F Wall Street: Joe Ponzio's No-Nonsense Approach to Value Investing For the Rest of Us [Paperback]

Joe Ponzio (Author)

Book Description

Publication Date: June 18, 2009

"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."
—Warren Buffett

Investors shouldn't hate the market because of its up and downs. They should capitalize on it—and give a middle finger to those brokers wasting their time (and money) buying and selling, viewing investing as just buying stocks and not taking ownership of a company.

In this book, Joe Ponzio gives an "f-you" to Wall Street and teaches you how to become a sharp value investor who uses economic downturns to your advantage. By buying into companies you believe in—but that may be selling for less than their intrinsic value, like high-end retailers in a weak market and discount retailers in a strong one—you will profit from their long-term performance. It's the perfect guide for anyone fed up with Wall Street's bull.

Editorial Reviews

About the Author

Joe Ponzio has seen the "dark side" of Wall Street. Having worked for two of the largest firms in the industry, he left the Wall Street titans in 2002 to found the Meridian Business Group, a successful portfolio management firm dedicated to performance, safety, and putting his money where his mouth is. Today, Mr. Ponzio manages individual portfolios as well as a private investment fund modeled after the early partnerships of Warren Buffett. His website FWallStreet.com is a popular value investing site and is a permanent link on CNBC.com's Warren Buffett Watch. He lives and works in Chicago, IL.

Product Details

• Paperback: 288 pages
• Publisher: Adams Media; Original edition (June 18, 2009)
• Language: English
• ISBN-10: 1605500003
• ISBN-13: 978-1605500003
• Product Dimensions: 6 x 0.8 x 9 inches
• Shipping Weight: 12 ounces (View shipping rates and policies)
• Average Customer Review: 4.7 out of 5 stars  See all reviews (27 customer reviews)
• Amazon Best Sellers Rank: #641,250 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

33 of 33 people found the following review helpful

4.0 out of 5 stars Value Investing that Emphasizes Cash Flow June 27, 2009

By Jeff Partlow

Format:Paperback

I'm certainly glad that the somewhat objectionable title did not dissuade me from reading this book. The title comes from the author's contention that the brokerage and mutual fund industry is driven by their own greed. Thus, their focus is primarily on sales rather than what should be their objective, namely identifying good investment opportunities that will enhance our investment returns. Although I have no disagreement with this viewpoint, I'm pleased to report that a relatively small portion of the book is devoted to this topic. Most of the book is a practical guide to value investing.

The primary thesis can be summarized as follows: "So the key to making long-term gains in the stock market is simple. Figure out which companies will grow and buy them at a cheap price." It is easy to agree with such an objective, but how do we do that? What distinguishes this book from the myriad value-oriented investing books now available is the author's emphasis on the importance of analyzing a company's cash flow characteristics. This is a welcomed viewpoint that transcends the traditional value investor's financial ratios of P/E, P/B, and P/S.

The author describes how Warren Buffett utilized the cash flow concept of owner earnings since the mid-1980s, even years before the cash flow statement became a required corporate quarterly financial reporting document. The author uses Enron to demonstrate the desirability of analyzing cash flows in lieu of reported earnings. The two primary analysis tools espoused by the author are "Cash Yield" and "Buy-and-Hold Valuation". Historical examples using Johnson & Johnson, Coca Cola, and Microsoft are helpful in answering the when to buy? and when to sell? questions.... An additional benefit from this book are the interesting, common sensical insights in the areas of portfolio diversification and also "The Psychology That Will Drive Your Investment Success".

The improvements that would take the rating from four stars to five stars would be: (1) Less repetition of a few of the viewpoints provided; (2) Reduce the terminology confusion. For example, "Cash Yield" would be more appropriately termed as "Owner Earnings Yield". The same problem with clarity exists in use of the terms "Buy-and-Hold Valuation" and "Cash Return On Invested Capital"; and (3) Rather than relying solely on historical examples of how to identify buying and selling opportunities, it would also be even more useful to the reader if a specific example of how to use the tools to identify a current worthwhile investment opportunity was provided. Read more ›

21 of 22 people found the following review helpful

5.0 out of 5 stars Joe Ponzio Understands and Explains Buffett Better Than Others July 1, 2009

By Rob Joseph

Format:Paperback|Amazon Verified Purchase

Joe Ponzio's "F Wall Street" is a true achievement in clarity and investing wisdom. Over the past 14 years, I have read virtually every book or article or essay written by or about Warren Buffett and Charlie Munger, and nothing captures the value-oriented, fundamentals driven "Focus Investing" approach of Buffett and Munger better than this well written and explained book. Ponzio, who fully gets the irony of his name being similar to the namesake of all pyramid schemes, knows of what he writes, having left high paying jobs on Wall Street disgusted with an industry that has lost any semblance of truly serving the average investor to start his own firm dedicated to providing honest, long-term financial advice to average and well-heeled investors.

