Customer Reviews: Read 41 more reviews...
 Good fundamentals do not 'guarantee' good results January 1, 2009
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.
Tony Loton, author --
Stock Fundamentals On Trial: Do Dividend Yield, P/E and PEG Really Work?
 Good Introduction to Investing November 2, 2008
1 out of 1 found this review helpful
This book was an easy read that introduced the concepts of value investing very well. It will open up a lot of possibilities for those who take notes. If the reader does not know a single thing about stocks this book will have some concepts that will take some time and practice before fully understanding them. That is why I would recommend getting another book that defines stock market terms and concepts in a beginner's format in conjunction with this one. There are some websites online, such as ABOUT.COM that offers a helpful "class" on stocks that will be most beneficial.
I thought this was an outstanding book for the beginner investor to help them establish good trading habits early on, but will leave them wanting more. To become truly successful at trading, more care and education will be necessary. In no way was this a magic book of knowledge that will leave the reader capable of making millions overnight, which, by the way, isn't what this book is about.
This book is HIGHLY recommended for the beginner investor, and recommended for the intermediate investor.
 Very clear indeed. August 16, 2008
This a very clear and concise book--another one, all of which seem lately to contain the same wisdom: buy low (and buy smart). I'm trying. You can still pay too much, or buy too soon, or catch the wrong end of a falling knife, etc. But it's certainly a far better idea than taking hot tips from e-mails, or from brokers.
Investing lessons May 11, 2008
I learned from a broad range of investing books, and I got this one primarily because it was a short book. I'm only about half way through it, but I think it is very well written. It has some important information on how to approach researching a company. One of the glaring failures is how rapidly the trading environment can change. The book specifically tells investors to avoid China, and I've been making a lot of money investing in my first Chinese company. Read and learn, but ultimately decide for yourself on what you want to buy.
Excellent overview and introduction to Value Investing March 26, 2008
Great book as an introduction to the principles of value investing as laid out by Benjamin Graham. Very easy to read. With about 140 pages, you can get through this book in a couple of hours.
I'd use this as a warm up book to Intelligent Investor.
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