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Fisher Investments on Technology by Andrew Teufel, Brendan Erne, Fisher Investments

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Chapter 7. THE TOP-DOWN METHOD

So if you're bullish on Technology, how much of your portfolio should you put in Technology stocks? Twenty-five percent? Fifty? One hundred percent? This question concerns portfolio management. Most investors concern themselves only with individual companies ("I like Microsoft, so I'll buy some") without considering how it fits into their overall portfolio. But this is no way to manage your money.

In Part 3 of this book, we show you how to analyze Technology companies like a top-down portfolio manager. This includes a full description of the top-down method, how to use benchmarks, and how the top-down method applies to the Technology sector. We then delve into security analysis, where we provide a framework for analyzing any company, and then discuss many of the important questions to ask when analyzing Technology companies. In the last chapter, we give a few examples of specific investing strategies for the Technology sector.

INVESTING IS A SCIENCE

Too many investors today think investing has a single set of "rules"—that all one must do to succeed in investing for the long run is finding the right set of investing rules. But that simply doesn't work. Why? All well-known and widely discussed information is already reflected in stock prices. This is a basic tenet of market theory and commonly referred to as "market efficiency." So if you see a headline about a stock you follow, there's no use trading on that information—it's already priced in. You missed ...

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