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34 of 37 people found the following review helpful
on August 19, 1999
Format: Hardcover
Part of my summer reading list is to read more about value investing. I highly recommend Timothy Vick's book; "Wall Street On Sale". Congratulations on a great read. Very good use of Buffett quotes throughout. Excellent investment primer as well as a refresher for experts. One of my favorite sections is how this book is one of the few to point out how corporations resort to financial trickery and deception.
Mr. Vick helped me realize that I have always been a `value' investor with basic principles instilled during childhood. Before reading this book I didn't realize that I have been a value investor my whole life. It's in my bones. And as Tim points out so well, why shouldn't the virtue of value naturally extend to Wall Street and our investments.
Chapter Two points out that when you switch long distance phone companies to get the lowest rate, use two for one coupons, go to matinee movies, recycle, purchase used cars, self park instead of valet, visit the outlet mall, prepare your own taxes, or use a discount broker, you are value investing.
Tim points out that `cheap investing' isn't the same as `value investing'. Mr. Buffett calls this `cigar butt investing'. Buying a stock in order to get one or two more puffs of earnings. Something he used to do and did with the original Berkshire Hathaway. Berkshire Cotton Mills turned out to be a cheap investment or cigar butt investment, not a value investment.
This book does an excellent job explaining that diversification and dollar cost averaging both lead to mediocrity.
How about this gem: "The stock market is like perfume. The more you pay for it the better you feel."
Chapter Four does a great job attacking the Efficient Market Theory. More professors of finance need to read this book.
Chapter Six talks about Decade Trading in a day trading world. Tim is a proponent of investing like a businessperson, like you're buying a part of a business. This section has excellent data and research to debunk market timing. Good Seven Commandments of Investing but he forgot the Eighth Commandment: remember taxes. Value investors by their very nature must consider the tax impact of their investments. Whenever you can defer taxes you are adding to the return of your investment decision. Excessive traders pay 3% of their annual returns on average to the government.
In Chapter Seven Mr. Vick talks about buying all of a business, both private and public. Mr. Buffett defines this activity as a negotiated purchase. In other words the price isn't set by the stock market but rather negotiated between buyer and seller.
Dividend decisions in Chapter Nine are also a function of management's ability to allocate capital. If management can get a better return by retaining a $1 of earnings and increase intrinsic value by more than $1 it should. If however $1 of retained earnings doesn't increase intrinsic value of the enterprise by at least $1, earnings should be returned to the shareholders in the form of dividends.
Chapters Nine, Ten, Eleven, and Twelve simplify corporate accounting with excellent comparisons. The author compares a corporate income statement and balance sheet to an individual's income and net worth statement. In these chapters, Tim takes Ben Graham's concepts of security analysis, which can be complicated to some, and makes them easy to understand.
Chapter Thirteen explores the intangibles behind great investments. It teaches that value investing isn't just about the numbers. "Wall Street On Sale" does an excellent job examining the numbers AND in this chapter the non-numbers behind the enterprise. Management leadership is difficult to value. One of Mr. Buffett's strengths is deciding if a manager loves money or the business.
Berkshire is interested in acquiring business with management already in place. It is one of the few companies that have well-developed and well-publicized acquisition criteria. Berkshire's wise acquisition policy is different from most. Other companies need to acquire for competitive and growth reasons along their product line. Berkshire is in the enviable position to acquire whatever business that adds shareholder value. Notice that shareholder `value' and intrinsic `value' have the word `value' in them.
Chapter Fourteen presents great arguments against diversification and for concentration. Diversification equals mediocrity. Successful investors are discriminating: they avoid buying anything and everything.
How about this quote on page 249: "If you still like the company after the stock falls, you should like it more at a lower price and add to your position."
Figure 15-2 could also demonstrate how much of Berkshire's marketable securities are in a concentrated portfolio (3 securities equal 62% of the portfolio). This figure shows buy and holds only.
Also the appendix has an excellent list of stock information of the internet. The recommended reading list should include the vchairman's letters (the only ones widely quoted enough to be copyrighted).
The book finishes with a bang. Buffett's seven key elements of successful value investing restated by Tim Vick from the 1987 annual report. They are priceless.
(1) View yourself as a business analyst. (2) Don't be swayed by share price movements. Over time price follows the company's growth. (3) Don't be a price taker in the stock market. Price and value aren't always the same. (4) The market doesn't always properly value businesses. (5) Wall Street is designed to sell you something and make you trade. (6) Successful investing is just old fashion financial statement analysis. (7) Being a value investor sets you apart from, but ahead of, the crowd.
If you are just starting out in investing or are a seasoned professional, I highly recommend this book.
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35 of 44 people found the following review helpful
on January 14, 2000
Format: HardcoverVerified Purchase
Actually, to think that this book will teach you a whole lot about Warren Buffett's investment technique is significantly misleading.

I know many people have found this book more than just fascinating and it's probably bcoz this was the first value investing book they read rather than anything else.

