Fisher Investments on Industrials

MATT SCHRADER is an Industrials analyst for Fisher Investments. He is also a contributing columnist for MarketMinder.com. Matt is a graduate of the University of California, San Diego. Originally from Marin County, California, he currently resides in San Francisco. 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. Andrew also instructs at many seminars and educational workshops throughout the United States and United Kingdom, and lectures at the Haas School of Business at UC Berkeley. He is also the Editor in Chief of MarketMinder.com. Andrew is a graduate of UC Berkeley.

• Foreword ixPreface xiAcknowledgments xvPart I: Getting Started in Industrials 1Chapter 1: Industrials Basics 3Industrials Basics 4Industrials Characteristics 7The Modern Production Process 14Chapter 2: History of Modern Manufacturing 21The Advancement of Trade and Investment 22The Rise of Asia and Changes in the Manufacturing Landscape 29The State of US Manufacturing 41Chapter 3: Industrials Sector Drivers 47Corporate Spending 48Government Spending 59Part II: Next Steps: Industrials Details 65Chapter 4: Industrials Sector Breakdown 67Global Industry Classification Standard (GICS) 67Global Industrials Benchmarks 69Capital Goods Industry Group 75Transportation 85Commercial & Professional Services 93Chapter 5: Staying Current: Tracking Sector Fundamentals 97What to Watch 97Corporate and Government Spending-Related Metrics 98Industry Specific Indicators 111Chapter 6: The Infrastructure Market 117A Very Big Market 118Infrastructure Investment Drivers 120Risks to Infrastructure Growth 123Participating in the Infrastructure Boom 125Part III: Thinking Like a Portfolio Manager 131Chapter 7: The Top-Down Method 133Investing Is a Science 133Einstein’s Brain and the Stock Market 134The Top-Down Method 136Top-Down Deconstructed 142Managing Against an Industrials Benchmark 149Chapter 8: Security Analysis 155Make Your Selection 156A Five-Step Process 157Important Questions to Ask 164Chapter 9: Allocating your “Capital Good” 171Strategy 1: Adding Value at the Industry Level 171Strategy 2: Adding Value at the Security Level 179Strategy 3: Industrials Sector Downturn 180How to Implement Your Strategy 180Appendix: Industrials Websites and Data Sources 183Notes 185Glossary 194About the Authors 197Index 198

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