Customer Reviews

New Era Value Investing: A Disciplined Approach to Buying Value and Growth Stocks

5 star:		(7)
4 star:		(1)
3 star:		(0)
2 star:		(1)
1 star:		(2)

 

 

For many years Geraldine Weiss has published a newsletter that identifies stocks trading in the upper range of their historic dividend yields. This method succesfully identifies undervalued stocks.

Tengler took this a step further, comparing stocks' dividend yields to their historic relationship to the yield of the market as a whole. Like Weiss' less sophisticated technique, stocks selected in such manner will, on average, outperform the market. She then goes on to ask and answer the question of how to apply a similar technique to stocks with little or no history of dividend payments. (Hence the "New Era" of the title). The answer is to employ the Relative Price to Sales Ratio.

It is easy enough to obtain price-to-sales ratios for individual stocks, which are routinely published in a number of sources. With a little work, an individual investor can then compare a PSR to the PSR of the market as a whole, obtaining the RPSR. But actual application of this technique requires that you obtain the entire range of RPSRs going back years, i.e. "construct the RPSR charts for each company." (p.48). How is this done? The very next sentence tells the tale, in parentheses: "(This information is generally only available to institutional investors through services such as Compustat)."

Oh.

I feel much as I would had I bought some software through a mass market outlet only to find it runs only on an esoteric operating system used by the Department of Defense.

I won't deny that the ancillary criteria used to winnow the complete universe of low RPSR stocks is of some value (hence the two stars instead of one), but that is like saying you bought a dictionary because you like the way it covers "X", "Y" and "Z".

"New Era Value Investing" is essentially marketing material aimed at convincing trustees for institutional funds to place those funds under Tengler's management. If you are not responsible for investing millions of dollars of other people's money, save your own and look for something better.

Don't buy this book if you do not have access to historical monthly price-to-sales ratios. The author even admits about half-way through the book that non-institutional investors may not have access to this information. I searched all over the web looking for it and was not able to find it. The closest I could get was Ben Stein and Phil DeMuth's website. And that is a quarterly, not monthly, ratio.

The checklist in the book as helpful, but if you really want to use the author's methods, you must have access to historical monthly price-to-sales ratios.

If you want a great model for outperforming the S&P 500 then buy this book. The Relative Dividend Yield (RDY) for value stocks and Relative Price to Sales Ratio (RPSR) for growth stocks both work in picking stocks for a portfolio BUT these factors also work across sectors. I discovered this in doing a backtest using the fundamentals from 10 Vanguard sector ETFs against the S&P 500 and since Sept '04, the model portfolio outperformed the S&P 500 by over 300 bps annualized.

Ms. Tengler has accomplished a feat that Graham and Dodd and other widely referenced deans of funadamental analysis have attempted to do for decades--making the art of analysis easily understood and interesting. Ms.Tengler, widely recognized media expert on the markets, has translated this difficult topic into very simple prose that even a lay investor can understand. At the same time, she provides enough additional valuable insight and explanations that market professionals would serve themselves well to read.

There is no question that this book will seve as a standard for the industry. It is highly recommended. The insight and information Ms. Tengler supplies serve as a foundation any market follower needs to become a savvy investor.

An excellent companion to such classics Dodd's Security Analysis and Graham's The Intelligent Investor. Here, value investing is presented in a simple-to-follow format and updated with Tengler's Relative Value Discipline strategy, which is supported through case studies. An interesting and informative read on solid investment ideologies.

I am a professional investor and have read most books on the market. This book is in a category with the Bible--Graham and Dodd's. To get as much info in one book was areal accomplsihment and testimony to the author's knowledge of the behavior of company's income/balance sheets as wellas the workings of the market. She has accomplsihed an incredible feat.

I studied finance in college and in graduate school I majored in investments. Unfortunately, all the book in the curriculum were dry and uninteresting. Hd this book been available in any of these courses, it would have made my learning process much easier. Kudos to the author for making an amazingly insipid topic an intersting read.

I have been in the investment business for 3 decades. Currently, I manage a large portfolio. My educatiuon and training is extensive but nothing compares to experience. However, Ms. Tengler book affords the reader maximum insight into the valuation of companies. Her writing style is easy upon the eyese and her knowledge is second to none. I understand her husband is also an accomplished investor in his own right. I don't know if they collaborated in this book, but the the outcome is definitely powerful reading. It's too bad I did not have this insight when I first enterd the business--it certainly would have enabled me to avoid a number of mishaps.

I would not be surprised to see many college courses include this book in their curriculum.

I stongly recommend this book to any serious student of the market. This is a professional book for amateurs as well as professionals!!

The book was okay. However, I thought the author threw in too much unnecessary information in order to keep the book from only being 30 pages long! For instance, do we really need a rehashing of the history of value investing? Also, there are lots and lots of charts, which I think is overkill.

Other than that, the book is fine!

One of the best pieces on fundamental investing ever written. This is more than just a "story" about what an accomplished investor has done throughout her career. It is truly a roadmap for creating a disciplined investment strategy; one that works now, has worked historically, and will continue to work through any market environment.

Breaking away from some of the more traditional and over simplified strategies involving just dividend analysis, this "New Era" approach allows an investor to slightly broaden the "universe" of stocks to capture those with slightly higher growth potential.

This type of strategy is appropriate in every investor's portfolio. For institutional investors, this could be your core strategy. For individuals, this discipline can become your overall governing approach to reviewing stocks.

This book is well written, easy to understand, and is complete with charts to help explain the very detailed points Ms. Tengler makes throughout the book.

Highly recommended to all investors, even to those interested in technical analysis.