Fisher Investments on Consumer Discretionary

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.

• Foreword ixPreface xiAcknowledgments xvPart I Getting Started in Consumer Discretionary 1Chapter 1 Consumer Discretionary Basics 3Consumer Discretionary 101 4Getting to Know the Consumer Discretionary Sector 13Chapter 2 The History of the Consumer Discretionary Sector 19The Earliest American Consumers 20The Birth of the Modern Consumer Discretionary Sector 23Chapter 3 Consumer Discretionary Sector Drivers 35Economic Drivers 36Political Drivers 49Sentiment Drivers 54Part II Next Steps: Consumer Discretionary Details 57Chapter 4 Consumer Discretionary Sector Landscape 59Global Industry Classification Standard (GICS) 60Global Consumer Discretionary Benchmarks 61Automobiles & Components Industry Group 66Retailing Industry Group 72Media Industry Group 76Consumer Durables & Apparel Industry Group 81Consumer Services Industry Group 86Chapter 5 Challenges in the Consumer Discretionary Sector 91Challenge 1: Growing Profits in Mature Markets 91Challenge 2: Managing Volatile Demand 101Case Study: Callaway Golf 106Chapter 6 Household Debt—Myths and Opportunities 111Household Debt in Developed Markets—Basically a Very Useful Tool 112Tremendous Opportunities in Emerging Markets 117Case Study: Brazil’s Credit-Driven Consumption Boom 118Part III Thinking Like a Portfolio Manager 127Chapter 7 The Top-Down Method 129Investing Is a Science 130Einstein’s Brain and the Stock Market 131The Top-Down Method 132Top Down Deconstructed 138Managing Against a Consumer Discretionary Benchmark 145Chapter 8 Security Analysis 151Make Your Selection 152A Five-Step Process 153Important Questions to Ask 161Chapter 9 Consumer Discretionary Investment Strategies 167Strategy 1: Adding Value at the Industry and Sub-Industry Level 168Strategy 2: Adding Value at the Security Level 174Strategy 3: Adding Value in a Consumer Discretionary Sector Downturn 174How to Implement Your Strategy 176Notes 179About the Authors 183Index 185