Fisher Investments on Consumer Discretionary

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