Managing Bond Portfolios参考.ppt

CHAPTER 16 Managing Bond Portfolios CHAPTER 17 Macroeconomic and Industry Analysis Figure 17.7 Industry Stock Price Performance, 2009 Defining an Industry North American Industry Classification System, or NAICS codes Firms with the same four-digit NAICS codes are commonly taken to be in the same industry. Table 17.5 Examples of NAICS Industry Codes Sensitivity to the Business Cycle Sensitivity of sales: Necessities vs. discretionary goods Items that are not sensitive to income levels (such as tobacco and movies) vs. items that are, (such as machine tools, steel, autos) Three factors determine how sensitive a firm’s earnings are to the business cycle. Figure 17.9 Industry Cyclicality Sensitivity to the Business Cycle Firms with low operating leverage (less fixed assets) are less sensitive to business conditions. Firms with high operating leverage (more fixed assets) are more sensitive to the business cycle. Operating leverage : the split between fixed and variable costs Table 17.6 Operating Leverage of Firms A and B Throughout the Business Cycle Sensitivity to the Business Cycle Interest is a fixed cost that increases the sensitivity of profits to the business cycle. Financial leverage: the use of borrowing Figure 17.10 A Stylized Depiction of the Business Cycle Sector Rotation Portfolio is shifted into industries or sectors that should outperform, according to the stage of the business cycle. Peaks – natural resource extraction firms Contraction – defensive industries such as pharmaceuticals and food Sector Rotation Trough – capital goods industries Expansion – cyclical industries such as consumer durables Figure 17.11 Sector Rotation Industry Life Cycles Stage Start-up Consolidation Maturity Relative Decline Sales Growth Rapid and increasing Stable Slowing Minimal or negative Figure 17.12 The Industry Life Cycle Which Life Cycle Stage is Most Attractive? Quote from Peter Lynch in One Up on Wall Street: Many people prefer to invest in a high-growth i