Customer Reviews

The Conscious Investor: Profiting from the Timeless Value Approach (Wiley Finance)

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The Conscious Investor is a handy reference tool for both the private investor and valuation professional, offering a thorough examination of the merits of a wide range of fundamental valuation techniques and fresh insights into their application. John Price has a PhD in mathematics and taught Mathematics and Finance at universities around the world, yet I found his book refreshingly practical. Highlight of the book is the chapter on Forecasting, with its analysis of forecasting risk and application of Benjamin Graham's margin of safety, popularized by Warren Buffet in recent years. I recommend this book to anyone interested in fundamental valuation.

Colin Twiggs,
goldstocksforex.com

I have read many books on value investing. This is the best by far. The author clearly and simply explains every technique of value investing analysis, leading you step by step through the process while explaining the importance of each procedure. His illustrations are excellent. If you want to know how to find a good business to invest in at the right price this is the book for you. I am glad to have purchased the more durable hard cover copy since it will be used as a reference every time I make an investment.

John Price's excellent book is destined to become a classic, sitting alongside Benjamin Graham's The Intelligent Investor and Phillip A. Fisher's Common Stocks and Uncommon Profits. Like those great works, The Conscious Investor stands apart from the ubiquitous recipe books of investing which offer fragmented advice with no discernible intellectual foundation and doubtful practical value. In contrast, this book is well-founded, rigorous, and innovative; and, one might add, comprehensive, accessible and useful. It is a significant contribution to the literature of investment principles and practice.

Price's presentation rests on two linked foundations. The first is one that is often lost in the maze of formulas: the principles of practical business. Here Price draws unambiguously and gratefully, on the writings and example of Warren Buffett. Few would argue with the choice: decades of outstanding returns speak for themselves. Buffet's core principles, expressed in the aphorisms for which he has become famous, underpin the analysis. This is investing for the long term in companies that have clear and defensible economic 'moats', run by managers who think like owners. Above-average investment returns, Price insists, with Buffett, rest on good businesses.

The second foundation relates to Price's observation that on its own intrinsic value, the so-called "true" value of a stock is problematic. He shows that different methods and mildly different business forecasts generate a large variation in valuations. As a remedy he introduces the "real value" of a stock as a combination of intrinsic value and price and then extends it to the expected return of an investment.

In the end investors want to know what sort of return they can make, not whether a stock is undervalued or overvalued by theoretical calculations. Even if we could calculate the "true" value, it may not translate into the sought-after price movement in a timely manner. There is a huge difference between a 50 percent undervalued stock that reaches its value in a year and one that takes a decade.

These simple concepts generate powerful and rigorous investment theory and practice. Price takes the reader on an expert tour of investment methods, from financial statement analysis (including off-balance-sheet items), ratio analysis, balance sheet valuation methods, free cash flow methods, discounted dividend methods, PEG ratios, residual income valuation, expected rates of return, and so on. His approach combines the insights of a specialist in financial mathematics with a rare expository gift. There is no compromise on delivering real understanding to the reader, technical and non-technical alike.

Uncompromising, too, are Price's challenges to long-standing investment orthodoxies. Discounted Cash Flow, for example, is politely but firmly dismantled, both for its mathematical assumptions and for the impenetrable derivation of the numbers it runs. Technical analysis meets the same clear, reasoned rejection. These are no small positions: they directly challenge the investment industry, for academicians and analysts alike. It will be fascinating to see the response.

In their place Price offers striking innovations. Since real value rests in large part on "clear forecasts about the business", Price develops a sophisticated statistical method of analysing business performance and projecting it into the future, along with a margin of safety that can meet rigorous stress testing. This is embedded in proprietary software which is clearly demonstrated. By taking a statistical approach to forecasting, at one stroke Price leaps over the endless pitfalls of modelling the future business environment, where tree diagrams become impossibly complicated within a few iterations. Price shows the power of statistics to simplify and to direct investment decision-making.

John Price's book is fascinating in many other ways. He touches on nearly all the main topics of the investment literature, expressing a firm view on them from the steady foundation of his analysis. He draws widely on the history and literature of business and finance, and on case-studies and anecdotes which illuminate the principles. His lucid, conversational style, and his obvious care for reader, make him a delightful as well as knowledgeable guide. Throughout the book, it is a privilege to be in his company.

I've dealt with Professor Price in the past and I must say it is rare to run into such a well educated quality person. His book is very detailed and well organized as is the Conscious Investor software I've purchased from him. When it come to fundemental analysis of companies, Professor Price is the person to learn it from. Thanks John, a quality piece of work as expected!!!

The Conscious-Investor by Prof. John Price is a Buffett inspired book that focuses on estimating investment value. As Buffett and others like to say "price is what you pay, value is what you get".

As its name suggests, Conscious-Investor is about bringing your awareness to your investing. What are you investing in and why? What methods are you using and which ones are most appropriate? What questions are you asking including are you avoiding the herd instinct?

Prof. Price describes 20 different valuation methods each of which addresses a slightly different aspect of value. Some of these methods and ratios will be known to you such as PE and PEG, whereas others such HGROWTH, which measures growth in earnings and STAEGR which measures stability in earnings may not.

Perhaps the most important thing about the book is its accessibility. Although a Professor of Maths, Prof. Price writes this book in a way that can be understood by anyone who has the time and interest to work through it.

I am very happy to recommend this book to anyone interested in valuing businesses.

If you want to make profitable investment decisions for your portfolio, this is the one book you must read!

It's the best book for investors I've read in decades - and I regularly read books for investors. It's extremely well written and thoroughly explains everything you need to know about the various valuation methods used by analysts and market commentators. More importantly, it details the various assumptions about the future necessary in the method and then explains and lists the strengths and weaknesses of each.

After reading this outstanding text, any investor should easily understand why "valuations" and "intrinsic valuations" are no more than "best guesses" made by so-called experts trying to predict an uncertain future. Dr. Price then goes on to show how a "Conscious Investor" can avoid the pitfalls of accepting "best guesses" and details a methodology for finding value in any market and then profiting from the unique safety features embedded into his incredible "Conscious Investor" software.

This book is very clear and understandable. The technical information is explained using concrete examples. Most importantly, the whole approach to investing presented here is reasonable, down-to-earth, and intelligent. Features I especially liked: The Bottom Line chapter summaries, the warnings, and the strength-and-weakness charts.

Being relatively new to the investment process I was after something that would help me understand principles to follow from a fundamental point of view. Not wanting to make a shambles of my investments and wanting to purely invest rather than trade, I started research on what theories to follow.

Price's book has given me an insight into what I should be looking for, what value I should be placing on companies, and how to filter the rubbish that often bombards us from Fund Managers, Newspapers and Gossip alike.

I feel I am now armed with information to make decisions based on logic rather than speculation. A great tool for anyone who is after a healthy portfolio and who wish to do their own investing.

This book is even better than I expected, given that I've used John Prices software (excel tools) for quite a number of years. Clearly written. Solid thinking. Convincing arguments about technical analysis vs "value" and other methods.

I got the book from the library, but it is good enough that I need to buy a copy for marking up and re-reading.

Pete