Summary of Bruce C. Greenwald, Judd Kahn & Paul D. Sonkin's Value Investing , livre ebook

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35 pages

English

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Please note: This is a companion version & not the original book.
Sample Book Insights:
#1 Value investing is the process of buying securities only when their market prices are significantly below their calculated intrinsic value. It is a simple process, but it requires a lot of discipline.
#2 There are two types of fundamental investors: macrofundamentalists, who are concerned with broad economic factors that affect the entire market, and microfundamentalists, who are concerned with the economics of specific securities.
#3 There are many different approaches to microfundamentalist investing, and each one focuses on a different set of economic fundamentals and securities. The most common approach focuses on current price of a stock or other security as the point of departure, and then studies the history of this security to anticipate how the critical variables will change.
#4 The case for value investing is both theoretical and factual. It has been proven that value investing strategies have worked, and over extended periods, they have produced better returns than have both the leading alternatives and the market as a whole.

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Publié par	Everest Media LLC
Date de parution	26 mars 2022
Nombre de lectures	0
EAN13	9781669365150
Langue	English
Poids de l'ouvrage	1 Mo

Informations légales : prix de location à la page 0,0150€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

Extrait

Insights on Bruce C. Greenwald and Judd Kahn & Paul D. Sonkin's Value Investing
Contents Insights from Chapter 1 Insights from Chapter 2 Insights from Chapter 3 Insights from Chapter 4 Insights from Chapter 5 Insights from Chapter 6 Insights from Chapter 7 Insights from Chapter 8 Insights from Chapter 9 Insights from Chapter 10 Insights from Chapter 11 Insights from Chapter 12 Insights from Chapter 13 Insights from Chapter 14
Insights from Chapter 1

#1

Value investing is the process of buying securities only when their market prices are significantly below their calculated intrinsic value. It is a simple process, but it requires a lot of discipline.

#2

There are two types of fundamental investors: macrofundamentalists, who are concerned with broad economic factors that affect the entire market, and microfundamentalists, who are concerned with the economics of specific securities.

#3

There are many different approaches to microfundamentalist investing, and each one focuses on a different set of economic fundamentals and securities. The most common approach focuses on current price of a stock or other security as the point of departure, and then studies the history of this security to anticipate how the critical variables will change.

#4

The case for value investing is both theoretical and factual. It has been proven that value investing strategies have worked, and over extended periods, they have produced better returns than have both the leading alternatives and the market as a whole.

#5

The three sources of support for the argument that value investing produces superior returns are the mechanical studies, which demonstrate that value portfolios are similar to those produced by a diligent value investor analyzing stocks one by one.

#6

The three-phase process of value investing is to locate potentially rich areas, identify value, and construct an investment portfolio that reduces risk. It is a mental discipline, but it may be that the qualities essential for success are less mental than temperamental.

#7

Value investing requires patience. You must wait for Mr. Market to offer you a bargain. After you buy a security, you must wait for the market to come around and recognize its true value.

#8

The company's intrinsic value is calculated by examining its stream of earnings over a period of years and estimating how much the company should earn on average over the course of a business cycle. This figure should correspond to a market-level return on the intrinsic value of the assets.

#9

There are three types of variables used to rank stocks: fundamental, growth, and profitability. Value stocks outperformed glamour stocks in studies that used several fundamental variables to rank them.

#10

The most common variables used to select stocks are those that relate the price of the shares to some fundamental company information: share price to earnings, share price to cash flow, share price to book value, share price to sales, or share price to dividends. In all of these cases, the value stocks - those with low share prices relative to each of these other variables - outperform the glamour stocks.

#11

The anomaly of value stocks is that they have outperformed expensive stocks. The explanation is that cheap stocks outperform expensive stocks, and investors should be able to bid up the price of the cheap stocks and eliminate the superior performance. But the data reveal that value stocks outperform and are less risky, so the argument of extra return for extra risk doesn’t work.

#12

The three entities that affect investment decisions are institutions, institutional managers pursuing their own needs and interests within the institutional setting, and individuals investing for themselves or as agents for others. The first two may have biases that affect investment decisions.

#13

The small capitalization discount compares the price to earnings ratio for companies in the Standard Poor's 500 to the P/E multiple of a small cap index. The small cap P/Es are usually higher than the P/E of the SP 500, because they are not acceptable to a large part of the investor universe.

#14

The last source of investor bias is human psychology. People are not dependably rational. They do not carefully weigh evidence, and they frequently stumble into logical pratfalls. However, these errors are not random; they cluster in certain locations, which makes them statistically predictable and useful.

#15

There are many places to find hidden value in the stock market. For example, obscure securities, which are the stock of smaller companies, are often ignored by large investment funds and thus lack coverage by security analysts.

#16

The search for undervalued stocks should start with companies that are undesirable, such as those in bankruptcy or suffering from financial distress. These indicators of undesirability identify potential areas of opportunity.
Insights from Chapter 2

#1

The methods pioneered by Graham and Dodd, value investing, believe that financial securities, like all other assets, have an intrinsic value that can be determined by careful analysis. Opportunities for profitable investment emerge when the current market price of the securities differs from this intrinsic value.

#2

The terminal value is the value of a company's cash flows projected beyond the end of year 10, when the cash flow grows perpetually at a constant proportional rate. The terminal value is typically calculated by assuming that beyond year 10, cash flow grows perpetually at a constant proportional rate.

#3

The problem with the present value method is that it is a terminal value calculation as of today, and it does not avoid the problems with terminal value calculations. It simply sweeps those problems under the rug.

#4

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