Customer Reviews

Mastering Fundamental Analysis

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2 star:		(2)
1 star:		(2)

 

 

Contrary to one reviewer I think the purpose of this book would be to teach fundamental analysis. To dismiss the Efficient Market Theory is not the main goal of this book, because if you do any type of technical or fundamental analysis this is a pre-condition. If your purpose is to dismiss EMH, get Louis Bachelier's thesis and do advanced statistical tests.

But the book should be better. What I did not like in this book: The author is repetitive, verbose. That is, he "talks" too much. Besides, I think he should exemplify his analysis with REAL CASES getting financial statements from, say 2 companies, make a spreadsheet and analyse them in detail, showing you how to really use fundamental indicators (not only the blah blah blah). He should give you price targets and buy/hold/sell recommendations.

On the contrary, he only talks about things. It lacks depth.
In a certain sense, the book seems a general public magazine. And several chapters are dedicated to commentaries about other things that are not related to fundamental analysis. This would not be a problem had the author explained well the main subject, that is, Fundamental analysis.

Also the book has errors in simple formulas, like the weighted moving average. The order of the quarters in the example is wrong (the last quarter should have the greatest weight as the text explains). This kind of error is horrible. If you intend to explain simple things for people that do not know these things you need to be careful and not make errors in the examples, at the risk of a complete confusion. The book has another error in the explanation of the return rate. Someone that knows what is a weighted moving average can discover these errors, but Thomsett should be more careful.

I ordered this book from Amazon and just finished reading it. The book has no useful value. It starts as a basic manual on Fundamental Analysis of companies, but quickly devolves into an unsystematic pile-up of various facts and opinions about investing, which have nothing to do with the topic of Fundamental Analysis. It is does not fit any specific level of the investment expertise. "Useless" pretty well sums it up.

If you want to get in the stock market and want to choose stocks properly, this book will help a lot. However, it would be a lot easier to master the techniques if you have a little accounting background. Good book with simple and direct-to-the-point explanations and illustrations.

I think I was cheated by the name. This is NOT a good book, at all, IMHO. The book didn't provide any pratical means to do the fundamental analysis. Most of the contents are explanation of concepts, things like company report, definition of ratios, which you can find a lot on the internet. Another feature of this book is its fake examples, which means there is no real example to illustrate how to do things in real world.
I doubt if the author ever made a penny through his "approach", if he had one. He must have made a lot through writing books. 50 books like this?

Disclaimer: I have only read parts of this book.

I am a student in economics, and a student in the market, as well as a fairly serious amateur buy-and-hold investor. Based mostly on the introduction, it is easy to identify this author as possessing only a cursory understanding of his subject matter.

In attempting to justify his basis for the book, he dismisses the 'efficient markets' and 'random walk' by stating that they are wrong by common sense, with no real argument whatsoever. There are many intelligent arguments, with hard evidence, for and against these popular theories. The author doesn't seem to realize this, and attempts to sound like he knows what he's doing just by mentioning them. Dismissing competing ideas simply with an appeal to common sense is ridiculous.

Later, he says that to have success with fundamental analysis requires being able to analyze stocks "as well as anyone else." So, you need this book, apparently. But, on the very next page, he dismisses going to a professional for stock advice by noting that, in one study, only 22% of professionals beat the market averages. It would seem that professionals would be some of the best at analyzing stocks, but they are unable to beat the market averages. So, the secrets in the book are supposed to allow you to outperform "the pros"? Mentioning that professional money managers usually fail to beat the market averages also contradicts his "common sense" dismissal of efficient markets. (The efficient markets theory basically says that the current price of any stock is an accurate reflection of all available information, implying that the future performance of is unpredictable and an investor's results are based on luck).

He states that the markets are beatable because the market overreacts to breaking news, sending stock prices too high or too low than should be. Again, the reader is expected to take this on little more than faith. For a long time this was believed to be the case, but recent research by economists seems to show that while overreactions to news do occur, the market is almost as likely to undervalue the importance of news, and that it is impossible to tell which are which.

Such serious flaws in the premises for a book indicate the author does not really understand his subject matter. There are much better books on the market which teach well-argued, balanced approaches, and are able to admit that opposing ideas do have merit. Look elsewhere, or at least read the sample pages available here before you buy.

The fundamentals deal with numbers, so a lot of books on the subject read like accounting primers. But this one led me through the green eye shade stuff and explained what it meant and how to put it to work to study companies. A good overall treatment of the topic, nice illustrations too.

If what you want is an explanation of all the terms/ratio's/metrics found in fundamental analysis, then this is a great book to have. I like the big idea books too, but my sense is that the vast majority of amateur investors do not know the basics covered in this book.