In the previous chapter, I discussed easy ways to home in on companies that will be worth your while. In the next section of the book, we'll focus on tools for understading different areas of the market | A Guided Tour of the Market In the previous chapter I discussed easy ways to home in on companies that will be worth your while. In the next section of the book we ll focus on tools for understanding different areas of the market. As I said in Chapter 3 it s easier for companies to make money In some industries than in others. Moreover some industries lend themselves to the creation of economic moats more so than others and these are the industries where you ll want to spend most of your time. Although we don t advocate a top-down investment strategy in which you select areas of the market that you think will perform better than others and invest heavily in your top-rated industries the economics of some industries are superior to others. Hence you should spend more time learning about attractive industries than unattractive ones. Every industry has its own unique dynamics and set of jargon and some industries such as financial services even have financial statements that look very different from the ones we discussed in Chapter y I asked Morningstar s staff of 30 equity analysts to put together a series of chapters covering just about every corner of the market. These chapters should help you wade through the different economics of each industry and understand how 184 A guided tour of the market companies in each industry can create economic moats which strategies work and how you can identify companies pursuing those strategies. Where to Look Because you re likely as pressed for time as every other person with a day job who also manages his or her own investments let me try to briefly steer you toward some areas of the market that are definitely worth more of your time. Banks and Financial Services In general most financial services firms are in excellent economic positions as middlemen for money. Banks in particular enjoy the enviable position of paying very little to hold on to depositors money when you consider the low rates on checking accounts and all of the
