Books on Investing: Discussions, Reports &amp; Suggestions

Top 77. Sep 26, 2002 8:19 AM

» Kirk - EVA: The Quest for Value

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Has anyone read this book?

<img align=left src=http://images.amazon.com/images/P/0887304184.01._PE30_PIdp-schmoo2,TopRight,7,-26_SCMZZZZZZZ_.jpg width=105 height=173>The Quest for Value: The Eva Tm Management Guide
by G. Bennett, III Stewart, Joel M. Stern (Preface)

Hardcover: 800 pages
Publisher: HarperBusiness; ISBN: 0887304184; (January 15, 1991)

Review:
Stewart has crafted an engaging treatment of Economic Value Added (EVA) which is accessible to both financial professionals and "lay-investors" alike. The material is highly readable and the case examples serve well to illustrate important concepts. (One criticism: Stewart should receive 40 lashes with a wet noodle for failing to provide an index in an 800 page quasi-academic book).

EVA was Stewart's contribution (in 1991) to the Shareholder Value framework originally introduced by Alfred Rappaport of Northwestern University. This theoretical framework emphasizes the imperative of adding shareholder value via the undertaking of specific financial and investment decisions at the corporate level and measuring that value with a metric similar to discounted cash flow analysis. EVA is Stern-Stewart's metric.

After reading the Motley Fools rave review above, I would issue one caveat to all of those "fools" who think they have found the holy grail to selecting winning stocks: EVA has been around for a long time (the theoretical work precedes THE QUEST FOR VALUE by decades) and is well-integrated into investment management methodologies. There have been several studies which demonstrate that selecting stocks based on EVA or even changes in EVA will not produce excessive returns for investors (See Damodaran). Thus, the real "value" of THE QUEST FOR VALUE for private investors is to focus attention on the importance of economic measures of value and to point out the limitations of accounting valuation measures like earnings and earnings growth.

Reveiw #2: Shuo Wang (see more about me) from Seattle, WA USA
After getting my MBA 1995, I have read so many books discussing about value and investment, I recommend, however, that The Quest For Value is the one you must read. The reasons:

First, few books put the two topics (value, investment) in one theoretical system. Even the books or articles about "value investment" can be separated into two categories: these about "investment art", talking about, or written by investment experts (who's names on the Money Master and New Money Master); the other about the "valuation scientific methods". People talked about value investment ideas by totally separated way, the art, or the science.

Second, too many books discuss value investment by this way: "it is the one... (maybe earning, or cash flow, or working capital,) but..., or, if....,". So the investor become a boxer, who need professional speed and energy to quickly switch his positions and punch among the keep coming "but", "if" from either accounting or reality. Contrary to my boxer's inspiration, my best friend in business school told me: "Warren Buffett must have one secret point he never told anybody". I think the secret he means is what is "one dollar", and what is "forty cents", if buy low sell high is the plan. Haven't our two foolish business school students told you everything about the "modern" market efficiency and inefficiency theories?! I know value investment masters will feel sad for this kind of coming value investment young villagers. Anyway, besides the "professional strong" and the "superstition power" from the point of ours, is there a rational point to support the leverage of investment art.

The third, value investment is always about two aspects: the business and the management. From Fillip Fish's buy and hold sticky strategy to Peter Lnych's traveling and talking around the world, to Warren Buffet's appreciation: "he (the CEO) is this kind of person, you can marry your daughter to him", investment is about to invest, or to marry with, the management team. But, we need the handsome's picture.

The Fourth, what kind of morality standards fits Wall Street's social position. Probably, people don't have time to talk about good or bad, when the regulation of a game is win or loss. However, if you are playing NBA, your morality, personality, even image are kind of money at least, aren't they? Even you just doing exercise in your backyard, at least don't forget another possibility: win-win.

If you have this kind of questions, you must read this book. The author's capital efficiency view and five categories of business accordingly put the "value" and the "investment" two topics into one system to discuss.

And, The Economic Value Added (EVA) investment method is independent from the any accounting system. The accounting system as a standard record of business activities is only an object of study, criticize or judgment for investment decision but not a constriction of decision mine field. Contrary to "but" "if" talking, this book puts everything on this way: it is the one (EVA), so you should....

Additionally, to look for a good management maybe, for investor, can become to create of good management teams. This topic you can read EVA and Value-Based Management by Mr. Young and O'Byrne for further study.

Finally, the meaning of investment probably is not just NBA's win or loss. It is about to add or to damage (or even worse, to steal maybe) the social wealth according to EVA theory.

