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Value Investing: Tools and Techniques for Intelligent Investment Hardcover – December 2, 2009
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From the Inside Flap
—Edward Chancellor, author of Devil Take the Hindmost: A history of financial speculation
"James' latest effort is a must read. It combines great academic and practitioner approaches written in a humorous and entertaining style. It has practical real world examples that don't require advanced mathematics to comprehend. I advise everyone to read and study this wonderful book. All of my students now have Value Investing: Tools and Techniques for Intelligent Investment to add to their required reading."
—Mark Cooper, Partner at Omega Advisors & Adjunct Professor at Columbia Business School
"A preponderance of evidence shows that successful long-term investing requires a strong value orientation and a proper temperament, virtues commonly blunted by behavioural and incentive-based biases. Montier, a leading light in value investing and behavioural finance, shows you what’s wrong with standard investment thinking and offers important insight into how to improve your process. Read Value Investing, live its lessons, and prosper."
—Michael J. Mauboussin, Chief Investment Strategist at Legg Mason Capital Management, and author of Think Twice: Harnessing the Power of Counterintuition
More About the Author
Top Customer Reviews
Value Investing: Tools and Techniques for Intelligent Investment is a compendium of the author's pieces and speeches while he was chief strategist at Societe Generale (he is presently at Grantham Mayo according to the dust jacket). For those fortunate enough to have all the author's pieces from his SG days, this book may not be worth purchasing. For those of us who are not so fortunate, this book has more kernels of wisdom on value investing than any book I have read in years.
A quick synopsis:
Montier debunks much of the academic literature on efficient markets and CAPM. He takes much of the issues Buffett has with modern finance theory and goes into further detail. Unlike many books on value investing which often give a mystical air to the subject of value investing, he backs up many of his assertions with a plethora of data and studies . . . and he doesn't mince words: Chapter Two is entitled CAPM is Cr-p*. Along the way, he provides value investing's definition of risk which is very different from how "modern finance" defines risk, but it is a definition of risk that investors post-2008 can readily identify with.Read more ›
Personally though, I was dissapointed. The first section spells out, in laborious detail, that the markets are not always rational. I'm sure there are a few academics around who disagree, but not many. Other writers made the same points long ago, and I seriously doubt that anyone who would buy a book with "value investing" in the title takes the idea seriously.
The second section is on behavioral economics. He goes over the same fifty or so experiments that every book on the subject seems to cover, and offers no new insights.
The third and fourth sections lay out what he thinks value investing is all about. He's more along the lines of Ben Graham than Warren Buffett, and has little or nothing in common with Marty Whitman, who also wrote a book with the title "Value Investing." (Whitman's book is poorly written, and a much less pleasant read, but ultimately far more insightful and valuable.) Montier is fond of developing numerical models, then back-testing them to see how they would have done over the last 30 years or more. His approach strikes me as a bit naïve. He rails against those who put too much faith in mathematical models based on past performance, then spends a lot of time discussing mathematical models based on past performance. Value investing, as I understand it, is figuring out much something is worth and buying it if you can get away with paying substantially less.Read more ›
A great quote from the book comes from Third Avenue Management who said "DCF is like the Hubble telescope, if you move it an inch you end up studying a different galaxy". There were hundreds of similar quotes from Templeton to Buffet to Newton (who failed as an investor incidentally). While the quotes were interesting they were not well integrated into the text and came off as somewhat gratuitous.
Unfortunately, the supposed backbone of the book, "Value Investing: Tools and Techniques" is where the book really fails - it just isn't a blueprint for making successful value investments (in the way Graham's Intelligent Investor is).
That said, readers less familiar with value investing may appreciate the simplified approach and general advice.
My advice: rather purchase the equivalent works of Greenwald, Dremen, Klarman or Graham and if you are interested in Montier, read his other book "Bulls-eye Investing".
Most Recent Customer Reviews
Word of caution: this is a very heavy read. If you want something lighter, go for something by James Montier in the Little Book series. Read morePublished on January 16, 2014 by Reading by Accident
A must read for anyone interested in the financial services industry. James Montier is a great teacher and writer. I highly recommend the bookPublished on December 2, 2013 by David Collon
This book is a gem. Highly recommended to anyone preferring facts and common sense to get rich quick schemes (plenty of people who don't).Published on October 24, 2013 by spectre
James Montier is a former sellside strategist, author of several books, currently working at GMO, a privately held investment management firm. Read morePublished on January 12, 2013 by investingbythebooks
James Montier is a disciple of the great value investors: Dodd, Graham, Grantham, Klarman, Templeton, Browne, Buffet, Munger, etc. Read morePublished on April 2, 2011 by F. Tyler B. Brown
A collection of various articles written by Montier that neatly describe his investment philosophy while also demonstrating why value is the "right" way to think about... Read morePublished on February 22, 2011 by MC