The Little Book of Value Investing (Little Book Big Profits Series)

The Little Book of Value Investing (Little Book Big Profits Series)


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The Little Book of Value Investing (Little Book Big Profits Series) 3.8 out of 5 based on 0 ratings. 4 reviews.
Anonymous More than 1 year ago
Anonymous More than 1 year ago
This book shows you the proven way to approach the stock market, and be successful
LOTONtech More than 1 year ago
This book opens by implying that when people shop for meat, electrical goods, and other products, they are always on the lookout for good 'value' items that are 'on sale': buy beef when it's cheap, switch to pork when it's cheap etc. In contrast; when buying stocks, people tend to buy "fashionable" stocks at high prices. While the latter is true, I'm not sure that the former is true at all.

I think people are just as likely to buy top-of-the-range food items because everyone else is, and are inclined to buy the "sizzle" rather than the "sausage". The other problem with this analogy is that people are not generally buying consumer items as an investment -- to sell on at a higher price in the future, or to derive an income from.

Nevertheless, the point of the analogy is to encourage you to buy umbrellas when it's sunny (and no-one relasises their true value) and sell them when it's rainy (and everyone wants one). This theory is totally sound, as long as:

1) You don't buy a faulty batch of umbrellas, which will never realise their true value.
2) It rains in the not-too-distant future, ideally in line with when you (or the weather presenter) forecast it to rain.

I have found two problems with value investing in it's simplest form, which I tested using real historic data in "Stock Fundamentals On Trial: Do Dividend Yield, P/E and PEG Really Work?". First: that fundamental ratios such as Dividend Yield, P/E, and PEG are not necessarily good indicators of future prospects (i.e. they don't guarantee fault-free umbrellas). Second: Analysts' forecasts can be spectacularly wrong, as 2007-2008 has demonstrated.

Despite my reluctance to embrace value investing (and to wait a long time for the returns that may or may not materialize), I do believe that this book may be very timely. If ever there was a time when stocks were selling at "on sale" prices in certain sectors, maybe that time is now.

If you think now is the right time to go value-hunting, you will find this book to be an engaging introduction which is accessible to all levels of readership.
Guest More than 1 year ago
This short book is surely among the most concise, informative investment guides ever written. Christopher H. Browne manages to make stock market investing as simple and straightforward as shopping for groceries. He sketches quickly, but in adequate detail, the main principles of value investing, offers guidance on how to use such basic information as P/E ratios, points the way to free online stock-screening services and, yet, makes no big promises about market success. His message is that value investors who do their homework patiently and thoroughly may expect good returns eventually. Instead of aggressive trading, he emphasizes the virtue of not taking action. We recommend this succinct tutorial to every investor.