To investors, a bellwether is usually a company that is worth watching closely because its earnings logically suggest a larger economic trend. Usually profitable and stable, most bellwether stocks have proven themselves in an industry with established customer bases and formidable brand loyalty. A stock in a well-known or highly-regarded company in a given sector. 1 The leading sheep of a flock, with a bell on its neck. Oftentimes, however, that means that its growth days are long over. someone or something that is believed to show how a situation will develop or change in the future: bellwether for/of sth The report is viewed as a bellwether for national economic trends. the most recently auctioned 10-year bond. Historical Unemployment Rates in the United States, Warren Buffett: My Original Plan Was To Retire at 25, What Pandemic? © 2012 Farlex, Inc. A bellwether stock is a stock that is used to gauge the performance of the market or macro-economy. A barometer stock is considered to be an indicator of the performance of its particular sector or industry, or the market as a whole. More goods are being manufactured to fill more wholesale orders, more wholesale orders are being sent to retailers, and retailers are buying more to meet consumer demand. © 2012 Farlex, Inc. Similarly, political bellwethers tend to be a leading indicator relating to voting trends and elections. Instead, investors may use bellwether stocks as indicators while actually putting their money into up-and-coming stocks with plenty of growth potential ahead of them. Use historical data for helpful predictions of future behavior, Give early indicators of shifting market conditions, Not always a good gauge for companies or industries of different sizes, Bellwethers do not guarantee a certain outcome, Potential to place too much emphasis on a bellwether. bellwether. If the bellwether stock is moving up or down, the whole sector or even market is expected to follow suit. Alcoa is in a. LVMH Moet Hennessey Louis Vuitton is a giant among luxury goods makers. He is a CFA charterholder as well as holding FINRA Series 7 & 63 licenses. someone or something that is believed to show how a situation will develop or change in the future: bellwether for/of sth The report is viewed as a bellwether for national economic trends. ‘Whether recent gains can be sustained after that will depend on the ability of financial and other industrial stocks to catch up with bellwether electronics that have led the upturn.’. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Accessed May 8, 2021. Higher-end retailer Nordstrom is a bellwether stock more than any of its retail peers. By that, we mean that when the stock performs well, it generally means the economy is performing well and vice versa. The term bellwether is used to describe a stock that tends to comment on the state of the U.S. economy (or if it is an international stock, it would comment on its respective economy). The offers that appear in this table are from partnerships from which Investopedia receives compensation. The word “bellwether” refers to the practice of placing a bell around the neck of a ram, which led the flock of sheep. The performance of FedEx and a number of other public companies are considered by analysts to indicate the direction of the economy and the financial markets because their performance is well-correlated with a general trend. Random good picture Not show. A bellwether stock's status as a bellwether status might change eventually, but in the equities market, the biggest, well-established companies in an industry are usually the bellwethers. A male sheep, usually wearing a bell, that leads the flock. Powered by electricity, producing zero emissions, and compactly designed, the Bellwether re-imagines commercial coffee roasting for a sustainable world. carrot, bean). Shepherds hang a bell around the neck of a sheep that leads the flock to make it easy to locate the flock in the fields. However you interpret the behavior of a bellwether, they are companies to watch closely, especially if historical data backs up their behavior. IBM is considered the bellwether stock on Wall Street. And the same meaning applies to the bellwether stock – the movement of the Sensex is tracked by the movement of this one stock. Meet the Bellwether Roaster. You can learn more about the standards we follow in producing accurate, unbiased content in our. FedEx, as noted above, is watched as a bellwether that indicates strength or weakness in consumer spending. man, dog, house). A noun is a word referring to a person, animal, place, thing, feeling or idea (e.g. IBM is considered the bellwether stock on Wall Street. A bellwether stock is a one that’s generally thought to be an indicator of the direction of the market overall – the market being either a sector (like technology), or an economy (like the US’s). A leading indicator is an economic factor that can be used to predict which way a market or economy may go in the future. The Barometric Bellwether: This is a place that accurately reflects the national share of votes. The word is a combination of bell and wether, a castrated ram. ‘college campuses are often the bellwether of change’. Meaning: n. 1. someone who assumes leadership of a movement or activity 2. sheep that leads the herd often wearing a bell. Also a bellwether or benchmark issue in the cash bond market, e.g. A phrase used as a figure of speech or a word that is symbolic in meaning; metaphorical (e.g. Similarly, Sandoval County in New Mexico is considered a bellwether because it gives a good pulse on national politics in swing states; in that county, there is a pretty moderate political sentiment, so that in some years, it swings red, and other years, it swings blue. While bellwether stocks may indicate future trends, they are not always the best investments in a sector. However, relatively few investors use the short-selling strategy. A bellwether company is watched closely, as its ups and downs are seen as signaling a change in direction for its industry or the economy as a whole. This animal was called the bellwether, a word formed by a combination of the Middle English words belle (meaning "bell") and wether (a noun that refers to a male sheep that has been castrated). A bellwether stock refers to a stock that's utilized in gauging the market's performance generally. However, these and other bellwether stocks tend to be companies that are established, stable, and financially sound. For decades the company was the bellwether of the British economy. These include white papers, government data, original reporting, and interviews with industry experts. A bellwether stock is seen as predicting the performance of the market or a sector of it. Value of World's Most Valuable Sports Franchises Soars, State of the Market: Dogecoin Surges on Hopes of Elon Musk "Saturday Night Live" Mention, Greg Abel Will Be The Next CEO of Berkshire Hathaway, Charlie Munger Really Doesn't Like Bitcoin. The only pure-play gym chain on the stock market, Planet Fitness is certainly a bellwether stock for those considering what a return to normal looks like. noun. ‘So a bellwether is the head ram with a bell hung around its neck.’. "What's good for GM is good for America" is a famous adage that speaks to General Motors' bellwether status in the U.S., mainly from the 1940s through the 1980s. Stocks aren't cheap, with investor sentiment broadly bullish. Higher-end retailer Nordstrom is a bellwether stock more than any of its retail peers. Receive full access to our market insights, commentary, newsletters, breaking news alerts, and more. COBUILD Advanced English Dictionary. Whenever it does, analysts will look at Sandoval County—which has been 92% accurate in predicting swings in the national electorate—for a pulse check on the country. 1.1. 1. Alcoa is a bellwether because the aluminum it produces is used in a wide spectrum of industries from aerospace to beverage containers. How Does a Bellwether Work? Some prove to be resistant to economic downturns. The term bellwether stock refers to a stock that is believed to be a leading indicator of the direction of the economy, a specific sector, or the market as a whole. 2. A company's stock may also be a bellwether if it is viewed as pointing towards an upward or downward trend in a sector. While bellwether stocks may indicate future trends, they are not always the best investments in a sector. A bellwether stock is believed to be a leading indicator of the direction of the economy or the market as a whole. For instance, a company such as JP Morgan Chase is seen to be a bellwether stock in the financial sector. These stocks also form the foundation of most major market indices; large-cap bellwethers such as Boeing Co. and Johnson & Johnson dominate the Dow Jones Industrials and the S&P 500.
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