Sector Rotations Happen Fast, Not Slow—and Models Fail to Predict Them

Tech stocks collapsed nearly 50% in 2001 while the rest of the market gained 7.7%—a 60-point gap compressed into months. Early 2021 saw energy spike 67.2% and financials jump 42.9% in six months as bond yields rose. These episodes expose the same truth: rotations cluster into brief windows driven by macro shocks, not gradual drift. Models built on past correlations systematically underestimate how fast relationships break.