Interesting? Plus the author's good logic and good case study! The only lack of this book to me is that the Capitan Case only has one. After finishing the Capitan Case at the end of the book, I wish there were other four cases for the other four categories of business accordingly (If you know where I can read that, please let me know...).

There already been so many, so different opinions about this book on this site. While, if investment is art, according to Peter Lynch, or is a project, according to Charles Ellis, then any theory or method is just a kind of tool or weapon. So it will depend on the person, so it will depend on everything. I myself start the second reading after the first. I am going back to Main China pretty soon to do Investment Banking business, probably focus on LBO, and I will keep reading this book, talking about this book, and trying to imply this book. I think that I owe amzon.com a customer's view since I have got so much helps from others' views, so I recommend this book to you: If you have been so patient to read my view to here, you need read that book. Good Luck smile

I found this book while reading an article on ROIC at the Motleyfools site http://www.fool.com/School/roic/roic02.h...

-- posted by Kirk

http://www.altruistfa.com/readingroom.htm

Top 78. Oct 8, 2002 8:59 PM

» bob90245 - Altruist's Reading Room

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Altruist's Reading Room

For those who have way to much time on their hands.

(Or who want the equivalent of a 4 year finance education - well it seems like it anyway)

-- posted by bob90245

<img src=http://images.amazon.com/images/P/0471233277.01._PE30_PIdp-schmoo2,TopRight,7,-26_SCMZZZZZZZ_.jpg align=left width=109 height=173> Markets, Mobs, and Mayhem: A Modern Look at the Madness of Crowds
by Robert Menschel

Top 79. Oct 21, 2002 6:06 AM

» Kirk - Markets, Mobs & Mayhem

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Get ready for the next bubble
Robert Menschel's 14 rules for keeping your head

By Marshall Loeb, CBS.MarketWatch.com
Last Update: 12:02 AM ET Oct. 21, 2002

NEW YORK (CBS.MW) -- This is, of course, the era of The Bubble.

The Bubble burst, famously, in March 2000, and that's when most investors began to suffer. But at least you probably gained something. You most likely emerged with some lessons learned -- lessons that will be valuable when the next bubble hits.

And make no mistake, there will be another bubble, and then another.

That is because investing is a seductive, never-ending tango that partners greed and fear. Fairly often, one or the other gets swept up in mania and goes to extremes. Then masses of investors begin to follow each other, lemming-like, over the cliff. As the fabulous investor Warren Buffet says, "A group of lemmings looks like a pack on individualists compared with Wall Street when it gets a concept in its teeth."

This is the way that otherwise sensible people have behaved for centuries-since the famous Dutch Tulip mania of 1634-37and both the French Mississippi shares bubble and the British South Sea shares bubble of 1719-21, down to the booms-and-crashes of the 1920s and 1990s.

Bubbles strike more often than you might think. Not even counting their grievous losses from the bursting of the latest U.S. bubble, foreign stocks have been swept up in no fewer than four bubbles in just the last quarter century:

In 1970-74, Hong Kong stocks whooshed 1,200 percent, and then plummeted 92 percent.
In 1978-81, Mexican stocks zoomed 785 percent, and then dropped 73 percent.
In 1978-86, Kuwaiti Gulf stocks surged 7,000 percent, and plunged 98 percent.
In 1986-90, Taiwan stocks rose 1,168 percent, and collapsed 80 percent.

There was even a fifth bubble, in silver, which in 1979-82 jumped 710 percent before melting down 88 percent.

All these extremes and much more are engagingly chronicled in a new book, Markets, Mobs & Mayhem, by Robert Menschel, a 50-year Wall Street veteran with an excellent record who is now senior director of the Goldman Sachs Group and founder of its institutional investment department.

A true Renaissance man, he is also president of the board of trustees of the Museum of Modern Art. (Full disclosure: He has been an acquaintance of mine for four decades.)

By examining bubbles and some other crazy actions (such as the Salem witch trials), Menschel may help you escape from the madding crowd in the future and avoid getting caught up in the stampede whether the market is either a roaring bull or a raging bear.

At the beginning, he cites three principles:

The faster a stock has climbed, the quicker it will fall.
The easier information arrives, the less valuable it is.
The more certain the crowd is, the surer it is to be wrong.

