Intangible Analysis of Sectors and Industries

SECTOR ANALYSIS

There are four basic types of firms in the stock market (see Table 8.1).

Depending on the economic climate, either large caps, medium caps, small caps, or micro caps will drive the stock market's performance. On Tuesday, December 30, 2003, the following data were collected.

Tables 8.2 and 8.2a are more easily understood on a relative basis. We know, from our preceding discussion of the intangible analysis of a single market, that indices are typically made up of large cap firms and medium cap firms. Small cap and micro cap firms are absent from index analysis (Tables 8.3 and 8.3a).

ANALYZING LARGE CAPS

On the 30th of December, 2003, there were 674 large caps out of a total of 8103 firms (8.32%). Tables 8.4 and 8.4a run contrary to investment logic. It

Firm Type Capitalization From Capitalization To

Micro Cap

$0

$250 m

Small Cap

$250 m

$1,000

m($1b)

Medium Cap

$1,000 m

$5b

Large Cap

$5,000 m

Onwards

TABLE 8.2 intMgtOS® Firm Type by Sector Report (intMgtOS® 5003.iR20a)

Sum of

Sum of

Sum of

Sum of

Large

Medium

Small

Micro

Sum of

Sector

Caps

Caps

Caps

Caps

Total

Basic Materials

43

89

86

251

469

Capital Goods

25

57

85

280

447

Conglomerates

15

9

4

1

29

Consumer Cyclical

30

58

64

256

408

Consumer/Non-Cyclical

41

38

46

158

283

Energy

38

59

65

141

303

Financial

136

152

246

724

1,258

Healthcare

53

90

173

538

854

Services

150

285

322

1,061

1,818

Technology

89

200

350

1,295

1,934

Transportation

12

34

36

72

154

Utilities

42

48

23

33

146

Grand Total

674

1,119

1,500

4,810

8,103

TABLE 8.2a intMgtOS® Firm Type by Sector Report

TABLE 8.2a intMgtOS® Firm Type by Sector Report

Notes Values intMgtOS®5003.iR20a

Dr Ken Standfield, Certified intMgtOS® Intangible Analyst

(111291-AKS01) Tuesday December 30th 2003

This report was compiled in strict accordance with intangible management operating standards and is deemed as being intMgtOS®5003 (International Intangible Reporting Standard) Certified.

intMgtOS Report Created By

Data Date

Data Date

IntMgtOS® Certification Number intMgtOS®-1000781

TABLE 8.3 intMgtOS® Firm Type by Sector Report (%) (intMgtOS® 5003.iR20b)

Sum of

Sum of

Sum of

Sum of

Sum of

Sector

Large

Medium

Small

Micro

Total

Basic Materials

6.38%

7.95%

5.73%

5.22%

5.79%

Capital Goods

3.71%

5.09%

5.67%

5.82%

5.52%

Conglomerates

2.23%

0.80%

0.27%

0.02%

0.36%

Consumer Cyclical

4.45%

5.18%

4.27%

5.32%

5.04%

Consumer/Non-Cyclical

6.08%

3.40%

3.07%

3.28%

3.49%

Energy

5.64%

5.27%

4.33%

2.93%

3.74%

Financial

20.18%

13.58%

16.40%

15.05%

15.53%

Healthcare

7.86%

8.04%

11.53%

11.19%

10.54%

Services

22.26%

25.47%

21.47%

22.06%

22.44%

Technology

13.20%

17.87%

23.33%

26.92%

23.87%

Transportation

1.78%

3.04%

2.40%

1.50%

1.90%

Utilities

6.23%

4.29%

1.53%

0.69%

1.80%

Grand Total

100.00%

100.00%

100.00%

100.00%

100.00%

TABLE 8.3a intMgtOS® Firm Type by Sector Report

Notes Values intMgtOS®5003.iR20b

Dr Ken Standfield, Certified intMgtOS® Intangible Analyst

(111291-AKS01) Tuesday December 30th 2003

This report was compiled in strict accordance with intangible management operating standards and is deemed as being intMgt0S®5003 (International Intangible Reporting Standard) Certified.

IntMgtOS® Certification Number intMgt0S®-1000785

is assumed that an investor has $674,000 to invest in shares. As the investor is unaware of what shares will increase in value, the investor invests $1,000 in each large cap stock.

The aggregated returns are listed in Table 8.4 in column [2], the "Large Cap Return on $1 k" column. As the investor invests $1,000 in each firm, the gross profit or loss (measured by column [3]) is determined by this logic: {[2] — ([1]*1000)}. The gross return or loss (column [4]) is determined by intMgtOS Report Created By

Data Date

TABLE 8.4 intMgtOS® Large Cap Report (intMgtOS® 5003.iR21a)

Sector

Number of Large Caps [1]

Large Cap Return on $1 k [2]

Gross Profit or Loss [3]

Gross Return or

Loss [5]

Net Return [6]

Basic Materials

43

59,641

16,641

38.70%

15,695

36.50%

Capital Goods

25

38,589

13,589

54.36%

13,039

52.16%

Conglomerates

15

21,294

6,294

41.96%

5,964

39.76%

Consumer Cyclical

30

41,296

11,296

37.65%

10,636

35.45%

Consumer/Non-Cyclical

41

45,781

4,781

11.66%

3,879

9.46%

Energy

38

53,852

15,852

41.72%

15,016

39.52%

Financial

136

183,673

47,673

35.05%

44,681

32.85%

Healthcare

53

70,691

17,691

33.38%

16,525

31.18%

Services

150

208,370

58,370

38.91%

55,070

36.71%

Technology

89

151,984

62,984

70.77%

61,026

68.57%

Transportation

12

15,395

3,395

28.29%

3,131

26.09%

Utilities

42

55,983

13,983

33.29%

13,059

31.09%

Grand Total

674

946,549

272,549

40.44%

257,721

38.24%

TABLE 8.4a intMgtOS® Large Cap Report

Notes Values intMgtOS®5003.iR21a

Dr Ken Standfield, Certified intMgtOS® Intangible Analyst (111291-AKS01)

Tuesday December 30th 2003

This report was compiled in strict accordance with intangible management operating standards and is deemed as being intMgt0S®5003 (International Intangible Reporting Standard) Certified.

IntMgtOS® Certification Number intMgt0S®-1001285

{[3] / ([ 1 ]* 1000)}, expressed in percentage terms. The net profit or loss (column [5]) adjusts column [3] for transaction costs. It is assumed that total transaction costs of $22 are required to enter and exit stocks. The net return column measures the percentage increase or decrease on the investment of $1 k per stock after transaction costs.

intMgtOS Report Created By

Data Date

There are two types of return—absolute return and relative return. Using the concept of absolute return we would seek the maximum values in column [2]. Using a relative approach we would judge column [4] and seek the maximum value. The highest relative return means the maximum return on minimal investment—the highest absolute return can be misleading, as it is increased due to the number of investment opportunities (especially if the absolute return in column [2] does not match the relative return in column [4]).

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