The 52-Week Low Formula: A Proven Approach that Beats the Market and Human Biases

Overview

Successful investing is based on simple principles. Buy low,sell high. Make good decisions based upon good information. Try toeliminate noise and emotional confusion. Mitigate risk.

Yet, too often, investors fall into familiar traps that lead tosuboptimal results. Herding, emotional investing, following thetrends instead of the data, taking unnecessary risks— all ofthese have a common root cause: The lack of a disciplined systemfor determining ...

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Overview

Successful investing is based on simple principles. Buy low,sell high. Make good decisions based upon good information. Try toeliminate noise and emotional confusion. Mitigate risk.

Yet, too often, investors fall into familiar traps that lead tosuboptimal results. Herding, emotional investing, following thetrends instead of the data, taking unnecessary risks— all ofthese have a common root cause: The lack of a disciplined systemfor determining investment opportunities.

In The 52-Week Low Formula: A Contrarian Strategy that LowersRisk, Beats the Market, and Overcomes Human Emotion, Luke L.Wiley, CFP®, examines the formula filters behind selecting theoutstanding companies and great investment opportunities that arebeing overlooked, resulting in bigger gains, reduced risk, andfaster recovery following economic downturns.

Using his own experiences, deep research, and a healthy degreeof skepticism as a guide, Wiley describes what he looks for in acompany, what requirements must be met, and how those criteria cameinto existence. He also presents several case studies to examinecompanies that were trading around their 52-Week Lows, overcameobstacles, and provided solid investment returns. His book is basedon the idea that five simple yet critical filters can lead tomitigating downside risk while achieving market outperformance.

The companies that positively make it through these filters, andthat are found to be in the midst of a skid, are the ones that areripe for investment yet continue to be overlooked and unloved byMain Street to Wall Street.

The 52-Week Low Formula is a must read for investors,money managers, and financial advisors who want to break throughsuboptimal conventional strategies and avoid common mistakes. Itpresents a new but timeless strategy and mindset that shouldgreatly help investors lower risk while outperforming themarket.

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Product Details

  • ISBN-13: 9781118853474
  • Publisher: Wiley
  • Publication date: 4/21/2014
  • Edition number: 1
  • Pages: 240
  • Sales rank: 344,090
  • Product dimensions: 9.10 (w) x 6.00 (h) x 0.80 (d)

Meet the Author

LUKE L. WILEY, CFP®, CRPC, is the Senior VicePresident of Wiley Wealth Management at UBS Financial Services inCincinnati, Ohio. In 2012, he was among the top ten of the 7,000UBS Financial Advisors in client retention and acquisition and hasbeen called upon to provide strategic guidance for other wealthmanagers, financial planners, and investment managers by UBSmanagement. His investment strategy and approach to life wasdefined by 17th century German mathematician Carl Gustav JacobJacobi who once wrote, "Invert, always invert." By solving for theopposite of your intended result, non-traditional paths to successreveal themselves. The idea of finding attractive investmentopportunities within the 52-Week Low lists came about from Wileyreading a book that sells used for about $1,400 written by SethKlarman, Margin of Safety: Risk-Averse Value InvestingStrategies for the Thoughtful Investor.

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Table of Contents

Introduction xiii

Foreword xxvii

Acknowledgments xxxi

Chapter 1 The 52-Week Formula 1

Chapter 2 Herding and the Bandwagon Effect 19

Chapter 3 Filter 1: Competitive Advantage 25

Chapter 4 Five Common Mistakes Investors Make 55

Chapter 5 Filter 2: Free Cash Flow Yield 67

Chapter 6 The Power of Fear and Decision Fatigue 83

Chapter 7 Filter 3: Return on Invested Capital 91

Chapter 8 This Time Is Never Different 105

Chapter 9 Filter 4: Long-Term Debt to

Free Cash Flow Ratio 109

Chapter 10 The Sunk-Cost Bias and Pride and Regret 131

Chapter 11 Filter 5: The 52-Week Low Formula and My JourneyTrying to Disprove It 137

Chapter 12 The Importance of Embracing a Trailing 12-MonthReturn of −25 Percent 151

Chapter 13 The Problem with Selective Perception andConfirmation Basis 163

Chapter 14 Putting It All Together 169

Afterword 179

About the Companion Website 183

About the Author 185

Index 189

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