Charles Sizemore | Source | Portfolio Manager at Interactive Brokers

The differences in tax efficiency will generally be minimal and will only be noticeable during times of investor redemptions.

When you're at the top of the economic cycle and profits are booming, a stock can seem artificially cheap, as the denominator – the 'E,' or earnings – is inflated. At the same time, near the bottom of the economic cycle, when profits are depressed, a cyclical stock can look expensive in P/E ratio terms because the denominator is temporarily depressed.