Customer Reviews

The Guru Investor: How to Beat the Market Using History's Best Investment Strategies

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John Reese's book "The Guru Investor - How to beat the market using history's best investment strategies" fills the gap in investing books on how a person who doesn't have a stock investing background (and struggles for some time with it) create a strategy to beat the market (and have a chance to beat the market) by learning from those who have beat the market consistently in the past. The book covers important most of the basic financial metrics and also covers value, growth and quants strategy. This book is basic enough and easy to understand. This book can be a one stop shop for investing books if you already know the basic of stock investing, but if you don't know much about stock market or how stock investing works, then this is not the book that you want to read first.

The 6 principles of "Guru Investing" (what I personally called investing philosophy):
1. Combining strategies to minimize risk and maximize returns
2. Stick to the numbers or the market will stick it to you
3. Stay disciplined over the long haul
4. Diversify, but you can't beat the market by owning it
5. Size and style - focused systems only limit investment possibilities
6. You don't have to hold stocks for the long term to be a long term investor

Pros:
1. practical and succinct
2. covers most of the investing legends strategies and their "story" (Warren Buffett, Benjamin Graham, Peter Lynch, David Dreman, Ken Fisher etc)
3. Covers many important financial ratios
4. Covers in depth the topic of "Determining when to sell"
5. Relate to the audience well (as someone who is trying to learn about investing from the investing greats)
6. Includes interesting facts in the fact box (or key learning) for each chapter or for each important topic.
7. Covers the performance of "Guru" based stock model portfolio and yearly track record comparison

Cons:
1. Marketing (cross selling) their other investment service (validea dot com and Validea investing system)
2. Supporting a subjective topic of the drawback of market timing/short term trading (that "one have to be right at least 74% of the time to make money with market timing approach")
3. Should include more learning/strategies from Philip Fisher

In conclusion, "The Guru Investor - How to beat the market using history's best investment strategies", is a very good resource to help us understand many of the proven stock investing strategies (as applied by several of the investing legend). This book is a nice hybrid of "the intelligent investor" type book (theory concentrated) and "One up on Wall Street" (practical and experience) type book.

Happy Investing,

Sidarta Tanu

This is simply one of the best investment books on the market. Who better to learn from than the greatest investors in history? What better strategies can you use than the ones used by Warren Buffett, Benjamin Graham, Ken Fisher, Martin Zwieg or Peter Lynch? What this book does is review the lives and investing performance of the top ten investors who ever lived. Then the book presents how to invest like them using the same metrics and valuations that the gurus used based on their own books or from writings from people who have studied the gurus. The author has used model portfolios based on the techniques in the book to show that these approaches continued to work from 2003 to 2008 with most of them doubling and tripling the performance of the S&P 500 over that time.
The book will give you the knowledge you need to pick stocks using stock screeners based on price to sales ratios, price to earnings ratios, book value, liquidity, earnings growth, and many other metrics you will learn from the gurus. There is also a free companion web site that gives three stocks for each guru that currently meet their guidelines. The book recommends sticking with a strategy for the long run to really get results. It also explains the need to balance your portfolio at regular intervals, and sell stocks when the fundamentals have changed or they get involved in an accounting or other scandal. Excellent book for getting started in investing or for improving your investing performance.

John Reese and I share something in common: we both once wrote for RealMoney.com. Occasionally I would question him in the CC about what he wrote, but I never got an answer back. He was probably a busy man.

Well, now I get to review his book, and I have to say that I like it. It won't be one of my favorite investment books, but it embeds many good ideas that will be useful to average investors. Here are some of the main advantages:

1) It points people toward strategies that are valuation-conscious. Whether investing for growth or value, the best investors pay attention to valuation.

2) Valuation is not everything. Earnings growth and price momentum also are valuable to follow.

3) Quality of the balance sheet matters.

One of the things that I like to say to investors is find something that fits your character, your free time, and your time horizon. This book simplifies the strategies of ten clever investors. Some require more time and effort, some less. With ten good strategies to choose from, perhaps one will fit your situation well.

For the ten gurus, it describes them, their strategies, and how to implement them in a simplified way. I knew a little about all of the gurus before reading the book, but I learned a little bit new about each one, except Buffett. They made life choices that led them to their investment theories, and the book makes that connection.

Sell Discipline

The sell disciplines in the book are similar to mine -- rebalancing, and adding stocks that the model likes better, and removing those that rank lower. For fundamental investors, that's a reasonable way of limiting risk, assuming that you review your thesis before adding new money.

Quibbles

1) Earnings quality: leaving aside Piotorski, the rest of the gurus spend little time on earnings quality. Particularly for value investors this component is critical for avoiding mistakes.

2) What Reese puts forth is a simplified version of what most of these great investors do. The actual process is more complex, and requires business judgment. That said, his simplifed versions have done better than the market, in general.

3) Performance calculations cut off in July 2008. Now, he had to cut off somewhere, or he couldn't publish. Still, it would be interesting to know how the strategies did July 2008 through February 2009 -- how did they do at risk control?

4) To be able to use this book effectively, you would need to have access to some reasonably sophisticated stock screening software. The cheapest one that I know of would come from AAII, but you would also have to be an AAII member to buy it. (If anyone knows a better one at a cheaper price, let me know.)

Who Would Benefit From this Book

This book would work best for people who want to follow valuation-conscious strategies, and not spend a ton of time at it, if they are willing to put in some time at the beginning setting up stock screens.

Summary

If after you have read this, you want to buy the book, you can buy it here -- The Guru Investor: How to Beat the Market Using History's Best Investment Strategies.

This book details the formulas that ten top gurus used/ back tested to beat the market. The ten investors the book discusses are Benjamin Graham, Warren Buffett, John Neff, Peter Lynch, David Dreman, Joel Greenblatt, Ken Fisher, Martin Zwieg, James O'Shaughnessy, and Joseph Piotroski.