Most significantly, Menschel lists no fewer than 14 of his own rules for keeping your head when almost everybody else is losing theirs. They are, in Menschel's words, with slight abridging by me:

Remember that at the extreme of fear in the marketplace, when all the excess has been wrung out, great buys are all over the place. Just consider some of the bargains that investors who had cash to spend scooped up last week.
Remember, too, that the stock market always comes back, no matter how shocking the events that drive it down. Within three years of the December 7, 1941, attack on Pearl Harbor, of John Kennedy's assassination, and of the 1993 World Trade Center bombing, the market was up anywhere from 21 percent to 81 percent.
Define the sandbox you want to play in. Menschel maintains a running list of 20 to 25 companies with records of consistent sales and earnings performance, with management committed to a defined strategy, and with strong franchises that are highly focused. He buys stock in those growth-value companies only when they are selling at sensible multiples, and he doesn't add new companies to the list unless he sells the weakest of those he owns.
Have a buy strategy and stick with that. Menschel never takes a huge stand at a single price because he says the market has humbled him too many times. Instead, if he thinks the price is within range for a company he wants to own, he begins to scale in: 25 percent of the desired holding today, 25 percent when the market volatility drives the price down again, and so on, Putting in orders in advance can help prevent cold feet when the market turns really ugly. Yes, you'll miss the absolute bottom in all likelihood, but only the blindly lucky hit the bottom in any event.
Stick with what you know. Menschel stays highly focused: leading discount and home-improvement retailers, consumer staples, pharmaceuticals, package delivery, soft drinks, brewers, and financial service companies, all of which are number-one in their field. Those are the companies he invests in because they create the products and services he can field-test day in and day out through his own experience.
Stick with who you are. Everyone has a different stomach. When you buy stocks, realize that "too risky" and "too cautious" are completely subjective evaluations. When personality and portfolio get out of whack, bad decisions follow as day follows dawn.
And stick with companies that know what they are, too. Menschel invests only in companies that stay focused on their core competency and have a strong franchise. He avoids technology companies because industry changes are so rapid that most of them turn into commodity businesses with no lasting franchise.
Always do due diligence. Invest your money only after thorough study. It's the mistakes that kill your investment performance. Evaluate the downside risk as much as the reward side, and you'll never have to be brilliant.
Never make a buy or a sell decision in your broker's office. Brokers are too close to the roar of the crowd. Menschel always waits until he's alone-shaving, maybe, or in the shower-to make up his mind. He is safe there from the feeding frenzy that drew investors to companies like Enron, EMC, Global Crossing, Adelphia, Tyco, World Com, and too many others.
Buy for the long term. If you were to die tomorrow, would this be a stock you would want your heirs to hold? It sounds morbid, but it is not a bad test to apply. Stocks should be for the ages, even if we won't survive them.
Accept a little boredom in your life. Greedy management bent on making overpriced acquisitions gets the headlines, but good companies with superior management teams and a culture of teamwork, turning out good, usable, affordable products, make money. Look for companies selling at a reasonable multiple, generally no more than 50 or 60 percent greater than the rate of growth in earnings.
Keep this in mind, too: The faster a stock has a run up in value, the faster it is likely to run down. Almost no company can safely grow earnings faster than 15 to 20 percent a year without attracting fierce competition.
It's the small things, not the big ones, that count. In baseball, homerun hitters get all the attention. Investing is simpler: Hit for average, swing for singles, not the fences. This race is ultimately to the sure, not the swift; the tortoises, not the hares. Avoid losses. Have a truly long-term strategy and follow it consistently, and you'll finish in front.
Never forget the miracle of compounding. Menschel's goal is to produce at least a 15 percent compound annual rate of return average over a five-year period. Do that for 30 years and your money will grow 66 fold. That's fast enough!

Marshall Loeb, former editor of Fortune, Money, and The Columbia Journalism Review, writes "Your Dollars" exclusively for CBS.MarketWatch.com.

Hardcover: 226 pages ; Dimensions (in inches): 0.99 x 9.24 x 6.14

Publisher: John Wiley & Sons; ISBN: 0471233277; 1 edition (August 30, 2002)

Financial Times, 4 July 2002
"...a collection of vignetttes, stories, proverbs and quotations laced with sound advice for avoiding the stampedes that can be triggered in a volatile marketplace..."

-- posted by Kirk

Top 80. Nov 6, 2002 10:36 AM

» Kirk - Rule the Freakin' Markets

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This is member bullrun's favorite trader. Now he has a book!