Ponzio starts simple, explaining the integral parts of Buffett's "follow the cash" approach to screen truly good long-term businesses from weak ones, then goes on to nuts and bolts of how to properly value a business using discounted cash flow analysis -- all in accordance with Buffett and Munger's advice. He then goes on to analyze how to execute another favorite Buffett approach -- merger arbitrage or "workouts" -- in a way that makes this somewhat more advanced tactic accessible to the more ambitious individual investor.

What sets F Wall Street apart from other books is it's clear to read style, and its ability to boil down essential and somewhat complicated value-investing concepts into easy to understand principles -- much like Buffett himself in his annual letters to shareholders. But Ponzio is not just another commentator -- he is a true practitioner of Buffett's art, with a comparatively short-term (a few years) but so far impressive results in his portfolio based on the approaches espoused in the book.... More on his portfolio can be seen on his blog[...]. The blog offers much of his principles for free and is worth visiting, but the book is well worth the price for bringing all the principles together in one place and bringing the reader through the base-logic all the way through the more advanced concepts in a logical progression.

In my view, having read all of the books on Buffett from Hagstrom to Mary Buffett to Lowenstein, this book does a better overall job of capturing the nuts and bolts of Buffett and Munger's approach, though the others are worth reading as well to round out one's knowledge of Focused Investing.

I am in no way affiliated with Joe Ponzio or his firm. I am simply very impressed with someone who has so well captured Buffett's "Focused Investing" approach, and shares Buffett's passion for educating his fellow man. Read more ›

8 of 8 people found the following review helpful

5.0 out of 5 stars A Gem of a Book! July 8, 2009

By Jonathan Watson

Format:Paperback

I have read many books on investing; my favorites include Graham's Intelligent Investor and Security Analysis as well as Fisher's Common Stocks and Uncommon Profits. This book ranks right there among them. In a clear, concise manner Mr. Ponzio takes the reader through the steps required to understand investing, value businesses, and purchase securities. Appropriate for beginning investors, but with valuable information for even the most seasoned- I highly recommend this book! If you are looking for a place to start learning about investing, purchase this book and Graham's Intelligent Investor. If you have read a ton of books about investing, you still need to read this book!

6 of 6 people found the following review helpful

4.0 out of 5 stars This is mostly very good. October 15, 2010

By C. Goodell

Format:Paperback|Amazon Verified Purchase

First, I should start off this review by stating something that is plainly obvious. The successful investor is a person who has the ability to think independently, and one who evaluates the merits of a potential investment from the facts and figures, coming up with an investment rationale that is logical and the product of his or her own original analysis. The investor succeeds based upon whether his or her individual reasoning and logic is valid, not whether he or she followed the correct steps, followed the crowd or used a specific formula to value what the stock is supposedly worth.

From reading F Wall Street, I get the sense that Joe is one of these rational, independent-minded investors. He understands the standpoint of value investing in a modern sense, as advocated by Buffett and others such as Glenn Greenberg, meaning that he evaluates businesses for what they are worth "alive", as profit-producing engines that create long-term wealth. This was refreshing, because most of the literature out in the market today either comes from a Graham and Dodd "what is it worth dead on the table?"/liquidation value philosophy (which doesn't help those wanting to learn how to go about investing in good businesses at good prices), or from academics such as Bruce Greenwald or Joel Greenblatt who advocate methodologies that do not cut to understanding the buying and selling of equities as a business, but as statistical phenomena that produce profits through the evaluation of formula and ancillary criteria. Not that what they have to say is invalid, but it is as if they have all of the pieces here and there but do not put them together to build a complete understanding.... There is too much sidetracked academic rambling, still paying a halfhearted due to the idea of an "efficient market", market risk premiums, betas, backtesting of various formulas in the search for the "God formula" and so on. Yet, all of it seems unproductive from an educational standpoint in really wanting to learn about how to value a business (remember Buffett's sage advice: "Beware of geeks bearing formulas.")

Joe looks at companies from an evaluative, bottom-up standpoint, starting with the income statement and going from there to calculate cash flow and owners earnings, and explains what these are and why they are important to the business owner. It is almost as though you can read this book alongside Buffett's annual reports, and come away with a very good understanding of how to evaluate companies. Once the reader and truly understand what Buffett and Joe are talking about, he or she can go about doing what Buffett advocates: go through the Moodys manual (or an online stock listing nowadays), starting with the A's and ending with the Z's. (Hey, no one said investing was supposed to be easy.)

A couple of caveats to this book however: while I feel that he is better equipped to write a book like this, there are points where it seems like he is saying so much at once that it doesn't come out right, and seems like he is rambling a bit. I presume that a later edition will be more concise and thoroughly edited in this regard. As well, I agree for the most part with his fundamentals, but he seems to sometimes take things a bit farther than they really should be used in an analytical sense. Case in point: his advocacy of using CROIC (an efficiency ratio that one can use to determine management's effectiveness) as a growth rate in valuing a company's cash flows.

Overall, though, it is a very good book for those who did not go to Columbia Business School and want to learn more about equity valuation. I would just take everything with a grain of salt, and like the analyst does in valuing a security, evaluate what is said on its own merits with respect to logic and reasonableness. This is where the "rubber meets the road," and this is also what separates the intelligent investor from the rest of the pack. Read more ›