Customer Reviews

The Complete Idiot's Guide to Value Investing

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As the author writes,

"If your're looking to make a quick buck, this is not the book for you. Value Investing involves looking for a company on sale and having the patience to wait until others realize that company is a bargain."

Value investing has served many of those who practice it. The best example of its success is Warren Buffett. This book provides good value for readers because it shows them not only that it is important to buy below intrinsic value, but also how to evaluate companies. It shows how to read income statements, balance sheets, and statements of cash flow. I liked the section where it teaches readers how to read the Auditor's Letter or Report. The author argues that this report should be read before spending any time looking at the core financial data.

Readers will also benefit from the chapter on how to listen to analysts. These reports should be read just as a means of gathering information, but never as following the buy and sell advice.

"Whatever type of analyst you're listening to or reading, the one thing you can be certain about is that analyst isn't working for you unless you're the one paying him for the information."

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

I'm not sure what book Derek Geer read, but page 2 of the book is a blank page after the "Part 1" introduction and page 44 does not discuss depreciation. In a review from Wallet Pop, the reviewer says, "From reading financials to designing a balanced portfolio, from understanding market behavior to determining your own risk tolerance, the book covers the gamut of basic investment advice in terms that the typical idiot (i.e., me) can understand.

If you're one who embraces the notion that "Ignorance got us into this mess, and ignorance can get us out," this book will only burden you with accurate information. If, however, you are determined to control your investments, this is an excellent primer."

Lita

Whoever told this author she should be writing a book for beginners should be give a severe reality adjustment.

The indivisible unit of understanding of any subject are the terms used.
When those aren't understood the subject can not be understood.

Page 2 of the book.
Definition: "Intrinsic Value of a company is based on the internally generated cash returns. When analyzing numbers for a stock, the common way to find intrinsic value is to calculate a discounted stream of net cash flows to find out what those cash flows are worth in today's dollars." She uses common English words like "returns", "discounted", etc. in a specialized sense, but doesn't explain any of them or give examples. I spent 30 minutes on wikipedia and google tracking down what she was talking about and still don't know how she meant in her definition although I have a good idea of what Intrinsic Value is to the investing world at large. Who was she writing for?

Page 44 of the book.
"... depreciation (where assets are written down slowly each year to show their use)." Did she actually read what she wrote for the beginning investor? What she probably meant was, "decreasing the accounting value of things, like factory equipment, to show the value to the company lost through wear and tear. Normally done in a prescribed manner like 10% a year." From her definition one gets the sense of someone getting some credit for writing things down slowly somewhere.

I am tossing examples that are representative of the confusions generated on every page. Insufficient definition of finance or accounting terms, insufficient examples to see how it would work, etc. It is a wonderful way for the author to show off her erudite financial knowledge though!

This is for people with an accounting or business background. NOT FOR BEGINNERS.
If you are going to read it, spend a lot of time in a business and finance dictionary or on-line researching the terms she should be explaining.

The book could be re-titled: "Value Investment for the Knowledgeable Accountant or Business Major."

The understanding of the actual subject of value investing is heavily corroded in this book by piling up undefined or explained terms on every
page. I will have to read another book or two to even judge if what she is writing is sensible and useful.