The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market / Edition 1

The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market / Edition 1

3.8 4
by Pat Dorsey
     
 

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ISBN-10: 0471686174

ISBN-13: 9780471686170

Pub. Date: 12/28/2004

Publisher: Wiley

The Five Rules for Successful Stock Investing

"By resisting both the popular tendency to use gimmicks that oversimplify securities analysis and the academic tendency to use jargon that obfuscates common sense, Pat Dorsey has written a substantial and useful book. His methodology is sound, his examples clear, and his approach timeless."
—Christopher C.

Overview

The Five Rules for Successful Stock Investing

"By resisting both the popular tendency to use gimmicks that oversimplify securities analysis and the academic tendency to use jargon that obfuscates common sense, Pat Dorsey has written a substantial and useful book. His methodology is sound, his examples clear, and his approach timeless."
—Christopher C. Davis Portfolio Manager and Chairman, Davis Advisors

Over the years, people from around the world have turned to Morningstar for strong, independent, and reliable advice. The Five Rules for Successful Stock Investing provides the kind of savvy financial guidance only a company like Morningstar could offer. Based on the philosophy that "investing should be fun, but not a game," this comprehensive guide will put even the most cautious investors back on the right track by helping them pick the right stocks, find great companies, and understand the driving forces behind different industries—without paying too much for their investments.

Written by Morningstar's Director of Stock Analysis, Pat Dorsey, The Five Rules for Successful Stock Investing includes unparalleled stock research and investment strategies covering a wide range of stock-related topics. Investors will profit from such tips as:

• How to dig into a financial statement and find hidden gold . . . and deception

• How to find great companies that will create shareholder wealth

• How to analyze every corner of the market, from banks to health care

Informative and highly accessible, The Five Rules for Successful Stock Investing should be required reading for anyone looking for the right investment opportunities in today's ever-changing market.

Product Details

ISBN-13:
9780471686170
Publisher:
Wiley
Publication date:
12/28/2004
Edition description:
Reprint
Pages:
384
Sales rank:
321,188
Product dimensions:
8.92(w) x 6.94(h) x 1.02(d)

Table of Contents

Foreword.

Introduction: Picking Great Stocks Is Tough.

Chapter 1. The Five Rules for Successful Stock Investing.

Chapter 2. Seven Mistakes to Avoid.

Chapter 3. Economic Moats.

Chapter 4. The Language of Investing.

Chapter 5. Financial Statements Explained.

Chapter 6. Analyzing a Company- The Basics.

Chapter 7. Analyzing a Company-Management.

Chapter 8. Avoiding Financial Fakery.

Chapter 9. Valuation- The Basics.

Chapter 10. Valuation-Intrinsic Value.

Chapter 11. Putting It All Together.

Chapter 12. The 10-Minute Test.

Chapter 13. A Guided Tour of the Market.

Chapter 14. Health Care.

Chapter 15. Consumer Services.

Chapter 16. Business Services.

Chapter 17. Banks.

Chapter 18. Asset Management and Insurance.

Chapter 19. Software.

Chapter 20. Hardware.

Chapter 21. Media.

Chapter 22. Telecom.

Chapter 23. Consumer Goods.

Chapter 24. Industrial Materials.

Chapter 25. Energy.

Chapter 26. Utilities.

Appendix.

Recommended Readings.

Morningstar Resources.

Index.

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The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market 3.8 out of 5 based on 0 ratings. 4 reviews.
Anonymous More than 1 year ago
Anonymous More than 1 year ago
Anonymous More than 1 year ago
LOTONtech More than 1 year ago
The inside flap states that "Stocks can be the perfect vehicle for your investment journey-if you know how to pick them". Well, it's the 'picking' part that's the problem for most people. For example: my research for "Stock Fundamentals On Trial: Do Dividend Yield, P/E and PEG Really Work?" demonstrated to me that choosing stocks based on popular fundamental measures was no more effective -- and maybe less so -- than simply investing in an index (and getting out again) in time with overall bull- and bear- trends.

The advice on 'finding economic moats' and 'having a margin of safety' is totally sound, of course, but I'm not so sure about 'buying for the long haul'. The problem with the last piece of advice is that it will be a long time before you discover (or admit) that you were wrong. Financial stocks, for example, might previously have been good to hold for the long term, but don't you wish you'd stopped holding them about 18 months ago? Indeed, page 184 of this book positively encourages you to look seriously at 'Banks and Financial Services', which might have been good advice in 2004 providing you got out (stopped holding) by 2007.

What I do agree with 100%, as confirmed by my own research, is the book's cautious approach to measures like P/E and PEG. I quote:

* Use PEG with caution because fast-growing firms also tend to be riskier.
* The lowest P/E isn't always the best.

Chapter 10 provides a nice description of 'intrinsic value', which is based on 'cash flow' rather than 'price'. And I liked the idea (if not the substance) of having a chapter devoted to each market sector.

As for the 'five rules': I found them to be a little disappointing. I mean -- Rule #1 is "Do your homework", and on the surface Rule #5 "Know when to sell" contradicts Rule #4 "Hold for the long haul".

It's a nice enough book, but it's not a panacea.

Tony Loton, author --
"Stock Fundamentals On Trial: Do Dividend Yield, P/E and PEG Really Work?"