Table of Contents

Foreword ix

Preface xi

Acknowledgments xv

Part I Introduction 1

Chapter 1 Financials Basics 3

Financials 101 4

Financials Sector Breakdown 23

Part II Industry Group Details 31

Chapter 2 Banks 33

Banks 101 34

Types of Banks 45

Banks Industry Group Characteristics 48

Bank Regulation 53

Chapter 3 Diversified Financials 63

Capital Markets 64

Consumer Finance 76

Diversified Financial Services 80

Chapter 4 Insurance Industry Group 83

Characteristics of Insurers 84

How Do Insurance Companies Make Money? 89

How Do Insurance Companies Act? 94

Regulation 98

Chapter 5 Real Estate Industry Group 103

What Is a REIT? 105

REIT Characteristics 108

A Representative Example: Annaly Capital Management 112

Equity REIT Sub-Industries 115

Unique Measurements for REITs 118

Part III Thinking Like a Portfolio Manager 121

Chapter 6 The Top-Down Method 123

Investing Is a Science 123

The Top-Down Method 126

Top-Down Deconstructed 131

Managing Against a Financials Benchmark 139

Chapter 7 Security Analysis 143

Make Your Selection 144

A Five-Step Process 145

Financials Analysis 153

Chapter 8 Financials Investing Strategies 159

Adding Value at the Sector Level 160

Adding Value at the Country or Industry Level 161

Adding Value at the Security Level 162

Appendix A: Reference Material 165

Appendix B: Derivatives 171

Appendix C: Risk-Adjusted Balance Sheet 175

Notes 179

About the Author 185

Index 187

About the Author

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.