This book, describes the many people who've had success with buying stocks at decent prices (hence, the VALUE investment idea) and how you too, as a reader can do the same. Then the author goes on to talk about Buffett, the billionaire investor who roughly made $8,000 plus out of every $1 invested over a 40-year period.

Now, to take this book as an intro to the technique is fine, but to take it as a "How Buffett did it book" is totally misleading.

You see, Buffett investing is about the margin-of-safety principle (essentially, making the purchase price so good even a bad sale yields satisfactory return), it's about his former lecturer Ben Graham and Mr. Market, it's about the temperament of investors, the attitude towards bear markets (falling markets), it's the pitches, strikes, and when to swing your money bat and most importantly, it's about the patience, rationality and discipline.

It's not just buying cheap. Buffett investing is about value NOT in the sense which the author of this book preaches. It's so much more than that.

I've come to understand Buffett investing as creating the most impressive investment record possible, consistently, over the long-term. To do that, you need to have some idea of how Buffett felt when he's buying and when other investors and the whole stock market is selling. It's about how to minimize your risk of losing money in a stock market crash, by doing this thing he calls "Workouts". And it's not about avoiding technology stocks either, that's a personal thing. Many argue that Buffett's techniques won't get you far these days which I think is a bit of a short-term thinking. Buffett's technique can be applied to technology stocks if you really understand the business. "Remember, what lies under every ticker symbol and stock tape is just an ordinary business!" Now, as a Buffett investor our task is to separate the myths and the facts and then, step on the plate... to swing at the perfect pitch. You don't have to buy them at rock bottom prices, they just have to be selling at a price you think is below it's intrinsic value.

Now, of course, more on intrinsic value if you read Hagstrom's first book, "Buffettology" by Mary Buffett and several other books. From my experience, you really need to read just a few books to be able to invest like Buffett and that the secret to this whole idea lies only in a handful of quotes. I'll leave you with one of my favorites,