The book was an excellent review for me. I have read many of the books by the gurus featured in the book but I forgot many of the specific details. This book filled in those gaps that I was missing.

However, this book is more geared towards a new investor. It gives a novice investor some valuable advice about investing( and value investing in particular). Instead of going out and buying like twenty books most of the information is contained all in this one book. The book also discusses important topics that no investor should be without such as when to sell, and how tax laws should effect your investing. I would recommend this book to a novice investor who wants to learn more about how to manage their portfolio.


I am a financial columnist for an investor website, I wrote a full review on the website. I can not write the full review here because I am a paid columnist and they have exlcusive rights to my articles. If you want to see my full review you can find it through my profile.

Warren Buffet's partner Charlie Munger once said, "You've got to have mental models in your head". John reveals to us in one book the diverse styles of some of the greatest investors who ever lived, all having achieved the same outcome---beating the market. A holistic approach to quantifying the seemingly unquantifiable, John's research into these famous investors makes the book a fantastic read, giving us the much needed mental models to beat the market. Great book!

Jim Didato
Real Estate Broker
Connecticut

If you have read Contraian Investor, by David Dreman, then you get the jist of the book. It touches on the topic of value investing in an easy to understand manner. There is an ample mix of value approaches, all kissing cousins IMHO, outlined in the book. The biographies are nice, and grouping all of these approaches together in one book gives you a nice reference. It's a quick read, and I've read it a few times and revisted certain chapters. In the end, nothing beats patience...

As a beginner to investing I wanted a way to learn excellent investment strategies, fail proof metrics and a step by step way to put everything into action. The book lets you learn from the best investors Benjamin Graham, Ken Fisher, Martin Zwieg and Peter Lynch. I always felt skeptacl when reading other books on investing because they never gave me examples like this book did. It was definatly a one stop shop book if your looking to learn from the best in the investment world.

If you're like me, and you've already red a lot about Lynch, Buffett, Graham, Zweig, Greenblatt, ... most of the information in this book will not be new to you. In fact, I found the information quite repetitive, simply because I've already red several books from most of the people covered here. That's not the fault of the book, but I thought it would go a little deeper into detail. Overall, every scan based on a guru in this book stays pretty basic.

This brief coverage of each author + the author's scan system he tries to sell you, I've decided to give this book 2*. Maybe if these guru's and stock scanners would have been completely new to me, I might have given it 3* or 4*, quod non.
Books like What Works on Wall Street, Fourth Edition: The Classic Guide to the Best-Performing Investment Strategies of All Time are a lot better in my opinion, and much more detailed.

This is an amazing book for anyone who doesn't gamble on wall street but actually wanna make money INVESTING in a company. It demonstrates why speculating and trying to beat the market in the short-term is a failing attempt and describes the techniques used by some gurus who are not some people that got lucky for few years, but are great investors with a 15, 20, 30 year record of great performances.
The greatness of the book is the balance between general rules and common sense (which is the product of genius in its simplicity, like the principles that Warren Buffett uses) and mathematical methods that can be actually used in practice by an investor, without being to vague. Also the methods are TESTED to demonstrate their validity. The philosophy of each guru and their methods have differences so that someone can give more weight to the ones that she feel more comfortable with (which is fundamental in investing).
Finally, the book gives tips on how to SELL. Cause everyone talks about how to buy stocks but half of the mistakes can be done when selling, and rarely people talk about that.
By far the best book about investing that you can find. For people that are realistic, wanna navigate the danger of the markets and wanna beat inflation (and possibly the stock market too)

The author uses a proprietary model to invest in stocks, and I have been on his mailing list for a number of years, as I used to pay for his newsletter. However, I have noticed that in some VERY good years, the author has not done so well. At least he publishes a track record and is honest about it. Most newsletter authors will tout their fantastic returns of one particular year. Even if that might be true, they conveniently forget to mention all the bad years they have had.

It took Hulbert's guide to sort out a lot of this misinformation. However, with all the newsletters and now website, it would be impossible for one person to sort it all out.

It would be best to find someone to give you financial advice who is a CFA--meaning a certified financial analyst--for this test a person needs five years of experience and has to pass 3 levels of this test. It is not an easy test and few brokers, personal financial planners, financial columnists, or newsletter writers have this credential. Second best might be to find someone with a Master's Degree in Finance. I would love to have this credential myself and took all the courses as UCSD Extended Studies that apply to this test. However, as a multiple myeloma patient, since at one time the average patient only lives 3 years, and I have lived 5 1/2 years already, I did not know if I would ever live long enough to pass the 3 levels of this test.

I do have knowledge even some CFAs may not. And I have taken courses taught by doctors of finance where what was presented was actually wrong--I just could not make the professors understand this. I was once told there is no such thing, for example, as a non-diversified mutual fund (also known as a focused or select fund). Of course there are. I have done very well by investing in them actually.

At any rate, there are few people giving financial advice who know both economics, finance, and everything that is relevant very well. How many, for example, might give you the advice to invest in stock funds specializing in foreign stocks but try to find one who knows anything about specific foreign stocks. A different system of accounting is used--different than the GAAP rules we use in the USA--which will be adopted worldwide shortly.

Yet try to find a brokers, planner, newsletter writer or financial writer who knows anything about accounting and foreign stocks, exchange rates, non-systematic risk (risk outside of the risk of investing in stocks), or statistics.

It is very hard to find these kind of people unless you have millions of dollars in assets. John Validea tries hard to give the small investor the same advice he would give to these kind of clients, but as I said his track record over the last several years has been mixed.

But kudos to him for admitting his good and bad years.