Fisher Investments on Consumer Discretionary

by Fisher Investments, Erik Renaud

Overview

The Fisher Investments On series is designed to provide individual investors, aspiring investment professionals, and students the tools necessary to understand and analyze investment opportunities—primarily for investing in global stocks. Each guide is an easily accessible primer to economic sectors, regions, or other components of the global stock market. While this guide specifically focuses on Consumer Discretionary, the basic investment methodology is applicable for analyzing any global sector, regardless of the current macroeconomic environment.

Following a top-down approach to investing, Fisher Investments on Consumer Discretionary can help you make more informed decisions within the Consumer Discretionary sector. It skillfully addresses how to determine the optimal times to invest in Consumer Discretionary stocks and which Consumer Discretionary industries and sub-industries have the potential to perform well in various environments.

Divided into three comprehensive parts—Getting Started, Consumer Discretionary Details, and Thinking Like a Portfolio Manager—Fisher Investments on Consumer Discretionary:

• Explains some of the sector’s key macro drivers—like consumer spending, income, and employment
• Shows how to capitalize on a wide array of macro conditions and industry-specific features to help you form an opinion on each of the industries within the sector
• Takes you through the major components of the 12 sub-industries within the global Consumer Discretionary sector and reveals how they operate
• Offers investment strategies to help you determine when and how to overweight specific industries within the sector
• Outlines a five-step process to help differentiate firms in this field—designed to help you identify ones with the greatest probability of outperforming

Filled with in-depth insights and expert advice, Fisher Investments on Consumer Discretionary provides a framework for understanding this sector and its industries to help you make better investment decisions—now and in the future. With this book as your guide, you can gain a global perspective of the Consumer Discretionary sector and discover strategies to help achieve your investing goals.

Product Details

ISBN-13:	9780470527030
Publisher:	Wiley
Publication date:	07/06/2010
Series:	Fisher Investments Press , #17
Pages:	208
Product dimensions:	6.30(w) x 9.00(h) x 0.80(d)

About the Author

ERIK RENAUD is a Consumer Discretionary Research Analyst at Fisher Investments. Renaud graduated from Santa Clara University with a bachelor’s degree in finance. Hailing from Minnetonka, Minnesota, he currently resides in San Francisco, California.

ANDREW S. TEUFEL has been with Fisher Investments since 1995, where he currently serves as a Co-President and the Director of Research. Prior to joining Fisher Investments, he worked at Bear Stearns as a corporate finance analyst in its Global Technology Group. Teufel also instructs at many seminars and educational workshops throughout the United States and United Kingdom, and has lectured at the Haas School of Business at UC Berkeley. He is also the Editor in Chief of MarketMinder.com. Teufel is a graduate of UC Berkeley.

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Table of Contents

Foreword ix

Preface xi

Acknowledgments xv

Part I Getting Started in Consumer Discretionary 1

Chapter 1 Consumer Discretionary Basics 3

Consumer Discretionary 101 4

Getting to Know the Consumer Discretionary Sector 13

Chapter 2 The History of the Consumer Discretionary Sector 19

The Earliest American Consumers 20

The Birth of the Modern Consumer Discretionary Sector 23

Chapter 3 Consumer Discretionary Sector Drivers 35

Economic Drivers 36

Political Drivers 49

Sentiment Drivers 54

Part II Next Steps: Consumer Discretionary Details 57

Chapter 4 Consumer Discretionary Sector Landscape 59

Global Industry Classification Standard (GICS) 60

Global Consumer Discretionary Benchmarks 61

Automobiles & Components Industry Group 66

Retailing Industry Group 72

Media Industry Group 76

Consumer Durables & Apparel Industry Group 81

Consumer Services Industry Group 86

Chapter 5 Challenges in the Consumer Discretionary Sector 91

Challenge 1: Growing Profits in Mature Markets 91

Challenge 2: Managing Volatile Demand 101

Case Study: Callaway Golf 106

Chapter 6 Household Debt—Myths and Opportunities 111

Household Debt in Developed Markets—Basically a Very Useful Tool 112

Tremendous Opportunities in Emerging Markets 117

Case Study: Brazil’s Credit-Driven ConsumptionBoom 118

Part III Thinking Like a Portfolio Manager 127

Chapter 7 The Top-Down Method 129

Investing is a Science 130

Einstein’s Brain and the Stock Market 131

The Top-Down Method 132

Top Down Deconstructed 138

Managing Against a Consumer Discretionary Benchmark 145

Chapter 8 Security Analysis 151

Make Your Selection 152

A Five-Step Process 153

Important Questions to Ask 161

Chapter 9 Consumer Discretionary Investment Strategies 167

Strategy 1: Adding Value at the Industry and Sub-Industry Level 168

Strategy 2: Adding Value at the Security Level 174

Strategy 3: Adding Value in a Consumer Discretionary Sector Downturn 174

How to Implement Your Strategy 176

Notes 179

About the Authors 183

Index 185