"You don't need to know a person's exact weight to tell if she was fat.." -- Ben Graham
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6 of 7 people found the following review helpful
on June 2, 1999
Format: Hardcover
For more than two years, my husband and I have been searching for a one-stop shop primer on how to pick a good stock and build a portfolio. Wall Street on Sale is it. It is carefully researched, answers every question an investor wants answered (how to find value, how long to hold, when to sell, how many stocks to own, how to maximize returns, etc.), and is wonderfully written. I have also read some of the books on Warren Buffett and value investing and found Wall Street on Sale to be the BEST- by a longshot. The author's early chapters on contrarian investing and ignoring the market are as potent and groundbreaking as you will find. His later chapters on valuing companies give even more detail than anything Peter Lynch has written. A lot of investing books seem to be written just to build the author's fame or to entice you to use a system that may work short term. I got the impression from reading Wall Street on Sale that the author truly wanted to help investors understand the complexities of the market. This book will convert any reader instantly to the value side. Anne Dennison, Tinley Park, Illinois
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3 of 3 people found the following review helpful
on May 20, 2001
Format: Hardcover
a dangerous thing
This book gives some of the clearest criteria I've seen in valuing a stock for a small individual investor and is very easy to read. I think it a little better than his book on Buffett which is basically a rehash of this one. The low reviews I can only assume in part are because of the timing of this book's release at the end of 1998 when value investing's popularity was reaching an all time low.
The book is very strong in giving and explaining yardsticks and indicators that could prove successful in screening stocks for a value portfolio. It talks about things you'd expect from a value book like a company's growth rate as related to its price, ROE, book value, etc. In addition though it goes into the interrelationship of interest rates, bond yields, and earnings yields and gives brief profiles of some value investors. It was easy to read, much simpler than something like Security Analysis for example.
There were problems though. The point raised in one of the previous reviews that the book gives somewhat of a contradiction in first criticizing forecasts and then turning around and using them is valid. Still I think that what Vick's examples show is how he thinks forecasts should be used and that his earlier criticism of forecasts was for the way others were misrepresenting them. It is unfortunate he did not take time to clarify his stand on this matter. The other thing I thought this book was weak in was on the experiential side. Not much in terms of what kind of stock price movement a value investor could expect during a holding period and what he should do. Doubtless an experienced value investor would hold but a beginner reading this book should be given a very clear idea of just how long it might take, the potential pitfalls that lie in wait and taught to constantly follow up on his analysis. The very clarity of the case and example style used by Vick might lead one inexperienced to believe that investing was more a matter of science than of art. Serious investors that go truly in depth and take the time to visit companies will also find this a rather boring book because of its classroom instruction sort of feel.
If you are a part time or beginning investor this book will give you a solid introduction to value investing and a convenient process by which to narrow down your search for value companies. If all you want to do is buy stocks, I would consider Wall Street on Sale to be more specialized and superior to an intro to corporate finance book for example which is more general but perhaps more complete. Like with any intro book it is dangerous to jump in immediately afterwards and think one is already proficient after just reading it. You'll need to be careful with the info here and experiment a little to see if it really suits your personality.
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5 of 6 people found the following review helpful
Format: Hardcover
The bull market has turned value investing into the neglected stepchild of wealth-building strategies. Tech companies have been big winners, and even value investing icon Warren Buffett has fallen on tough times. Still, Timothy P. Vick makes a compelling case for value investing. He dismisses such strategies as timing the market and chasing hot sector stocks as more gambling than investing. Vick argues that investors should seek bargain stocks by studiously researching companies and finding those whose current assets and future growth are undervalued by the market. Vick's useful rules for value investing include this first axiom: You buy cars and clothes on sale, so why not stocks? He lays out tools for determining when a stock is on sale, such as calculating return on equity and profit margins. While the subject matter is arcane, the way Vick conveys his message is easy to understand. We [...] recommend this book to investors on all levels (and it's far more cheery than the news from the market).
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1 of 1 people found the following review helpful
on October 19, 2009
Format: Hardcover
I think this book deserves to be read or at least glanced by any serious investors ---- there are surprising amounts of useful materials that you won't find anywhere ---- e.g a leverage table showing the changes in earnings given the fixed costs as % of sales and an increase in sales. Strange how even CFA level 2 doesn't give you that much intuitive details. Also there is this payback table that specifies what the maximum P/E you should pay given the the different growth rate and bond yields. e.g is it expensive to buy a company that has P/E 20 but has a sustainable growth rate of 36% vs growth rate of only 8%? i know one could use PEG but it isn't as intuitive. Other bits include how to use P/S ratio in the context of profit margin- i.e two company have P/S ratio of 0.6, with one having profit margin of 6% vs another with 18% -- which would you choose?
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3 of 4 people found the following review helpful
on November 12, 2003
Format: Hardcover
I have read many investment books but this gets my vote for the best of all of them. It is very easy to read as it is so well written and Mr. Vick makes many points that are so indisputable that I plan to re-read and re-read this book many times over in order to see through the sales pitch that Wall Street often sells us.
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2 of 3 people found the following review helpful
Format: Hardcover
This is an outstanding book, and is very timely in our present market of "irrational exuberance."
The author effectively dispels the arguments of efficient markets, market timing, and even technical analysis with a focus on a company's inherent value, rather than a company's transient stock price.
For example: the author illustrates that how dividends are responsible for about half of the historical returns of the Dow Jones Industrial Average, and how growth in earnings correlates very well over time with stock price appreciation.
In a time where companies are trading at generous premiums to their growth rates, this book gives the reader an effective, systematic approach to selecting "value" stocks.
If you have ever wanted to learn about what a "value" stock is, and do not want to delve into the dry prose of Graham, this book is for you!
I have read numerous books on personal finance and investing, and this is honestly one of the most thought-provoking and interesting books I have read on the subject. I wholeheartedly recommend it to all readers (especially those willing to pay top-dollar for non-existent earnings at Amazon!).
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4 of 6 people found the following review helpful
on August 27, 1999
Format: Hardcover
Vick ties in many important aspects of investing in one book. He includes the strategy of Graham, Buffett, Fisher and other top tier investors to explain how anyone can profit from their simple methods. If you are pressed for time and do not have the luxory to read Security Analysis, Common Stocks and Uncommon Profits, and the many Buffett books available this is a great opportunity to pick up on what each author has to say. This book is even great for those who need to refresh their memory about ''value investing'' or even need a reality check due to the bizarre internet stock craze.
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9 of 14 people found the following review helpful
on June 18, 1999
Format: Hardcover
This book is filled with apparent contradictions and inconsistencies that will likely confuse and frustrate the novice investor. For example, in Chapter 4 (entitled "Buying What Is Known: The Uselessness of Forecasts") the author proceeds to tear apart the "arcane formulas" taught in business schools and even draws a graph illustrating the difficulty of maintaining accurate earnings forecasts for a company over time, then spends most of the rest of the book showing readers how to create their own 10-year earnings estimates to value stocks. (Witness the title to Chapter 8: "Valuing a Company: Estimating Earnings and Cash Flow"). Are forecasts useless or not -- which is it?
The author also offers up some truly foolish advice such as that in Chapter 1 to "Ignore the Market". I have seen too many novice investors buy stocks they felt were value stocks, see their prices fall 10, 20, 30%, and continue to watch the value of their holdings slip away because they insisted that they were right and the market was wrong. Without some sort of selling discipline that protects you from major losses investors can too easily fall victim to emotion, doubts of their own judgement or unexpected financial needs.
I would strongly recommend anyone looking for simple, time-tested strategies that produce market-beating long-term returns, read "What Works on Wall Street" or "How to Retire Rich" by James O'Shaughnessy. If you have a psychological need to pick stocks and be "right" and are not worried about how much money you may lose in the process, try to follow the advice in this book.
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