<img align=left width=107 height=173 src=http://images.amazon.com/images/P/0312282567.01._PE30_PIdp-schmoo2,TopRight,7,-26_SCMZZZZZZZ_.jpg > Rule the Freakin' Markets : How to Profit in Any Market, Bull or Bear
By: Michael Parness (WAXIE)
Hardcover - 272 pages
St. Martin's Press; ISBN: 0312282567
Price: $17.46
S/H: $4.95 (US)

Waxie's review from his web site:
The book is, and I AM being humble, the BEST dang book on trading and the stock market EVER written! Without a doubt, this is the best investment in YOURSELF you will ever make! For $17.46, you have nothing to lose and everything to gain!

Product Details
Hardcover: 246 pages ; Dimensions (in inches): 0.87 x 9.14 x 6.76
Publisher: St. Martin's Press; ISBN: 0312282567; (March 2002)

-- posted by Kirk

The Complete Idiot's Guide(R) to The Federal Reserve with Preston Martin.

The Complete Idiot's Guide(R) to Social Security

The Complete Idiot’s Guide to Tax Breaks and Deductions

Streetwise Retirement Planning: Savvy Strategies and Practical Advice for a Secure Financial Future

Teach Yourself Retirement Planning in 24 Hours

Top 81. Dec 18, 2002 11:19 AM

» Kirk - Books By Lita Epstein

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Books By Lita Epstein

To discuss these books or post questions to Lita visit Lita's forum right here called "Ask Lita".

-- posted by Kirk

Top 82. Jan 18, 2003 4:29 PM

» Kirk - Venus Williams: Economics Explained

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<img align=left src=http://images.amazon.com/images/P/0684846411.01._PE20_PIdp-schmoo2,TopRight,7,-26_SCMZZZZZZZ_.jpg width=106 height=173>Economics Explained,Everything You Need to Know About How the Economy Works and Where It's Going
by Robert L. Heilbroner, Lester C. Thurow
Price: $11.20
Paperback: 320 pages

MELBOURNE, Australia (AP) -- Venus Williams and her sister, Serena, are known for their penchant for fashion design, but Venus says she likes nothing better than to settle down with a good book.

"My latest book is 'Economics Explained,' because I found that it was a subject I didn't know a lot about," the 22-year-old tennis star said this week.

Williams said she doesn't like to "live life not knowing a lot about things, so I just decided I have to pick up the pace. Put down the nonsense books and pick up the real deal."

The Williams sisters are in Melbourne for the Australian Open.

-- posted by Kirk

Sunday morning 8-9:30 AM eastern time; The Roger Arnold Show at
http://www.businesstalkradio.net/

Top 83. Jan 21, 2003 8:48 AM

» Kirk - If It Doesn't Go Up Don't Buy It

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From Roger Arnold's January 21, 2003 Daily Observations

Al Thomas next Sunday

<img src=http://images.amazon.com/images/P/0967155304.01._PE_PIdp-schmoo2,TopRight,7,-26_SCMZZZZZZZ_.jpg width=114 height=166 align=left>
This Sunday Al Thomas will be our guest and will be taking your calls and answering your questions. Al is the author of "If It Doesn't Go Up Don't Buy It" and also offers a newsletter on Mutual Fund Investing. I have read "If It Doesn't Go Up Don't Buy It" and highly recommend it for all investors. It is especially useful for those wanting to get an easy to read guide into what technical trading is. It is written in easy to understand language and fills a nitch overlooked by most books on the subject. It takes away the complicated industry jargon that frustrates most investors and highlights the absolute need to know stuff. With over 40 years of experience Al has started and owned an insurance company and commodities trading firm and brings a wealth of practical, real life experience for others to draw from.

Roger's Radio Schedule

Monday 4:30 - 4:45 PM eastern time; The Tom O'Brien Show at www.TFNN.com

Thursday 5:30 - 5:45 PM easten time; The Tom O'Brien Show at www.TFNN.com

Monday / Thursday 10:12 and 11:12 AM eastern time to :20 after the hour www.kbnp.com

-- posted by Kirk

Top 84. Jan 28, 2003 5:11 AM

» litab16 - Federal Reserve

You can get a preview of my new book, Complete Idiot's Guide to the Federal Reserve, at Amazon. Forty-three sample pages are now online. I co-authored the book with Preston Martin, who was vice chairman of the Federal Reserve under Paul Volcker. Martha Seger (financial economist, bank executive, and governor of the Federal Reserve Board) wrote in its foreword quoted on the cover: “I recommend this book for general reading as well as for courses in banking, financial markets and investments. . .high level people at 1600 Pennsylvania Avenue and the U.S. Treasury would benefit greatly from it’s insights.”

-- posted by litab16