Fisher Investments on Consumer Discretionary

210 Pages·2010·1.404 MB·English

by  Fisher Investments, Erik Renaud

(continued from front flap)
$49.95 USA / $59.95 CAN
Filled with in-depth insights and expert advice, Fisher
Investments on Consumer Discretionary provides
The Fisher Investments On series is designed to
a framework for understanding this sector and
provide individual investors, aspiring investment
its industries to help you make better investment CONSUMER DISCRETIONARY
on professionals, and students the tools necessary to
decisions—now and in the future. With this book as
understand and analyze investment opportunities—
your guide, you can gain a global perspective of the

primarily for investing in global stocks. Each guide is an
Consumer Discretionary sector and discover strategies This installment of the Fisher Investments On series is a comprehensive guide to the Consumer on
easily accessible primer to economic sectors, regions,
to help achieve your investing goals. Discretionary industry—which includes companies such as auto manufacturers, homebuilders,
CONSUMER or other components of the global stock market.
sports equipment manufacturers, hotel developers and operators, cruise lines, retail websites,
While this guide specifi cally focuses on Consumer
and department stores, to name just a few.
Discretionary, the basic investment methodology is
applicable for analyzing any global sector, regardless
This reliable guide can help you in making top-down investment decisions specifi cally for the
ERIK RENAUD is a Consumer Discretionary Research DISCRETIONARY of the current macroeconomic environment.
Consumer Discretionary sector. It shows how to determine better times to invest in Consumer
Analyst at Fisher Investments. Renaud graduated from
Discretionary, which Consumer Discretionary industries and sub-industries are likelier to do
Santa Clara University with a bachelor’s degree in fi nance. Following a top-down approach to investing, Fisher
best, and how individual stocks can benefi t in various environments. The global Consumer
Hailing from Minnetonka, Minnesota, he currently resides Investments on Consumer Discretionary can help
Discretionary sector is complex, covering many sub-industries and countries with unique
in San Francisco, California. you make more informed decisions within the
characteristics. Using the framework detailed in this book, you can learn to be better equipped
Consumer Discretionary sector. It skillfully addresses
to identify their differences, spot opportunities, and avoid major pitfalls.
ANDREW S. TEUFEL has been with Fisher
how to determine the optimal times to invest in
Investments since 1995, where he currently serves as
Consumer Discretionary stocks and which Consumer
Given the vast market landscape and diverse geographic operations, it is vital to maintain o
a Co-President and the Director of Research. Prior
a global perspective when investing in the Consumer Discretionary sector. This invaluable n Discretionary industries and sub-industries have the
to joining Fisher Investments, he worked at Bear
resource provides the tools that can help you understand and analyze opportunities both in the C potential to perform well in various environments.
Stearns as a corporate fi nance analyst in its Global O
United States and abroad within this diverse sector.
Technology Group. Teufel also instructs at many N
S Divided into three comprehensive parts—Getting
seminars and educational workshops throughout the
U Started, Consumer Discretionary Details, and
For more information, visit www.consumerdiscretionary.fi sherinvestments.com.
United States and United Kingdom, and has lectured M
Thinking Like a Portfolio Manager—Fisher
(cid:129) An in-depth look at the global Consumer
at the Haas School of Business at UC Berkeley. He is E
Investments on Consumer Discretionary:
R Discretionary universe, including automobiles,
also the Editor in Chief of MarketMinder.com. Teufel About Fisher Investments Press (cid:129) Explains some of the sector’s key macro drivers—like
D consumer durables and services, retailing, and media
is a graduate of UC Berkeley. consumer spending, income, and employment
I
S
Fisher Investments Press brings the research, analysis, and market intelligence of Fisher C (cid:129) Tips and tools for security analysis and (cid:129) Shows how to capitalize on a wide array of macro conditions
Investments’ research team, headed by CEO and New York Times bestselling author Ken Fisher, R and industry-specifi c features to help you form an opinion
E portfolio management on each of the industries within the sector
to all investors. The Press covers a range of investing and market-related topics for a wide T
Jacket Design: Leila Amiri I (cid:129) Takes you through the major components of the 12 sub-
Jacket Images: © iStockphoto audience—from novices to enthusiasts to professionals. O (cid:129) A useful guide for investing in any market condition industries within the global Consumer Discretionary sector
N
and reveals how they operate
A
R (cid:129) Offers investment strategies to help you determine when
Y and how to overweight specifi c industries within the sector
(cid:129) Outlines a fi ve-step process to help differentiate fi rms in this
fi eld—designed to help you identify ones with the greatest
probability of outperforming
Foreword by New York Times bestselling author Ken Fisher
(continued on back flap)
ISBN: 978-0-470-52703-0
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Fisher Investments on
Consumer Discretionary
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FISHER INVESTMENTS PRESS
Fisher Investments Press brings the research, analysis, and market
intelligence of Fisher Investments’ research team, headed by CEO and
New York Times best-selling author Ken Fisher, to all investors. The
Press covers a range of investing and market-related topics for a wide
audience—from novices to enthusiasts to professionals.
Books by Ken Fisher
How to Smell a Rat
The Ten Roads to Riches
The Only Three Questions That Count
100 Minds That Made the Market
The Wall Street Waltz
Super Stocks
Fisher Investments Series
Own the World by Aaron Anderson
20/20 Money by Michael Hanson
Fisher Investments On Series
Fisher Investments on Energy
Fisher Investments on Materials
Fisher Investments on Consumer Staples
Fisher Investments on Industrials
Fisher Investments on Emerging Markets
Fisher Investments on Technology
Fisher Investments on Consumer Discretionary
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Fisher Investments on
Consumer Discretionary
Fisher Investments
with
Erik Renaud and
Andrew Teufel
John Wiley & Sons, Inc.
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Copyright © 2010 by Fisher Investments Press. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or
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Important Disclaimers: This book reflects personal opinions, viewpoints and analyses
of the author and should not be regarded as a description of advisory services provided
by Fisher Investments or performance returns of any Fisher Investments client. Fisher
Investments manages its clients’ accounts using a variety of investment techniques
and strategies not necessarily discussed in this book. Nothing in this book constitutes
investment advice or any recommendation with respect to a particular country, sector,
industry, security or portfolio of securities. All information is impersonal and not
tailored to the circumstances or investment needs of any specific person.
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disclaim any implied warranties of merchantability or fitness for a particular purpose.
No warranty may be created or extended by sales representatives or written sales
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For general information on our other products and services or for technical support,
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ISBN 978-0-470-52703-0
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
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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
v
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vi Contents
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 Consumption
Boom 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
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Contents vii
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
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