Sector funds invest in individual industries, such as banks or technology. Of the 912 new funds created in 2000, most were sector funds, especially representing the internet sector. When a sector is very narrow, I call it a "fad fund". Sometimes they start off with a spectacular flash earning 100% or more.

In 2001 dozens of new funds such as Monument Internet Fund, Strong Internet Fund, Munder International, NetNet, and Turner B2B e-Com Fund close after losing most of their investor's money. After big returns in 2000, the money flooded in and the market sucked it out.

Still, an investor should have some knowledge of the many stock market industry sectors, since some sectors such as healthcare, finance, and technology, have outperformed the general market over the past 12 years.

But when a sector goes out of favor like technology and telecom did in 2000-2001, you can suddenly lose everything you’ve gained in the prior years.

Other Stock Market Basics Topics:

1. Mutual Fund Advantages
2. History of Mutual Funds
3. NAV
4. Dollar Cost Averaging
5. General advice about choosing a fund
6. Mutual Fund Ratings
7. Evaluating Mutual Fund Investment Risk
8. Mutual Fund Share Classes
9. Mutual Fund Fees
10. The Mutual Fund Prospectus
11. How important is the manager's length of experience?
12. Why is the prospectus hard to understand?
13. Mutual Fund Annual Report
14. Comparing your fund to the competition
15. Comparing funds on an after-tax basis
16. Average Return on Investment
17. How Not to Pick a Mutual Fund
18. Cashing in Your Fund
19. When to Sell Your Fund
20. Mutual Funds and Asset Allocation
21. When to get started with a mutual fund
22. Types of Mutual Funds
23. Value Stock Funds
24. Growth Stock Funds
25. Small and Micro-cap Stocks
26. Mid Cap
27. Large Cap Companies
28. Income Stock Funds
29. Mutual Fund Index
30. Enhanced Index Funds
31. Sector Mutual Funds
32. Stock Market Sectors
33. Defensive Stocks
34. International Funds
35. Real Estate Mutual Funds
36. Socially Responsible Funds
37. Balanced Funds
38. Tax-Efficient Funds
39. Bond Convertible Funds
40. Junk Bond Funds
41. Mixtures of stock types
42. Closed End Funds
43. Exchange Traded Funds (ETF’s)
44. Stock Picking Strategy - Picking your own stocks?
45. Fund names, and what they really invest in
46. How to get started
47. Where can I start investing with no money?