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The Little Book of Value Investing (Little Books. Big Profits 6) Kindle Edition
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From Publishers Weekly
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to the hardcover edition.
From the Inside Flap
LITTLE BOOK BIG PROFITS (TM)
"In value investing, you cannot do better."
"Chris Browne is one of the best value investors in the world. What he has to say is always worth paying attention to."
--Barton M. Biggs, Traxis Partners, and author, Hedgehogging
"Legendary value investor Chris Browne derived his skills from Ben Graham and Warren Buffett. His helpful book, filled with common sense and uncommon insights, distills his four decades of experience into a set of guidelines that will make any investor more effective."
--Byron R. Wien, Pequot Capital Management
"Forget Wall Street. It's a promotion machine. Forget almost all books on investing. They won't help you. But this book will. Chris Browne makes sense."
--Jean-Marie Eveillard, former portfolio manager, First Eagle Funds
"Brilliant value investor Chris Browne uses this gem of a book to explain how value investing works, how to understand value in a stock, how to use accounting information on domestic and foreign firms to your advantage, and how to allocate your (hopefully growing!) portfolio over time."
--Glenn Hubbard, Dean and Russell L. Carson Professor of Finance and Economics, Columbia Business School --This text refers to the hardcover edition.
- ASIN : B008L01MTY
- Publisher : Wiley; 1st edition (May 18, 2009)
- Publication date : May 18, 2009
- Language : English
- File size : 476 KB
- Text-to-Speech : Enabled
- Screen Reader : Supported
- Enhanced typesetting : Enabled
- X-Ray : Not Enabled
- Word Wise : Enabled
- Print length : 213 pages
- Lending : Enabled
- Best Sellers Rank: #203,088 in Kindle Store (See Top 100 in Kindle Store)
- Customer Reviews:
Top reviews from the United States
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However, reading about investors like Benjamin Graham, Warren Buffet and Walter Schloss buying companies at unbelievably low multiples feels like a bygone era.
I believe the reason value investing worked so well in the past is because it was so intensive.
Before computers, and even calculators, value investors were toiling over balance sheets and running numbers to find the cheapest stocks they could. It was grunt work that required an advanced financial skill set with scarce information that wasn’t available to many people in the mid-20th century.
With the proliferation of computers and access to Fidelity’s financial screens, that grunt work is much simpler. And because it’s simpler, more people can do it. And the more people do it, the harder it becomes to find those deep value buys that are touted throughout the book.
At the end of the book, Browne admits this point and says the process has to remain dynamic, abandoning metrics like book value and looking at acquisition values instead.
I think more of the book should have been devoted to explaining those methods.
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
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.
Top reviews from other countries
reading this book; you won't become a stock market guru overnight, however you will learn a hell of a lot and may even be swayed by value investing as a methodology going forward.
Would reccomend to anyone and everyone, but you may need a tiny bit of knowedge on financial terms.
What I liked about the book is that everything is explained really clearly and you come away the "I get it feeling" This is useful for the beginner and and a little further reading on the internet and you will be wel on the way.