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The Little Book of Value Investing Audio CD – Audiobook, CD, Unabridged
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From Publishers Weekly
Browne's experience as managing director of investment firm Tweedy, Browne provides examples to support his lessons on value investing, a method of buying stocks that have fallen in price to earn the best return over the long term. Browne uses examples from successful investors (such as Benjamin Graham, Walter Schloss and Warren Buffet) to illustrate that value investing is the best way to make the most of one's investments. The zingy chapters titles ("Buy Stocks like Steaks...On Sale," "Around the World with 80 Stocks" and "Sifting out the Fool's Gold") are demonstrative of his penchant for metaphors, parables and anecdotes, which make this book as entertaining as it is informative. Browne's short chapters detail useful and time-tested concepts, including the significance of book value, which foreign economies are worth investing in, and who to watch for investment ideas. With detailed advice and thorough explanations, this book should prove an asset to both professional and amateur investors.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to the Hardcover edition.
"One of the country's most successful money managers."--Fortune magazine
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Top customer reviews
Just keep in mind that if you're looking for it to give you ideas on which securities to invest in and actual investment strategies/advice, you're not going to find it here. It's a basic book that explains the idea of Value Investing, and some of the basic methodologies behind it. It explains the history of it, the definition, and how to put it into practice. Any more details would have to require more advanced concepts which will not be covered.
1. The current ratio - Current assets over Current liabilities - look for a figure greater than 2
2. The quick ratio - same thing minus the inventory
3. Shareholder equity (book value)- Total assets (less intangibles) minus total liabilities
4. Debt to equity ratio - Total debt over Shareholders equity - look for numbers < 1 - the lower the number the better
Chapter 13 is titled "Physical Exam Part II" and examines the income statement.
1. Look for growing revenues ( sales)- top line
2. Gross Profit - Sales minus COGS
3. Gross profit margin - Gross profit over Revenue - look for stability
4. EPS - net profit divided by shares outstanding
5. ROC - Earnings divided by beginning of the year's capital (stockholder's equity plus debt)
6. A low P/E relative to industry and market
Chapter 14 is titled "Send Your Stocks to the Mayo Clinic". Here he gives you 16 additional questions to ask about your company. You have to get the book to see the questions.
This book gave me the idea to create a spread sheet with info that I gathered from the book. The following is the one I did on Intel.
Shares Outstanding 4,980
Price per share 24.26
Market Capitalization $120,815
Earnings per share 2.0
TOTAL ASSETS 83083
NET WORTH ( SHAREHOLDERS EQUITY) 51,194
Total Liabilities 31889
Book Value per Share $7.15
Price to Book value per share ratio Selling for 3 times the amount company can be sold for
Price to Earnings per share ratio Selling for 12.1 times earnings
Current Assets 28677
Total Current Liabilities 11798
Net Current Assets (Graham's number) $16,879
Net Current Assets per share $3.39
Price to net current assets per share ratio Selling for 7.2 times net current assets
Total Assets 83083
Total Debts 31889
Assets to Debt ratio 2.6
At first I wasn't liking this book and agree with other reviews that it is a mini-version of Graham and Buffett schooling of which there are already plenty of books about their teachings. The first chapters include lots of anecdotes on past great buys by the author including international accounting practices and other nuances not immediately available to the average person. However I found this book valuable and handy for two reasons:
1. Solid introductory advice on the value investing school of thought. Be an investor not a trader. Look at the trend of a data point over TIME, and compare to another RELATIVE FACTOR etc etc.
2. There are 3 middle chapters that breakdown the basics of A) the balance sheet B) an income statement and C) 16 questions the author asks himself after reading A & B
For reason #2 I found this book very helpful and added 2 more stars. This is after reading many other books that I'm sure mentioned that stuff, but for some reason it didn't stick. More sophisticated books assume you already know the income statement so when they say "look at operating margins because of XYZ" I am trying to remember what that is each time I read it. Other books offer pages and pages on each item, which I am too busy for right now.
I then went into Google docs and made myself a little table of the balance sheet and income statement items. Added comments to each cell that defined them mathematically, aliases for the term, and what the metric tells you. Then added rows for the 16 questions. Added a column of personal targets for each item and some conditional formatting. Finally added in the data from my portfolio and also my stock "Fantasy League". Added the kindle reader app too.
Now where ever I go I've got the book's best parts and my breakdown of it in my pocket. So for $10 I'd say got my money's worth and the desire to take time to comment about it. Now I'm reading the Joel Greenblatt Little Book which is pretty good so far too.