To calculate the overall star rating and percentage breakdown by star, we don’t use a simple average. Instead, our system considers things like how recent a review is and if the reviewer bought the item on Amazon. It also analyzes reviews to verify trustworthiness.
I consider myself fairly smart, but I cannot for the life of me comprehend this book. Perhaps it's because I don't have a background in business or finance. I should've just started with a "for dummies" valuation book first. I'll revisit the book in the future I'm sure.
The first version of this book I LOVED. I learned so much and refer to it often. This book(second edition) has updated examples and well over 100 new pages. I knocked a star off this review because, in the second version, the authors decided to repeatedly point out that in every investment one investor is right and one is wrong because investing is a "zero-sum game." That statement is common belief for many people and I can overlook a belief I disagree with. In this case, however, the same belief is stated in the Introduction, Chapter 1 and Chapter 2 (so far...I'm still reading). Chapter 2 is even called Searching for Value: Finding the Right Side of the Trade. I guess I find this so offensive because I can't imagine Buffett saying "Oh boy, I really put one over on the See family. They totally lost out on that deal. Good thing I was on the winning side of that transaction. Bunch of losers!" That's absurd. Buffett doesn't think that way or invest that way. There does not need to be a wrong side of the trade. Viewing investing as a zero sum game is WRONG. Zero sum viewpoint (and it's in many trading/investing books) is one reason many people have a negative view of Wall Street.
Buy the book. It is filled with valuable content. Just be sure to think for yourself. Question everything.
If you are looking for a shortcut to value investing, this is not the book for you. You aren't going to find a list of key ratios to use (though you may derive that from the text). Nor are you going to find a simple list of formulas to quickly get to the intrinsic value of a stock (though formulas are there). What you are going to find is a solid, practical approach on valuing companies that can be as simple as using the balance sheet, as complex as becoming intimately familiar with the business, and everything in between. The tools and knowledge are given to the reader, who can then make the choice on how accurate he or she wishes to be in their attempts to value a company with the potential for good to great results that are directly correlated over time to the effort put into the evaluation of the security.
I highly recommend this book, though I suspect most readers will want to compliment this with other similar readings. I foresee this being the one I come back to the most often though as I strengthen my knowledge and hone my skills in valuing companies.
*I reviewed this after reading the Kindle version, which was very well done.
I was a little disapointed about this book since it has a legion of followers and good reviews and for me it worked as much as a reinforcement of thing already consolidated by the likes of Graham and Buffett books when the question is to spot attractive business with moats and competitive advantages than give me a realy new insight.
Also I found the writing a little confused and bad regarding the shallowness about some information and description of what would be and where to find those key numbers mentioned on the formula you just presented me, and what would they be precisely.
One of the things that bothered me most was the authors initial thought about how hard and innacurate it is to quantify growth and value it and how Graham-Dodd would stay away from trying it, just to see they presenting me a bunch of mathematical formulas and ways to value growth with the justification that the modern Graham-Dodd Theory should be able to do so.
One other thing was the dismiss of modern portfolio theory and calculations of cost of capital that we learn on DCF, Damodaran and CFA, just to use some arbitrary costs with none whatsoever throughly explanation about why that would be better and what study and facts supports these assumptions.
In sum, the book is good for those who want a refresh/reinforcement about what we are looking for when we value a stock, but in general the book lacks content by it shalowness of the topics and unfurtunaley for me it was one of the most dry and challenging books to read, since the authors writing is not so good.
It would not be my first recommendation of book since we can find better books in this regard
I have been reading investing books for 20 years and this is the first book I couldn't finish and felt compelled to leave a negative review to warn others. This book is written by a bunch of academics who have very little real world investing experience and even less practical business experience. They present a bunch of conceptual frameworks for analysing and valuing businesses which just don't align with how things work in the real world. There are countless examples but the clearest demonstration would be the two "franchise" businesses they picked, WD-40 and Intel are down 30% and 40% respectively (Nov 2022) since publication whilst the S&P500 is up 15%. These franchise businesses are supposed to be the best examples of high quality companies that can earn sustainably high returns on capital due to some unassailable competitive advantage.
With academics teaching this drivel at the premier investment course taught at arguably the best business school in the world, no wonder there's been no improvement in fund manager performance over the decades despite so much more formal investment "education" being available.
Sorry Bruce, Judd and team - only 1 star is fitting.