Top critical review
3.0 out of 5 starsToo general. Not enough details. Subpar overall.
Reviewed in the United States on March 6, 2011
Warren Buffett once said that value investing can't be taught. If the concept does not resonate with you the first time that you are exposed to it, it probably never will and you will never become a true value investor. So if you are ready to pay close to $1,000 for a book on value investing, I am afraid that the Chairman was right one more time and very little enlightenment will come from reading this book.
Joke apart, the book is decent not great. I would recommend "The Intelligent Investor" and other books by Joel Greenblatt and Bruce Greenwald over it.
The book is divided in three parts: (1) why it is hard to make money in the markets, (2) what is the philosophy of value investing, (3) where to look for value investing opportunities.
The first part addresses the common themes of why speculators lose money, why Wall Street is tilted against you, and why indexing will only deliver subpar results. The author concludes that only value investing will deliver solid profits in the long run while limiting your downside risks.
The second part elaborates on the philosophy of value investing. It revisits the ideas of "Mr. Market" proposed by Ben Graham and the analogy between baseball and investing made by Warren Buffett. "Investing is like a pitching game where the referee does not keep track of balls and strikes, strikes in particular. Just swing when the perfect pitch that you can handle comes along". The core principles of value investing are then discussed. It is a bottom up approach where the investor focuses on absolute risk and downside risk. Finally, three valuation methods are briefly examined.
The third and last part of the book gives examples of where to look for value investing opportunities. The usual themes of spin-offs, arbitrage, and bankruptcy are visited one more time.
So who should read this book? Perhaps someone who starts his investment career and would like to read a general audience book about value investing. Someone already familiar with the concept will not learn much from the book especially because there are very few concrete examples about the topics discussed.
The lack of example is in my opinion the main weakness of the book. Value investing is after all not a difficult concept to understand, albeit few people follow the strategy in practice. So the marginal contribution of a book on value investing that does not delve into details can only be limited.
I would rather suggest books by Ben Graham. "The Intelligent Investor" to start; "How to Interpret Financial Statements" to continue; and "Security Analysis" for an in-depth treatment of the topic of valuation. I also enjoyed reading books by Joel Greenblatt "You can be a stock market genius" or by Bruce Greenwald "Value Investing: From Graham to Buffett and Beyond". Both authors provide clear illustrations of value investing at work.
Good luck in your quest for betterment and knowledge and by the way, the book is available free on-line. So no need to spend the $1,000 unless you want it as a collectible.
