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Module 6 Sectors and Industries

Module 6 Sectors and Industries. Module 6 - Learning Objectives. Define industry and sector. Differentiate between sectors. Evaluate an industry on the basis of size, valuation, relationship to the business cycle, regulations, industry dynamics, and relative performance.

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Module 6 Sectors and Industries

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  1. Module 6Sectors and Industries

  2. Module 6 - Learning Objectives • Define industry and sector. • Differentiate between sectors. • Evaluate an industry on the basis of size, valuation, relationship to the business cycle, regulations, industry dynamics, and relative performance. • Categorize investments by industry and evaluate the impact of industry allocations.

  3. Which sectors are the largest?Can you give reasons why?

  4. Here’s some history

  5. Here are some well-known companies. What industry and sector are they in? • Citigroup • Lockheed Martin • Duke Energy • Starbucks • Cisco • Chevron • Nortel • Weyerhauser • Boise Cascade • Aetna • Allstate • Humana

  6. Sector Choices

  7. Evaluate Industry Risk And Return(2001 data)

  8. Evaluating Sector Return and Risk(2004 data)

  9. Evaluating Industry Cycle

  10. Source: www.fidelity.com

  11. Not all industries are affected by recessions. Look over the following list of industries and identify those that might not be hit as badly by recessions (also known as defensive industries). Give your reasons why. • Food processing • Personal care • Tobacco • Hotels • Advertising

  12. Evaluating Industry Regulation • Which industries are affected and how? • Food and Drug Administration (FDA) • Federal Communications Commission (FCC) • Federal Aviation Agency (FAA) • Medicare • Environmental Protection Service • U.S. Patent Office • Federal Trade Commission (FTC)

  13. Evaluating Industry Dynamics

  14. Evaluating Fundamentals

  15. Sectors Relative Price Movement

  16. Evaluating Relative Price • Go to www.smartmoney.com and find the Map of the Market. • Set controls to see price performance in the past six months. • Compare to the chart in the previous slide. • Which industries are cycling up? • Which are cycling down?

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