Value Investing Tools and Techniques for Intelligent Investment

by Montier, James

• ISBN13: 9780470683590
• ISBN10: 0470683597
• Edition: 1st
• Format: Hardcover
• Copyright: 2009-12-02
• Publisher: Wiley

Summary

Value Investing has been pioneered and is used by the world's most famous investors, including Warren Buffett, Ben Graham, John Templeton, Joel Greenblatt, Bruce Greenwald and many more. It offers tried and tested techniques to making money out of buying underpriced shares and securities. In this important new book, the highly respected and controversial value investor and behavioural analyst, James Montier explains how value investing is the only tried and tested method of delivering sustainable long-term returns. This begs the question why isn't everyone a value investor? In part, it is because value investing requires a different mindset and the methods, approach and conclusions of value investing are very different from those taught in business schools and finance courses. In this book James shares his tried and tested techniques and provides the latest and most cutting edge tools and techniques you will need to deploy the value approach successfully.James shows you why everything you learnt at business school is wrong; how to think properly about valuation and risk; how to avoid the dangers of growth investing; how to be a contrarian; how to short stocks; how to avoid value traps; how to hedge ignorance using cheap insurance. Crucially he also gives real time examples of the principles outlined in the context of the last 18 months.Contents:Part I: Everything you learnt in Business School is wrong 1) The dead parrot of finance 2) Psuedoscience and finance 3) The relative performance derby: a key source of poor performance 4) The dangers of DCF 5) Is Value really risker than growth 6) Deflation, depression and valuePart II) Behavioural Foundations of Value Investing 7) Overpaying for the hope of growth 8) Placebos, booze and glamour stocks 9) Tears before bedtime 10) Clear and present danger: The Trinity of Risk 11) Maximum pessimism, profit warnings and heat of the moment 12) The behavioural stumbling blocks to value investingPart III) The Philosophy of Value Investing 13) The ten tenets of investing 14) Process not outcomes 15) Beware of Action man 16) The Bullish bias and the need for scepticism 17) Keep it simple stupid 18) Dark days for deep valuePart IV) The Empirical Evidence 19) Global Value Investing 20) Graham's net-nets: outstanding or out-dated?Part V) The 'Dark Side' Of Value Investing: Short Selling 21) Pirates, Spies and Short Sellers 22) Cooking the books 23) Bad businessPart VI) Real time value investing 24) The case against emerging markets 25) Financials: opportunity or value trap 26) Bonds: speculation not investment 27) Cyclicals and value traps 28) The road to revulsion and the creation of value 29) Psychology of bear markets 30) Revulsion and value 31) Buy when its cheap, if not then, when? 32) Roadmap to inflation and sources of cheap insurance

Author Biography

James Montier is a member of GMO's asset allocation team. Prior to that he was global strategist for Société Générale and Dresdner Kleinwort. He has been the top rated strategist in the annual extel survey for most of the last decade. He is also the author of three other books – Behavioural Finance (2000, Wiley), Behavioural Investing (2007, Wiley) and The Little Book of Behavioral Investing (Forthcoming, Wiley). James is a regular speaker at both academic and practitioner conferences, and is regarded as the leading authority on applying behavioural finance to investment. He is a visiting fellow at the University of Durham and a fellow of the Royal Society of Arts. He has been described as a maverick, an iconoclast, an enfant terrible by the press.

Table of Contents

Preface	p. xi
Foreword	p. xvii
Why Everything You Learned in Business School is Wrong	p. 1
Six Impossible Things before Breakfast, or, How EMH has Damaged our Industry	p. 3
CAPM is Crap	p. 19
Pseudoscience and Finance: The Tyranny of Numbers and the Fallacy of Safety	p. 29
The Dangers of Diversification and Evils of the Relative Performance Derby	p. 39
The Dangers of DCF	p. 47
Is Value Really Riskier than Growth? Dream On	p. 57
Deflation, Depressions and Value	p. 65
The Behavioural Foundations of Value Investing	p. 73
Learn to Love Your Dogs, or, Overpaying for the Hope of Growth (Again!)	p. 75
Placebos, Booze and Glamour Stocks	p. 85
Tears before Bedtime	p. 93
Clear and Present Danger: The Trinity of Risk	p. 105
Maximum Pessimism, Profit Warnings and the Heat of the Moment	p. 113
The Psychology of Bear Markets	p. 121
The Behavioural Stumbling Blocks to Value Investing	p. 129
The Philosophy of Value Investing	p. 141
The Tao of Investing: The Ten Tenets of My Investment Creed	p. 143
Process not Outcomes: Gambling, Sport and Investment!	p. 165
Beware of Action Man	p. 173
The Bullish Bias and the Need for Scepticism. Or, Am I Clinically Depressed?	p. 181
Keep it Simple, Stupid	p. 195
Confused Contrarians and Dark Days for Deep Value	p. 205
The Empirical Evidence	p. 215
Going Global: Value Investing without Boundaries	p. 217
Graham's Net-Nets: Outdated or Outstanding?	p. 229
The 'Dark SideÆ of Value Investing: Short Selling	p. 237
Grimm's Fairy Tales of Investing	p. 239
Joining the Dark Side: Pirates, Spies and Short Sellers	p. 247
Cooking the Books, or, More Sailing Under the Black Flag	p. 259
Bad Business: Thoughts on Fundamental Shorting and Value Traps	p. 265
Real-Time Value Investing	p. 279
Overpaying for the Hope of Growth: The Case Against Emerging Markets	p. 281
Financials: Opportunity or Value Trap?	p. 291
Bonds: Speculation not Investment	p. 299
Asset Fire Sales, Depression and Dividends	p. 309
Cyclicals, Value Traps, Margins of Safety and Earnings Power	p. 315
The Road to Revulsion and the Creation of Value	p. 325
Revulsion and Valuation	p. 343
Buy When it's Cheap - If Not Then, When?	p. 355
Roadmap to Inflation and Sources of Cheap Insurance	p. 361
Value Investors versus Hard-Core Bears: The Valuation Debate	p. 371
References	p. 379
Index	p. 383
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