This installment of the Fisher Investments On series is a comprehensive guide to the Financials sector, the largest sector in most broad equity indexes around the world and the lifeblood of the global economy.
This reliable guide can help you in making top–down investment decisions specifically for the Financials sector. It shows how to determine better times to invest in Financials, which Financials industries and sub–industries are likelier to do best, and how individual stocks can benefit in various environments. The global Financials industry is large and complex, with the major part of the sector located outside the United States. Using the framework detailed in this book, you can learn to be better equipped to identify opportunities and avoid major pitfalls.
Given the vast market landscape and diverse geographic operations, it is vital to maintain a global perspective when investing in the Financials sector. This invaluable resource provides the tools to help you understand and analyze opportunities both in the United States and abroad within this sector.
Part I Introduction 1
Chapter 1 Financials 101 4
Financials Sector Breakdown 23Financials Basics 3
Part II Industry Group Details 31
Chapter 2 Banks 101 34
Types of Banks 45
Banks Industry Group Characteristics 48
Bank Regulation 53Banks 33
Chapter 3 Capital Markets 64
Consumer Finance 76
Diversified Financial Services 80Diversified Financials 63
Chapter 4 Characteristics of Insurers 84
How Do Insurance Companies Make Money? 89
How Do Insurance Companies Act? 94
Regulation 98Insurance Industry Group 83
Chapter 5 What Is a REIT? 105
REIT Characteristics 108
A Representative Example: Annaly Capital Management 112
Equity REIT Sub–Industries 115
Unique Measurements for REITs 118Real Estate Industry Group 103
Part III Thinking Like a Portfolio Manager 121
Chapter 6 Investing Is a Science 123
The Top–Down Method 126
Top–Down Deconstructed 131
Managing Against a Financials Benchmark 139The Top–Down Method 123
Chapter 7 Make Your Selection 144
A Five–Step Process 145
Financials Analysis 153Security Analysis 143
Chapter 8 Adding Value at the Sector Level 160
Adding Value at the Country or Industry Level 161
Adding Value at the Security Level 162Financials Investing Strategies 159
Appendix A: Reference Material 165
Appendix B: Derivatives 171
Appendix C: Risk–Adjusted Balance Sheet 175
About the Author 185
JARRED J. KRIZ has been in the financial ser–vices industry since 1997, with experience in the banking, investment banking, brokerage, and asset management fields. He regularly presents to audiences at investing workshops across the country and currently works as a Senior Capital Markets Research Analyst at Fisher Investments with a focus on the Financials sector and macroeconomic strategy.
About 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 bestselling 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.