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Fisher Investments on Materials

Fisher Investments on Materials

Fisher Investments, Andrew Teufel, Brad Pyles

ISBN: 978-0-470-62180-6

Dec 2009

256 pages



The second installment of the Fisher Investments On series is a comprehensive guide to the Materials sector. Fisher Investments on Materials can benefit both new and seasoned investors, covering everything from Materials sector basics to specific industry insights to practical investing tactics, including common pitfalls to avoid.

The book will begin with a discussion of Fisher Investments’ investing philosophy as it applies to the Materials sector. Then, readers will be lead through a discussion of sector basics , what drives the industries, and develop a framework for individual security analysis. Finally, the book will look at industry fundamentals and discuss what investors can do to protect themselves in a down market.

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Foreword ix

Preface xi

Acknowledgments xv

Part I Getting Started in Materials 1

Chapter 1 Materials Basics 3

Materials 101 4

Commodity Pricing Basics 9

The Production Process 13

Chapter 2 A Brief History of Materials 29

The Industrial Revolution 29

Structural Shifts in Metals Since the Industrial Revolution 33

Industrialization of the Emerging Markets 37

Chapter 3 Materials Sector Drivers 41

Key Drivers 42

Drivers at Work 46

Case Study: Copper 51

Part II Next Steps: Materials Details 63

Chapter 4 Materials Sector Breakdown 65

Global Industry Classification Standard (GICS) 66

Global Materials Benchmarks 67

Metals & Mining Industry 74

Chemicals 88

Construction Materials 96

Paper & Forest Products 96

Containers & Packaging 98

Chapter 5 Staying Current: Tracking Sector Fundamentals 101

What to Watch 102

Chapter 6 Case Study: The 2003 to 2007

Bull Market in Materials 117

The Backdrop 119

Demand Growth 120

Supply Constraints 130

The Growth of Mergers and Acquisitions 136

Part III Thinking Like a Portfolio Manager 139

Chapter 7 The Top-Down Method 141

Investing Is a Science 141

The Top-Down Method 144

Top-Down Deconstructed 150

Managing Against a Materials Benchmark 157

Chapter 8 Security Analysis 163

Make Your Selection 164

A Five-Step Process 165

Important Questions to Ask 173

Chapter 9 Materialize Your Portfolio: Investing Strategies 181

Strategy 1: Adding Value at the Industry and

Sub-industry Level 182

Strategy 2: Adding Value at the Security Level 189

Strategy 3: Adding Value in a Materials Sector Downturn 190

Strategy 4: Investing in Commodities 191

Appendix A: Materials Sector Resources 195

Appendix B: Top 10 Materials Firms by Industry 199

Notes 203

Glossary 217

About the Authors 223

Index 225

Divided into three comprehensive parts—Getting Started, Materials Details, and Thinking Like a Portfolio Manager—Fisher Investments on Materials:
  • Covers the entire Materials universe—from metals and mining to chemicals, construction materials, and paper

  • Discusses Materials' main drivers—basic materials prices—and provides eight simple questions to help you form an educated opinion on Materials stocks

  • Takes you through the fifteen sub-industries within the global Materials sector and reveals how they operate

  • Addresses issues unique to Materials stocks—from the importance of emerging markets demand to the effects of supply shortages

  • Delves into top-down investment methodology as well as individual security analysis

  • Outlines a five-step process to help differentiate firms in this field—designed to help you identify ones with the greatest probability of outperforming