sector.
There are some pretty important differences between sectors. Some sectors have companies that require little capital. Some require a lot to stay in business. Some sectors have lots of regulations, others have little to none.
One sector stands out as an interesting investment opportunity right now: The airline sector.
That's because after nearly a decade of mergers, the big four companies control about two-thirds of the market. That's a big enough number of companies to stay competitive, but without having a monopoly on the market.
Even better, the government has regulated this industry favorably. Domestic flights—say from New York to Los Angeles—can only be made by domestic carriers. If you want to go from LA to Vancouver, only then will you be able to fly on an airline domiciled in another country.
For decades, the airline industry competed against itself rather harshly. We're talking fare wars, airlines aggressively moving into another airline's primary routes to try and increase market share, and so on.
With the industry now consolidated into a smaller number of companies, those days seem by the wayside.
Instead, airlines are focused on everyday low fares, combined with all sorts of upcharges. While that may mean that complimentary meals are no longer available, it does mean better profit margins for shareholders.
Add in some weak oil prices for this time of year, and this is a sector that's on track to keep performing well for the foreseeable future.
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