Now you’ve got the basics of how the Materials sector works, an understanding of its history, and its high-level drivers. But a high-level understanding is just the beginning. Just like our overall economy, each sector is made of many distinct parts—some are relatively similar to others and some are quite unique. To better understand the whole, you must understand the parts.
Chapter 1 covered the basic categories of the Materials sector: metals, chemicals, construction materials, and paper. But that’s really an oversimplification—all the metals and chemicals have unique characteristics and drivers. This is also true of the other Materials industries and the sub-industries that comprise them.
Before making any portfolio decision, you must understand what makes each distinct sector component tick. This chapter explores the sector’s sub-industries and how an investor can form an opinion on each.


Before beginning, some definitions: The Global Industry Classification Standard (GICS) is a widely accepted framework for classifying companies into groups based on similarities. The GICS structure consists of 10 sectors, 24 industry groups, 68 industries, and 154 sub-industries. This structure offers four levels of hierarchy, ranging from the most general sector to the most specialized sub-industry:
• Sector
• Industry group
• Industry
• Sub-industry
Let’s start by breaking down Materials into its different components. ...

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